The commission’s final report was handed down on Monday and it included a radical shake-up of the brokering industry which arranges more than 50 per cent of all new home loans.

It suggested that the borrower not the lender should pay the mortgage broker fees; that brokers should be subject to and regulated by the same laws as financial advisers; and that mortgage brokers must act in the best interests of the intending borrower.

Mitchell Co-op Home Loans’ Mr Lindsay blamed the banks’ bad behaviour for this week’s tough recommendations.

“The mortgage brokers have become a bit of a scapegoat,” he said.

“It’s the banks that have been doing the wrong thing.”

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The banking royal commission final report at a glance

Mr Lindsay said he feared that if consumers were forced to pay for a broker’s service that they would stop using them.

“Ninety-six per cent of clients will not like to do a fee for service, they’ll walk straight into a bank,” he said.

“It’s reducing competition and consumers will end up paying more.”

FrontRunner Finance Solutions owner Laurie Parkes has also been left shocked by the recommendations.

He said the changes would lead to less competition, interest rates being driven up and it would also hand more power back to the big banks.

“The banks will go back to the bad old days of charging people what they want,” he said.

Mr Parkes said people would not pay a “couple of thousand dollars” for a broker’s services when they could “get it done in a bank for free”.

“We’ve got 20,000 mortgage brokers in Australia and ancillary staff … all of those people are going to be without employment,” he said.

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Mr Lindsay said if the reforms were adopted by the federal government, customers would not have such easy access to loans from smaller institutions if they did not use a mortgage broker.

“Smaller banks have been able to get their products out through mortgage brokers because they’ve got no branches in Bathurst,” he said.