In less than three decades, mortgage brokers have gone from revolutionising how Australians get mortgages to being just another cog in the banking sector's machine.
At least that's the image that has been painted in the Productivity Commission's long-awaited report into competition in the nation's financial system.
The commission has found mortgage brokers in 2018 are not consistently providing customers with lower interest rates than they would get directly from lenders - despite many thinking they are.
That's a far cry from their debut down under in 1996, when offers of lower rates helped make them a "significant disrupter", the report says.
The report has largely attributed the change to the firms that often act as intermediaries between lenders and mortgages brokers - known as mortgage aggregators - increasingly being owned by the lenders themselves.
The changing ownership of Aussie Home Loans is a stark example.
The Commonwealth Bank acquired a 33 per cent stake in the business in 2008, before boosting its stake to 80 per cent in 2012 and then 100 per cent in 2017.
Lenders such as the Commonwealth Bank have snapped up parts or all of only a minority of aggregators, the commission's report found, but they happen to be the ones that account for a majority of loans.
The situation creates a conflict of interest as the aggregators owned by lenders could give brokers access to a disproportionately high number of their own products, even if they are otherwise branded.
"Lenders have natural incentives to favour their own products," the report said.
The report also found commissions through which mortgage brokers are paid are often "inconsistent with acting in a customer's best interest".
It has recommended abolishing trail commissions, which continue through the life of the loan, and restricting clawback commissions, which brokers sometimes need to pay lenders if a loan is repaid or refinanced within a certain time frame.
But it has stopped short of recommending customers pay for broker services outright, instead suggesting a "best interest" obligation for all credit licensees - be they a lender or a broker - in the home loan market.
"It is the bank as paymaster that triggers conflicts," the report said.
"So a best interest obligation must cover ADIs (authorised deposit taking Institutions), as well as brokers."
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