“A strong, stable and well-functioning financial system is the lifeblood of the economy. It is important not to break the economy as policy makers set about fixing the banks,” warns Property Council chief Ken Morrison.
The Property Council has urged the Morrison Government “not to break the economy while fixing the banks” as it works through the response to Hayne royal commission into the banking and financial services industry.
The sweeping review of the Australian financial system will have far-reaching consequences for banking, financial advice, superannuation, insurance, remuneration and regulators.
Following seven rounds of public hearings over 68 days, attendance by more than 130 witnesses and 10,000-plus public submissions, the royal commission’s final report makes 76 recommendations – 75 of which have been accepted by the Morrison Government.
The Federal Opposition has announced its in principle support for all recommendations.
“Restoring trust, delivering better consumer outcomes, promoting competition and maintaining the flow of credit are rightfully at the centre of government’s response to the royal commission,” Property Council chief executive Ken Morrison says.
“On first blush, the government’s response seems to strike the right balance,” Morrison adds.
However, he cautions that care will be needed during the implementation of changes to mortgage brokers’ remuneration – one of the most significant structural shifts proposed.
Treasurer Josh Frydenberg has acknowledged “the importance of competition in the home lending sector and will proceed carefully and in stages” – a commitment welcomed by the Property Council.
“Mortgage brokers account for more than half of all home loans settled. They are a vitally-important source of advice and access to competitive finance for Australian property buyers,” Morrison explains.
“Abolishing trail commissions and the mooted shift to a ‘borrower pays’ model for broker commissions must be very carefully managed.
“The property industry will need to be consulted on the transitional arrangements, particularly given the current uncertain state of the residential property cycle.
Morrison says credit availability is also an “ongoing concern” for the property industry.
“Our members are telling us that credit is harder to get for qualified borrowers. This has the potential to cascade through the property pipeline and into the wider economy.
“While the royal commission report takes a somewhat sanguine view of credit supply, we’ll continue to monitor this very closely to ensure that implementation of the recommendations doesn’t pull the handbrake on our industry – directly or indirectly.”