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ASIC sheds light on forthcoming commissions review

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Julia Corderoy | 09 Dec 2015, 08:00 AM Agree 0
Commissions are a form of conflicted remuneration, ASIC has said ahead of its forthcoming remuneration review, but the regulator insists it has no firm stance on commissions going into the review
  • Oscar Hvala | 09 Dec 2015, 08:49 AM Agree 0
    No preconceived ideas about commissions? Seems like an oxymoron when the very first sentence in this clip has said that ASIC believes commissions are a form of conflicted remuneration! Anyway, let them complete their review and due diligence and see what transpires from this.
  • daryn | 09 Dec 2015, 10:04 AM Agree 0
    How about we change the wording from commission to brokerage? I think that would sit better in the industry. Would the regulators still feel "brokerage" is a "form of conflicted remuneration"? It seems stockbrokers are not being investigated for charging their clients brokerage whilst finance brokers are being investigated for receiving brokerage from the bank.
  • hmmm... | 09 Dec 2015, 10:07 AM Agree 0
    Exactly what Oscar said....a review that the big 4 wanted - behind the scenes - to drive down commission rates even further; and make the independents obsolete.
  • Broker | 09 Dec 2015, 10:09 AM Agree 0
    Spoken on behalf of the big 4.
  • Paul Modest | 09 Dec 2015, 10:25 AM Agree 0
    I am concerned that this is a make work exercise by ASIC. It appears to have become a crime for self employed individuals in the finance sector to be rewarded for risk. Meanwhile union officials are plundering member's funds and bogus training organisations are saddling people with massive debt for useless qualifications all funded by the govt.
  • QEDRisk | 09 Dec 2015, 11:10 AM Agree 0
    Of course commissions are a form of conflicted remuneration. Every single broking transaction involves a conflict of interest in that lenders pay different rates of commission.

    But what ASIC needs to acknowledge when making sweeping statements like this - statements that carry with them a very negative connotation, intended or not - is that the Credit Act itself ACKNOWLEDGES that conflicts of interest are simply a part of doing business. The law says that we must have mechanisms in place to ensure that a consumer is not DISADVANTAGED by the existence of a conflict of interest.

    We have that - they're called disclosure documents!!

    We get paid some commission now and some commission later. The bit we get paid later is our reward for having placed the consumer in a loan that worked well for them and they therefore stuck with it.
  • MCC | 09 Dec 2015, 11:20 AM Agree 0
    Well rather than work against ASIC in this process, I would propose the following. Aggregators / MFAA / FBAA approach ASIC with the proposal that self nominated "brokers" take part in showing how the current commission remuneration structure works on "live cases". As an example that can follow the path of a simple audit, or if that were perceived to be too threatening, then it could be a workshop presentation with stakeholders present & again tracking the loan process from start to finish - explaining the full broker value proposition, the fact finding, how the clients objectives are explored & a range of "not unsuitable" products are offered, culminating in a decision being made - which is in fact not based on the commission remuneration structure at all!!! I am more than happy to put myself at the disposal of ASIC's scrutiny & I'm sure other brokers will do likewise - after all "Education is the Key to Enlightenment".
  • Stephen Dinte | 09 Dec 2015, 11:30 AM Agree 0
    I can't help but think that there is a misguided perception within ASIC that consumers (read borrowers) are suffering from "poor outcomes".

    If this is true, I would really welcome an opportunity to review the data that purports to show this.
    Are there some brokers in this country who are more focussed on the rate of commission that they will earn rather than doing what is best for the client? Most probably there is.

    That being the case, what is the percentage of brokers like that compared to what I firmly believe is the vast majority of brokers who are very much client focussed, and who put the interests of their clients front and centre.
    Does that mean we need to change a system that from my perspective works really well simply because of a few bad apples?

    Seems we would be throwing out the baby with the bath water.

