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AFG shuts down commission fears

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Julia Corderoy | 09 Jun 2016, 08:41 AM Agree 1
AFG has revealed extensive data to ASIC and brokers that shut down claims mortgage broker commissions are a form of conflicted remuneration
  • ASIC Do The Math | 09 Jun 2016, 09:15 AM Agree 0
    Why no mention of the % of business sent to each lender highest and lowest. $4.56 a week, 200 loans, 52 weeks = $47,528 in a 12 month period, over a 7 year average run time = $332,696?
    • Paul NQ | 09 Jun 2016, 09:40 AM Agree 2
      Who on Earth is doing 200 loans per year and where did you get your average run time from, it's about half that? Talk about pie in the sky figures. Your knowledge of the industry appears extremely poor.
    • AwesomeAlbert | 09 Jun 2016, 04:17 PM Agree 3
      Sorry ASIC Do the Math - Did you read the article?
      The average difference is $2.10 per week - The $4.56 per week is the maximum difference.
      I write closer to 50 loans which according to industry reports is about twice the average. So the average broker who write closer to 26 loans per year would get and extra $2,839 per year extra. Which is the revenue generated by just one referral from a happy client.
      Sorry but for me a client who is happy, has the right product at the best rate I can negotiate is still worth more than any tiny differences in commission.
    • Reality Check | 08 Jul 2016, 11:19 AM Agree 0
      ROFL - if you were writing 200 loans per week, you'd be dead in a fortnight anyways.....
  • Tana X | 09 Jun 2016, 09:16 AM Agree 1
    Well done!
  • Broker | 09 Jun 2016, 09:46 AM Agree 4
    A broker looks for the most suitable loan for the client, the primary (but not only) factors are rate, fees and and overall customer experience. When a broker gets this right, they will receive referrals from their existing client base.

    And I can assure you that these referrals are far more valuable than $4.57 per week.

    Personally I would be happy to have upfronts and trails standardised for all lenders and then be done with the debate.
  • Sa Broker | 09 Jun 2016, 09:50 AM Agree 0
    These comments and justification of commissions just come across as defensive. ASIC are only doing a fact find and as long as it is found that the customer is not disadvantaged, there will be no problem. Worry about the banks and commission rather than the government.
  • Brenton | 09 Jun 2016, 09:54 AM Agree 1
    They actually have given this data to ASIC. Ironically ANZ which is the lowest payer on the entire panel has the majority of the business. And Macquarie who is the highest payer on the panel is well below the bottom half in the panel for its quantity of business.
    • Adam West | 09 Jun 2016, 10:34 AM Agree 1
      Yeah ANZ have always been the most consistent when it comes to turn around times, but they also have the lowest customer satisfaction rating of the big 4 banks, which is always something to kep in mind when making a reccomendation to a client as this can reflect on you.

      Like Broker said, I'd rather see commission rates standardised across the whole industry as it has absolutely no bearing on where I send a client.
  • Aydn O'Neill | 09 Jun 2016, 10:08 AM Agree 0
    I think it is fair to say ASIC is already doing the math, based on the current review being undertaken. Because I'm part of the industry and have been so for the last 10 years, it's hard for me to fathom some people out there think that every Broker is a shark and cannot be trusted or are in some way trying to cheat people out of money based on the scruples of a few (I would suggest in the minority based on the number of people utilising the services of a Broker). Right or wrong I did read an article this week that stated that one of our highest paying majors was getting the lowest portion of Brokers business and one of our lowest was getting the highest. What I can say for sure is that not once have I looked at a Commission PDS and decided that my client had to go to the lender that was paying me the most. I'm also quite confident in the belief that the vast majority of Brokers are working to get the best outcome for their clients. As for writing 200 loans a year and retaining all of them for 7 years. It is quite clear that you don't have a real understanding of what it takes to write the initial business, but be there and help the client/s whenever they need to discuss or do something with their finance in future. The transaction does not finish until the loan is paid out in my books. The great thing about our industry is the clients get to choose with whom they deal. No one is holding a gun to their head. Bank or Broker, the choice is always theirs. It would appear based on the number of clients utilising Brokers its fair to say we must be doing some thing right, regardless of the ceaseless campaign of a few to hold us in a bad light. To everyone, have a great day and keep on keeping on :)
  • Adam West | 09 Jun 2016, 10:20 AM Agree 0
    Well said by Mark Hewitt, one thing that was extremely disappointing to see was The Adviser sending out direct marketing to all subscribers this week about Prospa offering double commissions for all loans written before June 30

