Brokers hold the key to trail payments: St George

by BN02 Apr 2009

St George Bank has sent out a lucid message to brokers - the future of trail payments is in their hands.

Speaking exclusively to Brokernews, St George's general manager for intermediary distribution, Steven Heavey, said trails would remain  part of the  makeup of broker remuneration in the immediate future, if brokers properly managed areas like portfolio arrears and runoffs.

"The industry really has to demonstrate that it can add value in that regard," he said.

He also used the opportunity to reiterate the bank's position on trail, saying the commission was paid to brokers in order for them to manage client relationships on an ongoing basis.

Speaking more broadly about commissions, Heavey revealed that he did not expect to make extra changes to the bank's current commission model, unless to simplify it, following "extremely positive" feedback from brokers.

"When we implemented the commission structure some time ago it was designed to achieve certain objectives. We have achieved those goals," he said.

"However brokers have said it can be a little complex and difficult to understand - so simplification will be the [next] focus."

St George brought its new commission structure to market in May last year, reducing up-front and trail commissions but allowing brokers to earn them back by meeting quality metrics.

As a final point, Heavey enforced St George's commitment to the third party distribution channel, saying the bank's limited branch footprint (outside of NSW) meant that brokers were 'very important' in the marketing mix to deliver service to its customers.

Related Stories:

St.George: Brokers will have to 'earn' extra commission

Two weeks notice: St.George pulls no deposit loans 

St George next to cut 100% loans

 

COMMENTS

  • by Broker 3/04/2009 10:34:29 PM

    I love their "Just trust us" trail commission model. The amount of my trail is dependent on St George telling me whether my customers are using their st George Freedom account.

    Give me a break! How are we going to keep them and the aggregator diligent about this?

  • by OzBoy 4/04/2009 1:51:43 PM

    "The industry really has to demonstrate that it can add value in that regard," he said. Another comment with no substance behind it. What does he mean by this. I get told the month after a loan is paid out and I am never advised when a client is in arrears, so not sure how I can add value or is this just a seed planted so that at same stage in the further St G can say "Well there is no value in paying trail so we are cutting it." I am only too happy to assist but lenders and aggregators need to give us the information and tools to add value. I would really like to see some of the journalists in this area to start drilling down a little more to get some substance behind these remarks.

  • by St George (read USELESS) 4/04/2009 2:09:52 PM

    St George has to demonstrate that they can add value to the home loan market by fixing up their ancient processing systems and not wasting everybody's time. How often do you get a request from a SG lender (for a 80% LVR and servicing ratio of 3x) asking about a credit card CRAA inquiry from 5 years ago. Only to find that it was just to buy them more time in delaying your approval.