‘The broker’s price is passed on to the client’: Stephen Jones, MP

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The cost of brokers’ commissions is “built into the cost of a mortgage”, the shadow financial services minister claimed, but stressed the “value” of the chain.

The fictitious Minister for Financial Services and Deputy Treasurer, MP Stephen Jones (member of Whitlam), suggested that banks “consider” the cost of using mortgage brokers in mortgages, adding that “customers pay in one way or another “.

Mr Jones made the comments while speaking to Momentum Media in an exclusive interview focusing on the Australian Labor Party (ALP) and its plans for the financial services, credit and pensions sectors (available via The Advisor Podcast Network).

After reiterating that the ALP would not seek to change brokerage compensation if they win the May federal election (“If it ain’t broke, don’t fix it,” he said), asked Mr Jones if he thought Australians should pay for mortgage advice.

In response, the fictional Minister of Financial Services and the fictional Assistant Treasurer said, “Well, they pay one way or another. There’s no free lunch.

“The commission paid by the institution, by the lender to the broker, is built into the overall cost of a mortgage loan. For God’s sake, banks charge you a fee to use an ATM, they charge you a fee to use the tap-and-go in a supermarket. They are pretty good at taking into account all the costs of a transaction, whether it is a mortgage or a transfer elsewhere in their payment systems.

“Anyone who says a mortgage broker’s price isn’t passed on to the client somewhere along the line doesn’t understand how these institutions work.

“So the customers pay one way or another. And that should be transparent and the ethical requirements for advisers and the duty of financial interest should make all that kind of stuff transparent. This is a good thing.

“And I don’t see a long line of customers coming to me and saying, ‘We want to change that.'”

The Shadow Deputy Treasurer told Momentum Media that while the ALP “respects” the opinions and analysis of Commissioner Kenneth Hayne of the Royal Banking Commission, when it “considered how [a consumer-pays model] would work in practice, we don’t think we’ve struck the right balance.

“So we wonI will not make that change,” he said.

“Frankly, I don’tI do not think about itit is a problem to be solved. There is no problem to fix.

“If something down the track emerges where people are doing the wrong thing, then we’ll focus on people doing the wrong thing, but we don’tno need for hammers to crack nuts.

The Shadow Minister for Financial Services has switched to a broker

The MP for Whitlam added that he “sees[s] value” at brokers, revealing that he had recently converted to the third-party channel after being a direct client for more than 20 years.

Asked why he changed channels and whether he would recommend the services of a mortgage broker, Mr Jones said: ‘Listen, I consider myself incredibly busy. II was a pick-and-stick guy. Ihad the same residential mortgage provider for over 20 years (I had a few different houses for 20 years, but the same provider), II have just returned to the paddock that I knew best…

“It’s after dealing with this stuff in the last Parliament – and seeing a lot of mortgage brokers come to me and talk about what they do – and I said, ‘II’ll give you a chance.’

“So I did, and I can absolutely guarantee that II’m paying less on my mortgage now, and probably will in the future, because I took that step and contacted a broker.

“So I see the value you bring and more strength to your arm. II am better off for this, as are millions of Australians,” Mr Jones said, noting that brokers are now the primary gateway for customers entering the residential mortgage market”.

“[Brokers] are, overwhelmingly now, the majority entry point for mainstream customers entering the mortgage market.

“Customers do good business. I can say from personal experience that clients get a good deal because they consult their credit counselor; their mortgage broker.

Shadow financial services minister says brokers will be increasingly important to mortgagers in future given rising expectations that interest rates will soon rise and noting that lenders have already started raising rates fixed and variable.

“What I want to see brokers focus on over the next couple of years…we want brokers to be 100% focused on ensuring everyone on their books has access to the mortgage at the best price at a time where we know mortgage rates are going to rise and the pressures on the cost of living are enormous,” Jones concluded.

You can listen to the full podcast interview with Shadow Financial Services Minister and Shadow Assistant Treasurer, Stephen Jones MP (Whitlam Member), at The counselor Podcast network, here.

[Related‘We are not going to change it’: Shadow minister for financial services on broker remuneration]

‘The broker’s price is passed on to the client’: Stephen Jones, MP



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Last update: February 23, 2022

Posted: February 23, 2022

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Annie Kane

Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian brokerage industry, the mortgage market, financial regulation, fintech and the wider lending landscape, Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser webcasts. Live.

Email Annie at: This email address is protected from spam. You need JavaScript enabled to view it.

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