One of the key recommendations of Kenneth Hayne’s royal commission was to abolish trail commissions for mortgage brokers, which would make a big hit to brokers’ income.

The Liberal Party was originally going to support this proposal for new loans but has since softened its position and plans to commission a review in three years’ time.

The Labor Party’s position is that lenders instead pay brokers a standardised upfront commission as a proportion of the loan amount.

A disruption to fees, which disincentivises mortgage brokers from staying in the market, would have a major impact on competition – meaning a misstep from either side of government could have a direct impact on consumers.

Federal Treasurer Josh Frydenberg fears a wrong move could drive business back to the big banks and wipe out competition.

“The reason is that mortgage brokers play an absolutely critical role in our economy and they help generate competition in that market, and we don’t want to see mortgage brokers put out of business with, effectively, their business just migrating to the big banks,” Mr. Frydenberg said in a town hall discussion on Thursday morning.

For more on how these proposals could impact your back pocket, tune in to the Nest Egg podcast.