Commission truth: Up, stable... or down?

by Mackenzie McCarty13 Jul 2012

Leading industry heads of third party have told Australian Broker commissions are under pressure and have forecast exactly what and how they expect brokers to be paid over the next year and beyond.

Speaking with Australian Broker TV, Bankwest's head of specialist banking Ian Rakhit said that there was pressure from the board room on commissions.

"I think the environment at the moment is a very difficult one to see what the next 12 months looks like in terms of commission alone.

"We've seen tremendous pressures on funding prices, and I don't think I'll be alone in having pressure from the board room on what does that mean as far as broker incentives are concerned," he said.

However, Rakhit said while pressure continues, the bank would focus increasingly on rewarding quality applications - and this could even see brokers paid more.

"What I think will happen going forward is we will look at the quality of submission as being the real driver for commissions and incentives," Rakhit said.

"It makes philosophical sense that a broker who packages a deal correctly or costs me less in terms of processing time may well get rewarded better than a broker who passes an applicant in with no pay slips, no supporting documents, and costs me more in terms of processing time because we need to go back to the broker and the client for additional information."

Australian First Mortgage's Tanya White said broker incentives are in the spotlight.

"Commissions are under pressure as are our margins and our income. In the near future I don't see commissions dropping, but I certainly don't see them increasing either."

Want the full story? Click through to our exclusive Australian Broker TV report find out:

  • How banks are likely to pay commissions in the future
  • What lenders think of substituting a fee-for-service
  • Why heads of third party channels should be 'applauded'

View the exclusive multimedia interview online after 11am today, or wait for it to be delivered direct to your inbox today over lunch. 

Want to see more on this issue?

Two weeks ago, brokers and aggregators told Australian Broker exactly why they should be prioritising commission, and why they need to be 'profit mechanics'.

TV: Brokers switch lenders for bigger commissions

 

COMMENTS

  • by Country Broker 13/07/2012 10:01:25 AM

    OK why are some other banks and commentaors talking about possible increases due to market share concerns ? Is this CBA/ Bankwest spin , I am suspicious of this type of commentary to say the least.

  • by Garry 13/07/2012 10:29:20 AM

    Given the fact tah brokers do most of the work for the bank now in the electronic submissions and ordering valuations I feel its time the banks started to increase the commission rates. The argument of funding costs doenst hold much water any more given the fact the banks have dramatically increased their margins. The banks need brokers to deliver customers to them. I say its time to share the spoils a little more.

  • by David 13/07/2012 10:42:58 AM

    I agree with Country Broker and find it interesting that this is the first thing that Bankwest have to say about brokers after getting the green light to operate under CBA's banking license. Bankwest's track record for supporting the broker channel is pretty poor as it is and we all know what the CBA think.