MORTGAGE CHOICE chief executive officer, Susan Mitchell, has welcomed the Federal Government’s decision today to maintain trail commissions on new loans and undertake a review in three years. 

In his statement today the Treasurer, Josh Frydenberg, said abolition of trail won’t proceed in 2020 because the government is concerned about the adverse effect on competition in mortgage lending market. He also conceded that abolishing trail would be “a free kick to the banks”.

The government will review trailing commissions in three years time, as well as the feasibility of continuing upfront commission payments. The review will be conducted by the Council of Financial Regulators and the Australian Competition and Consumer Commission (ACCC).

Treasurer Frydenberg acknowledged that mortgage brokers and small lenders are “absolutely critical in the mortgage lending market”. 

Ms Mitchell said, “I wholeheartedly support Treasurer Frydenberg’s announcement to maintain trail commissions. It is clear that abolishing trail would have an adverse effect on the home lending market and would be detrimental to competition.

"Australia’s 17,000 mortgage brokers will applaud the Government’s common sense decision to keep trail commissions. ASIC’s 2017 Review of Mortgage Broking Remuneration Report did not identify trail commissions as directly leading to poor consumer outcomes, nor recommend the removal of trail commissions.

“The figures speak for themselves. The latest data shows that 59.1 percent of home loans originate through the mortgage broking channel, yet Australian Financial Complaints Authority (AFCA) data for the month of November 2018 revealed that of 6,522 complaints against financial service providers,  only 29 related to mortgage brokers. This is less than half of one percent of reported complaints.

“Furthermore, brokers drive competition in the lending market. Proof of this can be seen in Mortgage Choice residential settlement figures, which show that in the past two years the big four banks have lost 10 percent of market share to smaller lenders.

“Maintaining competition in the mortgage industry is of the utmost importance to every borrower in Australia. Mortgage Choice brokers have been helping Australians realise their property ownership goals for 27 years.

"We believe that maintaining trail commission will ensure a strong mortgage broking industry and allow brokers to continue to guide Australian borrowers through what may be the most significant financial commitment of their lives - buying their home,” Ms Mitchell said. 

ends

THE Institute of Public Accountants (IPA), in partnership with publishing and media firm, Momentum Connect, has transformed its digital hub into a world class, multijurisdictional content platform.

In 2015, the IPA acquired its UK based peer, the Institute of Financial Accountants (IFA), creating the IPA Group which has become the largest SME focused accountancy organisation in the world.

In doing so the organisation vowed to introduce a raft of new communication mediums to engage with its members and prospective members, and the new digital platform forms a part of that pledge.

“We wanted a modular digital content platform that can stand the test of time, delivering a vast content range while enhancing user engagement,” says the IPA Group’s chief executive officer, Andrew Conway.

“The new site will deliver features from the IPA and IFA print magazines, local content and shared global content, on the basis of where a person is geographically located.

“When making content-related decisions, we will consider the needs and interests of our audiences. Our research shows that this goes beyond the day-to-day accounting profession.

“For example, we will put a special emphasis on articles exploring health and wellbeing, which we have previously recognised as a top priority for our readers in the small business community,” Mr Conway said.

Momentum Connect director, Phillip Tarrant, said that the new platform is fresh, exciting and in tune with the latest technological developments.

“The news industry is constantly evolving and we are following the trends. When it comes to content that is both engaging and interactive, you cannot ignore the digital space,” Mr Tarrant said.

“While the initial focus of the new platform is on Australia and the UK, we have designed and constructed it to grow with the addition of other jurisdictions that the IPA Group may expand to in the future.

“Besides keeping members and prospective members up to date on the latest news from the accounting industry, it will also offer engaging weekly blogs, features and a monthly podcast with industry professionals,” Mr Tarrant said. 

www.publicaccountant.com.au 

publicaccountants.org.au

ends

THE Federal Government should use next month’s Budget to advance policy commitments to help the financial services sector to get rid of old, substandard legacy products that do not benefit consumers, Financial Services Council CEO Sally Loane said today.

Ms Loane said the FSC had asked the government in its pre-Budget submission to deliver on a commitment to slash the red tape hindering the rationalisation of legacy products right across the financial services sector.

“Many FSC members have legacy products in managed investment schemes, life insurance, and superannuation,” Ms Loane said.  “The FSC has estimated there are at least 600 legacy structures, each of which may contain multiple products, disadvantaging an estimated 2.44 million consumers.

“Our members have modernised their products over time, but customers with older products cannot easily be transferred into newer products. This is for several reasons, including significant tax liabilities triggered by shutting down legacy products, and a ‘better off’ test that is complex and expensive to apply. We have offered solutions to these barriers in our submission.

“Product rationalisation was a recommendation of the Financial Services Inquiry in 2014, which the government accepted. The problems with legacy products were also highlighted this year by the Royal Commission and in the Productivity Commission’s (PC) inquiry into superannuation. The PC estimated about $160 billion in superannuation assets alone were in legacy products in 2017.

“Consumers should not be worse off due to any transition to a newer product and will most likely be substantially better off in modern products with lower fees, better customer service, and improved accessibility.

“The FSC believes a rationalisation scheme should involve a test to ensure a rollover is in the interest of consumers as a whole, and removal of any taxes on the rollover.”

