Clawback research reveals reassuring results

by Adam Smith10 Apr 2012

Research has shown banks are by and large "doing the right thing" on clawbacks when broker clients re-negotiate or top up through branches.

AFG last year undertook extensive research into customer clawbacks, contacting 565 of its members' clients who had triggered clawbacks. General manager of sales and operations Mark Hewitt has told Australian Broker the research revealed some encouraging results.

"Reassuringly, the research showed that by and large lenders are doing the right thing with trail payments on the occasions when loans are re-negotiated or increased via branches. There were a few isolated cases where trail had stopped incorrectly but these appeared to be genuine human error and were quickly corrected when we highlighted the problem," Hewitt said.

Hewitt said the research also indicated simple steps brokers can take to avoid clawback situations.

"The major takeaway was, not surprisingly, that brokers who stayed in touch with their clients post-settlement through customer contact programs like SMART were far more likely to retain customers and be front of mind. A simple thing like obtaining a customer’s email address meant a broker is three-and-a-half times more likely to retain that customer's business," he said.

Clawbacks were rarely triggered through customer dissatisfaction, as the AFG research showed 82% of clients who discharged said they would use their broker again. Instead, Hewitt said the situations generally came down to a lack of communication from the broker.

"There are some cases where clawbacks simply can’t be avoided, but the ones that can be stopped are when the customer refinances early with another bank, either directly or via another broker. This is generally because the broker has not maintained contact with the customer, so I would strongly encourage broker to utilise the CRM and marketing offering provided by their aggregator, and if their aggregator does not offer anything comprehensive enough, shift to one that does," he said.

In spite of clawbacks sometimes being beyond the control of a broker, Hewitt still questioned the efficacy of writing clawback provisions into a finance broking contract.

"From a practical point of view, I think it would be difficult to actually enforce. From a reputational point of view I am not sure it would do great things for the broker," he said.

Related stories:

Clawback extension fears rise as Murphy's Law bites

FBC clawback clauses up to the test


  • by ozboy 10/04/2012 10:16:03 AM

    This is encouraging but why can't the lender notify the broker when they get a discharge notice either internal or external.

  • by Country Broker 10/04/2012 11:35:37 AM

    this is encouraging and theNAB are leading the way in keeping the brokers in the loop when an incraese is requested , the CBa have got better but need to improve , the Anz ARE POR IN THAT WE NEVER GET TOLD A THING , AND IF A CLEINT GOES TO A BRANCH AND WANT AN INCRAESE OF MORE THAN $50k THE BRANCH HOME LOAN LENDER KEEPS THE DEAL AS THEIRS AND WE GET CLAWED BACK .

  • by BrokerIQ 10/04/2012 11:55:05 AM

    Ozboy - why should lenders be advising the broker the customer has discharged? Is not in the broker's interest to have mechanisms in place ensuring the customer always get's their broker involved everytime they undertake a major transaction? If they don't then there's a serious gap between broker-customer relationship. Just saying.