The Royal Commission's recommendations concerning broker commissions could result in dire consequences that will ultimately fall on borrowers, some industry experts say.

The Royal Commission's recommendations concerning broker commissions could result in dire consequences that will ultimately fall on borrowers, some industry experts say.

Finance Brokers Association managing director Peter White said the ban on trail commissions could realistically result in interest rate hikes.

"This could force up-front commissions to rise in order to compensate for reduced revenues to brokerages, which in turn will lift interest rates and make housing affordability more difficult," he said.

White told News.com.au that rates could increase by as much as 20 basis points.

"The borrower doesn’t win from any of this. All it’s done is increase the cost of someone getting a house," he said.

The shift to the consumer-pays model is likely to lead to big banks amassing more power and therefore eliminating any competition, he said.

"It’s very disappointing that the royal commission wants to destroy some 20,000 small businesses for the monetary gain of the big banks, and we trust the government will see clearly on this and continue to work extensively with our industry to improve consumer outcomes," he said.

Two big banks — CBA and ANZ — have already pledged their support to brokers who, they said, are partners in the industry.

ANZ acting group executive Mark Hand said that while the bank supports the new broker “best interest ” duty and a better model for broker remuneration, changes should take place gradually and should involve careful consultation with all affected groups.

"We see brokers as integral to promoting competition and choice within the broader industry. If we work together, I’m confident we can create a better future for both brokers and our customers. ANZ is committed to the broking channel and we will work with you to help ensure the industry continues to serve Australian consumers within any new regulatory framework," he said.

In a previous report, Commonwealth Bank CEO Matt Comyn said the bank is prepared to charge borrowers a fee for taking out a loan to create a level playing field with brokers.

"I think it's really important that the broking industry is certainly not disadvantaged," he said.

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