Justice Kenneth Hayne’s findings into the Australian financial services sector were delivered in the final report on Monday, February 4.

The commission suggested the mortgage-broking industry should move to a fee-based model with the removal of upfront and trailing commissions for brokers.

Justice Hayne suggested a move from the existing model – where banks pay brokers’ fees – to a model where the borrower pays a fee.

Matt Knight says his business won’t be directly impacted but fears the most vulnerable buyers, such as first home buyers, will be funneled to the big four banks. 

“I guess the concern I have is that Commissioner Hayne brought down a set of recommendations to completely eliminate mortgage brokers’ trail income in a short space of time and to completely eliminate their upfront income as well, which will force them to fee for service,” he said. 

Most buyers don’t have the money to pay a separate mortgage broker fee and will go to the service without added fees.

“They’re going to have a choice between a free loan from one of the big four banks or paying three or four thousand dollars for a broker to set them up a loan.”

While they won’t pay a fee for a loan at a bank, Mr Knight was skeptical about the advice buyers will receive.

“They’re going to be told this is the best product for you, but they won’t actually know if that’s right or not and they could end up paying more interest,” he said.

In the 48 hours after the report was released, Mr Knight said some brokers he spoke to feared for their businesses’ future.

Some said they would be closing their business while others said they would fight the changes, he reported.

“I understand Commissioner Hayne found a couple of bad apples, but the reality was 80 per cent of complaints were about the banks’ behaviour,” Mr Knight said.