Clawbacks are essential, says non-major

by Julia Corderoy06 Nov 2015
Reasonable clawbacks are essential for the viability of broker commissions, non-major bank Suncorp has said in response to claims that clawing back commission from brokers is “fundamentally not fair”. 

Earlier this week, the FBAA announced it would be taking a stand against “unreasonable” commission clawbacks after the major banks reported increased profits over the latest reporting season. 

Speaking to Australian Broker, the CEO of the FBAA, Peter White, said clawing back commissions from brokers is fundamentally not fair in most circumstances.

However, in response to White’s claims, Suncorp Bank’s head of intermediaries, Steve Degetto said reasonable clawbacks are an essential part of conducting business through the third party channel.

“Reasonable clawbacks are essential for the viability of broker commissions. Without reasonable clawback provisions, there could be challenges to maintaining upfront commissions as they are,” he commented to Australian Broker.

In a situation where a client has refinanced a loan shortly after settlement, according to Degetto, lenders are in fact sharing the cost with brokers.

“We recognise that brokers incur costs and devote time to introducing customers to a lender and have a best endeavours approach when they introduce their customers,” he commented to Australian Broker.

“Lenders also operate on this principle and incur their own costs to process the loan, as well as other third party costs such as valuations and settlement costs. It is reasonable to expect that brokers and lenders share the cost when a customer repays their loan shortly after settlement.”


  • by Mark 6/11/2015 8:40:33 AM

    To Steven, tell me this, would you go to work today and do a hard days work and on the 5th day of November 2017 all of a sudden have someone tell you that you have to pay back your day's wages from the 6th of November 2015? I don't think so! Clawbacks are wrong make no mistake.

  • by SouthBrisBroker 6/11/2015 8:41:01 AM

    What does the FBAA grandstand over an issue that only impacts 1% of the loans that I write? Surely they have better things to do or does Peter need more attention. Writing emails sounds like a school protest not a professional body. What rubbish.

  • by R Watson 6/11/2015 8:48:46 AM

    OF course the banks think it is fair to share the costs - but that is so they can maintain their world class profitability.

    What part of 'fair'requires that a broker do the work to deliver a customer to a bank and then be paid nothing if the bank fails to keep the customer? Where in this equation is the bank taking any risk at all? Where does the bank take responsibility for anything?

    Peter White is correct when he highlights the problem of clawbacks. The clawbackof payments does NOTHING to maintain the viability of the commission system. It is only about banks keeping their margin and pushing risk onto brokers.