    I hope our associations will become very much involved in this conversation and work to show ASIC that professional brokers are just that - Professional.
  • Papery | 09 Dec 2015, 12:19 PM Agree 0
    Perhaps CSOL etc also need to weigh in with the real data that tells how many client disputes/complaints have been lodged in respect of Brokers that were centred around how unhappy the clients were with the product placement because of commissions. ASIC could go a step further & review the data concerning clawbacks also.
  • Broke Broker | 09 Dec 2015, 01:39 PM Agree 0
    And what is 'conflicted' remuneration actually mean ASIC if you don't have any pre-conceived ideas - garbage. So perhaps why not look at the Real Estate Industry or any Sales industry for that matter. Appears the Big 4 influence is shining through to reduce our commissions- Ultimately. If it's not broken, why does it need to be Fixed? Only thing broken is clawbacks which interestingly ASIC is likely NOT to address ! Let's see who is 'conflicted' ASIC....
  • mac | 09 Dec 2015, 03:06 PM Agree 0
    Will ASIC consider commissions could actually increase consumer outcomes? What about emails answered bt said brokers at all hours, appointments at 9 pm, hand holding through the process on weekends etc etc all at NO extra cost to the consumer? Not possible without the commissions.

    The twisted rationale is all consumers should be on the cheaper rates and as brokers cant offer UBank et al consumers must therefore be getting bad outcomes. So their solution will be to cut commissions to lower overall costs of origination and consumers win with all round lower rates. Then RBA says hang on rates are too low we will increase the cash rate. Lenders respond by increasing their rates. Consumer looses again!

  • GC | 09 Dec 2015, 03:09 PM Agree 0
    If our actions are causing concerns for "consumers" then why is our market share growing? Businesses usually grow due to the good outcomes for the consumer. The banks are well aware of this issue as their market share is dramatically shrinking due to the inability of their staff. To state commissions could somehow be conflicted is just another idiotic statement from ASIC. Will this group continue to go down this route of disparaging the Broker industry? They have constantly come out with nothing but dribble against the industry and have yet to prove ay of these absurd statements....and "conflicted commissions" is yet another one. Where is the MFAA and FBAA in all of this? They really seem to be doing their usual - - nothing....
  • Dave Robinson | 09 Dec 2015, 05:33 PM Agree 0
    Yes pretty much agree with all the comments however if WE rely on Aggregators / MFAA / FBAA to put a case forward on our behalf we may regret it. First I think it would be hard to get all of these "people" to agree on what should be said to ASIC, so the chances are that we will have up to around 10 different arguments put forward. What we really need is for "a broker (by that I mean a loan writer who has their own ACL)" to put forward their "story" on exactly how commissions work in the "real world" explaining clawbacks, work involved in NCCP, CPD activities, client "stealing" (couldn't think of a better word :-)) and why we are paid the ongoing trail. Any volunteers?
  • Broker | 09 Dec 2015, 05:59 PM Agree 0
    The clueless and farcically inaccurate commentary that comes out of ASIC in relation to our industry is an utter disgrace, this mob continue to demonstrate that they have as much creditability as A Current Affair, more likely less.
    It is blatantly obvious that this is a bank driven agenda and for ASIC to dress it up as something else is just pathetic.
    ASIC need to get out of their offices and conduct some real research with real people (perhaps the 55+ plus % of borrowers that support our industry would be a good starting point), and work with factual information, not the fanciful crap they simply invent.
    Borrowers don’t care what lenders pay us – but obviously ASIC will do what they’re told by these lenders, and do whatever they possible can to trash talk this industry.
    To our Aggregators, the MFAA and FBAA , if I employed you I would sack the lot you – as you add zero value to the commission cut / annual fees that you extort from us.
    This industry is about 25 years old and is operating just fine, according to everyone except ASIC, why?
  • Looking at facts | 09 Dec 2015, 08:23 PM Agree 0
    Will they assess whether clawbacks are fair too?? These were designed for churning, but have been conveniently extended to all repayments for all circumstances.
  • Submitting another comment | 09 Dec 2015, 08:34 PM Agree 0
    I have loans with 13 lenders.

    We are not selling a commodity otherwise computers and robots could take over and we could check in from the Maldives over a moonlit dinner.

    If anything, ASIC should liberate commissions and encourage competition as we disclose anyway.

  • Broker | 10 Dec 2015, 11:22 AM Agree 0
    ASIC released a 143 page report on the finance and mortgage Broker Industry, way back in 2003.

    This report covered varying commission levels that have since decreased big time, so why the need to conduct another investigation , (a) because the big 4 told us to so the can reduce commissions even further, or (b) because we have nothing better to do - and we like to bag Brokers?
    http://download.asic.gov.au/media/1337558/Finance_mortgagebrokers_report.pdf?_ga=1.77067029.1012904817.1439715861
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