In its Budget submission, the FSC is also continuing calls for the government to implement a zero rate of non-resident withholding tax on Asia Region Funds Passport payments.  This would bolster the success of Australia’s participation in the Funds Passport which started on February 1.

“The Funds Passport allows eligible managed funds to be marketed to retail investors in participating countries, however tax reform needs to take place to maximise its potential,” Ms Loane said.

“The Australian tax regime for managed funds is complicated, with high tax rates and many exemptions – creating the impression our funds are highly taxed even though a very small amount of revenue is raised from the funds. Addressing our complex, uncompetitive tax system will enable the Passport to promote the exports of Australian funds.”

The FSC pre-budget submission also calls on the Federal Government to:

• Negotiate a tax treaty with Luxembourg and Hong Kong; address any financial services issues in existing tax treaties; and ensure that all new Free Trade Agreements are accompanied by a tax treaty.
• Pursue a cut in the overall corporate tax rate to 25 percent, preferably to 22 percent. Prioritise meeting existing commitments to address outstanding Investment Manager Regime (IMR) issues, extend the attribution regime to Investor Directed Portfolio Services, and fix outstanding issues with the Taxation of Financial Arrangements.
• Abandon the proposal to remove the CGT discount at fund level and replace it with a measure targeted at any investors that are inappropriately accessing the CGT discount. If any unfavourable changes to the Offshore Banking Unit (OBU) regime occur, offset the adverse effect of this by abandoning the proposed change to the CGT discount at fund level and proposed changes to the AMIT penalty regime. 

The FSC’s 2019-20 Budget submission can be access here.

About the Financial Services Council

The Financial Services Council (FSC) has over 100 members representing Australia's retail and wholesale funds management businesses, superannuation funds, life insurers, financial advisory networks and licensed trustee companies. The industry is responsible for investing almost $3 trillion on behalf of more than 14.8 million Australians. The pool of funds under management is larger than Australia’s GDP and the capitalisation of the Australian Securities Exchange and is the fourth largest pool of managed funds in the world. The FSC promotes best practice for the financial services industry by setting mandatory Standards for its members and providing Guidance Notes to assist in operational efficiency.

ends

WOMEN on Boards (WOB) has welcomed the NSW Premier’s $120 million commitment to make before and after school care available to public primary schools by 2021.

The co-founders of Women on Boards, Claire Braund and Ruth Medd, said the commitment by Gladys Berejiklian over the weekend could be a game changer for women and a break-through in the thorny issue of closing the gender pay gap.

"This announcement by the Premier is significant and very welcome. Lack of before and after school care has been a major irritant for parents and carers - mothers in particular - for way too long," Ms Medd and Ms Braund said in a prepared statement.

“Many families have struggled with the 9am-3pm school hours and the lack of appropriate on-site childcare for even an hour or so either side of school drop off and pick up times.

“In most cases, something has to give - and usually it’s the women’s job that is either scaled back to part-time or given up entirely, with the consequent impact of reduced job prospects, fewer opportunities for promotion, lower pay and less retirement savings.”

The WOB duo said they, alongside the National Foundation for Australian Women, had been actively advocating for many years for more supportive before and after care services, including making submissions to the Productivity Commission and lobbying politicians.

They said such a policy would be a boon for struggling parents and economically significant for the state of NSW and women for many reasons:

• Boost worker numbers in a state with the lowest unemployment rate in Australia.

• Result in more hours in more senior roles worked by women - fueling economic growth and assisting to close the gender pay gap.

• Provide women and men with better and more secure job prospects while their children are at school.

• Deliver a more structured arrangement for care for children will reduce family anxiety and stress and increase well-being.

Ms Medd and Ms Braund said that, depending on its design and execution, the NSW Liberal policy commitment would enhance female workforce attachment at a time when there has been slight slow-down in women’s workforce participation.

“Labour force data shows women with dependent children tend to work part time until the youngest child has left primary school," the joint statement said. "This continues over their life span - in fact the rates of full-time work for Australian women have not increased at all in 40 years.  And for women of child rearing age it has declined slightly.

“In the meantime women continue to take an unequal load in caring duties - preventing them from returning full time to work until children are older; by which time their employment prospects are diminished relative to their peers; hence exacerbating gender pay gap into perpetuity.”
 
Ms Medd and Braund said the next major challenge was in the provision of appropriate support care for shift-workers or those working non-standard hours.

KEY FACTS

NSW Premier's $120million before and after school care plan could:

- Boost worker numbers in a state with the lowest unemployment rate in Australia.
- Result in more hours in more senior roles worked by women - fueling economic growth and assisting to close the gender pay gap.
- Provide women and men with better and more secure job prospects while their children are at school.
- Deliver a more structured arrangement for care for children will reduce family anxiety and stress and increase well-being.

About WOB

Women on Boards (WOB) has been working for more than 10 years to address gender inequity in the boardroom and across leadership roles. WOB is a recognised leader in the ecosystem of organisations and networks promoting and supporting women; dedicated to breaking down barriers to entry into leadership and onto boards. WOB has a track-record of success and is known for its strategic and practical events and programs. WOB's aim is to have 40 percent of these roles occupied by women by 2025. Targets are essential and quotas will sometimes be necessary to achieve WOB's goal. As strong advocates for women, WOB works across organisations and sectors and with government on a meaningful and strategic policy and cultural change agenda for gender equity.

ends