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A national survey conducted for the group found that 27 percent of people trusted bank tellers, 23 per cent trusted financial advisers and only 12 percent trusted mortgage brokers.
“These results indicate a lack of trust across the financial system but the finding about trust in mortgage brokers is particularly concerning,” CHOICE said in its second submission to the Murray Inquiry.
“As the interim report notes, ‘Vertical integration of mortgage broking may create conflicts of interest, which could hamper competition,’” CHOICE observed.
“CHOICE would add that conflicts of interest will also reduce quality of recommendations and service for consumers.
“The mortgage broking industry relies heavily on commission-based remuneration and as a result there is a high risk of conflicted remuneration influencing what a mortgage broker arranges for a consumer.”
The consumer group said further work is required to fully explore the impact of mortgage brokers’ remuneration and institutional arrangements on the services they offer.
National regulations for mortgage brokers were introduced relatively recently after a series of inquiries explored concerns with state-based regimes.
CHOICE believes it is an appropriate time to conduct a thorough review into how these arrangements are working for consumers and if more extensive rules about quality of recommendations and disclosure are required.