A source pointed to under-the-radar comments by Mr Frydenberg in a speech this past week, where the treasurer said improving the financial system “must be achieved without inadvertently strengthening the position of incumbents or unduly restricting the flow of credit or other vital financial services that Australians need and the economy relies on.”
Assistant Treasurer Stuart Robert has also expressed support for the important role mortgage brokers play in intermediating credit to home buyers.
The government will give its initial response shortly after the report is received.
The mortgage broking industry has been on tenterhooks after the sector’s remuneration structure was exposed during the royal commission for incentivising poor behaviour and contributing to lower quality loans being written.
During the royal commission a letter from former Commonwealth Bank of Australia chief executive Ian Narev revealed the banks knew the structure which rewarded brokers who sold bigger loans was flawed but it was powerless to do anything.
Submissions made to the royal commission by the broking houses included extraordinary examples from brokers including fraud, forgery, assaults, sexual harassment, impersonation of customers and more.
Mr Frydenberg has strongly indicated that introducing new laws will not be the government’s preferred option, but rather tougher enforcement of existing laws by more aggressive regulators is part of the solution to penalise and deter misconduct against consumers.
The treasurer has taken particular note of commissioner Hayne’s interim findings that “much more often than not, the conduct now condemned was contrary to the law” and that misbehaviour was insufficiently punished or not punished at all.
Shadow treasurer Chris Bowen said this week that a Labor government will seek to carry out all the recommendations of the royal commission and both sides of politics will need a “very, very, very good reason” not to adopt any finding.
“Your default position should be if the royal commission recommends it, it shall be done,” Mr Bowen said on Tuesday.
He also hopes the final report due next week, and subsequent political policy responses, will ease a credit squeeze for home buyers and small business by giving the tetchy lenders more certainty about how responsible lending laws will operate and be enforced by regulators.
Mr Frydenberg said in his Tuesday speech that central to the government’s thinking in responding will be “restoring trust in the financial system by delivering better consumer outcomes, including in retirement.”
“This requires a culture of compliance and accountability, regulators that are fit for purpose and an acknowledgement by the sector that people must be put before profits,” Mr Frydenberg said at the Sydney Institute.
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