    Stupid and irresponsible by both parties given the review that is under way.
  • | 09 Jun 2016, 10:39 AM Agree 1
    Hi Sa Broker I don't think they sound defensive I think they sound like people who are passionate about what they do and wish to convey support for the message AFG have delivered. Just my humble opinion.
  • BJ | 09 Jun 2016, 11:37 AM Agree 0
    Do the math no argument

    Try doing the same at 50% volume and duration 5 years. The numbers remain significant and if we are to debunk the issue of conflicted remuneration, we need a coherent argument from zero self interest. However, the reality remains, we have issues both of fact and perception which will not be resolved by arguing the nonsensical self interest position.
  • Nicole | 09 Jun 2016, 01:00 PM Agree 1
    Thank you AFG for providing what was a very comprehensive, non bias presentation on lenders and commissions. The information was very insightful and was great to see the difference of volumes to commission paid as well as the minimal weekly benefit. This made me feel more confident about what the outcome will be of this review. If this enquiry results in remuneration to be equal for every one of us then this has to be a great thing for our industry. Am proud to be part of an aggregator that has been proactive with this topical and very relevant issue.
  • SanityPrevails | 09 Jun 2016, 02:53 PM Agree 0
    Thank goodness someone is standing up for the industry. Where are the bank owned aggregators? Where are Connective? Where is Aussie John? AFG clearly is investing/spending real money into the protection of the industry (and yes, their interests also) but the silence from others is deafening. There has been minimal, if any, commentary from the lenders regarding the value broker introduced business brings as well as percentages of "new to Bank" customers, for some its 70%. its time for others to join in rather than cash in on AFGs industry leading work.
  • Denise L Brailey | 09 Jun 2016, 02:56 PM Agree 0
    The correct focus of the people has been laid squarely on the perpetrators of the Loan Approvals. Banks lowered their lending standards not the Brokers or sellers. In any case our files show 51% of all loans were written and submitted by the bank managers as "sellers of product." the same issues of concern are across the entire general public. Sellers have been set up by the lenders by way of a secret service calculator which was actually engineered as an 'amortization' calculator which the sellers have to use as a compulsory tool to project next years income. Problem being: the borrower clientele did not know this and nor were they given copies by the Lenders. That is why the flak and why the crescendo of calls for a Royal Commission into the Banks.......................not the sellers.

    No doubt the sellers will become prime witnesses for the prosecution. The Industry Captains can deny this as fact. The focus on a Royal Commission is purely driven by the facts contained in the files of some one million borrowers. the loans were engineered to only last 5 years or less. This caused a claw back panic. The sellers and borrowers were kept in the dark. Now the light is about to shine and that's when truth bubbles to the surface. Why were those documents hidden for so long by Lenders? That's the big question.
  • Marty McDonald | 17 Jun 2016, 05:02 PM Agree 1
    Denise..incomprehensible again. One thing is clear you believe it's a massive conspiracy. I bet you don't believe in the moon landing either.
  • brokers help people banks dont | 18 Aug 2016, 10:57 AM Agree 0
    200 loans a year? LOL I wish I was writing 200 loans a year.

    Buddy if you are writing 200 loans a year I assure you $47k will not entice you to go to a particular bank. In fact in order to do 200 loans you need some pretty good turn around times which would mean you use the big banks which don't pay the most.

    Whoever you are, you are an idiot.
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