Australian Broker forum is the place for positive industry interaction and welcomes your professional and informed opinion.

FBC clawback clauses up to the test

Notify me of new replies via email
Australian Broker | 21 Jun 2011, 07:30 AM Agree 0
Increasing numbers of broking businesses are successfully recouping lost fees from their clients by enforcing FBC clawback clauses
  • oldBroker | 21 Jun 2011, 12:04 PM Agree 0
    The absolute death of the broker market. The fact that there are deficiencies in the payment system between the broker and the lender should have no relevancy to the client. Some brokers justify this by saying "well, if it's a sickness or job transfer or something like that then we don't enforce it"... who cares? It's a clause within a contract that I have signed and therefore enforceable.
    I wonder how many potential clients these brokers listed above will lose due to winning their single judgements.
    If brokers want to solve the clawback issue then lobby the lenders and change their clawback policy, but making the client liable is suicide.
  • Melb Broker | 21 Jun 2011, 12:19 PM Agree 0
    If the broker is doing his/her job properly and looking after the client in a professional manner than clawbacks will not come into play. If the client is forced to look elsewhere for the financial requirements then the broker deserves to lose the money as they havent earnt it.
  • Marty | 21 Jun 2011, 12:21 PM Agree 0
    I have inserted a $1000 fee for loans clawed back into my FBC. I don't think it will be an issue for most clients. $1000 is recouping some $$ for my time and efforts while not making the clients pay all of my lost income. I think this is fair and reasonable. I don;t think a $10,000 fee or similar is warranted. Yes this is income forgone but commissions are effectively the profit sharing on a loan brought forward not a fee for service. If there is no profit why should the borrower pay is they way I see it.

    It will also weed out those clients who may not be fortcoming with their intentions.
  • Another Old Broker | 21 Jun 2011, 12:47 PM Agree 0
    There's a serious point being missed here. It's the value of a commission only service that is a key platform underlying the broker proposition. Advising clients you are going to charge them $$$ to offset a clawback if they payout a loan early destroys this key point of difference. If i was a borrower faced with this prospect, my first thought would be "see ya later Mr/Ms Broker, I'm off to the bank direct'.
  • countrybroker | 21 Jun 2011, 01:48 PM Agree 0
    What an issue , the banks are laughing behind our backs.
    Two issues here, I am all for a clawback refund from the client if the client has another broker churn the deal, and we need to specify a time period and circumstances CLEARLY within our contracts. Other than that I am not a fan.
    Second Point, clawbacks are entirley unnecessary if the bank's charge a rebatable application fee that is credited to the loan account after say 3 to 5 years , but if the client payout within the time period the application fess is lost , it will stop the need for clawbaek , our aggregators also need to ensure the contracts and agreements with the banks are enfored , I had cause to have a CBA claw back refunded after the client went into the local CBA branch asked for a loan increase and the branch lending staff told the client "no need to go back to the broker , he will get paid" I finally received a refund of the claw back after ny client signed a letter to the effect of what had occured. I still lost the loan. The CBA had breached the agreemment with my aggregator .

    Clawbacks are a mechanicsm for lazy bankers/ lenders who cannot be bothered to be innovative.
  • rural broker | 21 Jun 2011, 01:52 PM Agree 0
  • sidbroker | 21 Jun 2011, 02:36 PM Agree 0
    We need a decent and strong industry body that will stand up for the brokers. All our industry bodies do lately is engagre in reteric and grand standing. For my money they are worth zero.
  • QLDBroker | 29 Apr 2013, 03:37 PM Agree 0
    Please dont raise the issue of our Industry Bodies. First MFAA then FBAA caved to the lenders who now control us through our own bodies. Who is going to lobby themselves to take clawbacks away. Brokers introduce clients for the commission its why we care called Introducers. Requirement should be placed on lenders to PROVE that the client has been churned. Thats what Clawbacks are for.
  • Broker | 30 Apr 2013, 11:02 AM Agree 0
    I have a 100% clawback clause in my FBC and have for over 5 years now, I think I may have lost a deal or two ( perhaps 3K commission in total ) , but have recouped about 15K in the meantime. I have waived a % on occasions when I am writing a new loan for the same client , depending on the circumstances.

    Like all professions, I place a value on my time and expertise and I fully expect my clients to as well, if not they can go elsewhere, I’m ok with that too!
  • CharlieX | 08 Mar 2015, 04:09 PM Agree 0
    the rule is made by the lender, the broker can take the client to lender who has no clawback. if the client wants to go to a lender with clawback, then the client pays the clawback to the lender and leave the broker out. the real relationship is the lender and borrower. the lender just trying to get around the exit fee through the broker.
  • SEQ Broker | 10 Mar 2015, 10:55 AM Agree 0
    Clients should be liable for our service. A client walks into a lender direct and only gets the choice and advice relating to one lenders products. Our clients are put into far better proposition with less risk and better outcomes because of our knowledge and advice. Our expertise shouldn''t be free - not to a client and not for a lender. The clause in your contract if worded correctly does two things. Advises the client that there is a liability should they incur a claw back on your business and defines the scope of the monetary value that your experience deserves.
Post a reply