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“Let’s not blame the brokers”: Medcraft

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Miklos Bolza | 20 Mar 2017, 08:25 AM Agree 0
The ASIC chairman has defended the broking community after the regulator proposed changes to the industry’s remuneration structure
  • Broker | 20 Mar 2017, 11:19 AM Agree 1
    "Perhaps, rather than paying on amount, you’re paying on things like LVR or risk.” ( meaning this would save the banks money - as full commissions probably maintained for 50% LVR deals , and then gradually clipped all the way up to 95% deals)

    Now I'm getting somewhat confused , such positive commentary from the head of ASIC , but I cant see how payments linked to LVR and risk would work or be a fair outcome.

    Are we going to end up with a commission schedule that resembles an LMI matrix?
  • Concerned Broker | 21 Mar 2017, 10:18 AM Agree 1
    I have grave concerns about not paying based on loan amount. Not suggesting for one minute that a broker should push for higher loan amounts to get a higher commission, BUT if commission is based on LVR for example, would the commission rates be increased annually to reflect CPI at least? Imagine if commission rates stay the same, Broker's profit would slowly decrease at the expense of Lender's profits increasing. At the moment the increased loan amounts based on property value increases over time ensures our income keeps up with CPI. Commission rates haven't changed for years and have actually decreased over time. Just something to consider!
  • PJ Patterson - IFBF Chairman | 22 Mar 2017, 11:14 AM Agree 1
    I'm very pleased that ASIC has explicitly noted that it's the 'Lenders' who ultimately make the decision on lending and NOT Brokers. I also find it curious that no one is really asking WHY the broker channel originates higher value loans! I might speculate that the broker channel (as a pure sales channel) is hungrier to sniff out the higher value loans. Maybe due to our strong referral networks we get to these high value loans before they walk into a bank? But I suspect there is a reason. One thing that is disappointing is that a government body is once again interfering in the free market. Lenders compete for broker business by offering market rate remuneration and for all intents and purposes lenders offer roughly the same comms give or take 10 bps. But it is rarely about rate and more often about policy, turn around and interest rate than the commission they pay. As a libertarian I say to ASIC don't meddle with the free market. If you are concerned about high LVR, Interest Only loans and the lenders that are making these loans, then focus on whether the lenders conduct is 'appropriate'. I certainly think there is merit in further capital requirements and other measures for those lenders to insure our banking system is sound.
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