Aggregators have welcomed moves from NAB Broker to remove differences between its '4 Star' brokers and its other broker segments, labelling it a "positive step" from the lender.
National Mortgage Brokers managing director Gerald Foley said the move was a positive one for brokers as well as businesses that need to manage commissions.
Foley said the expansion of 95% LVRs beyond 4-star brokers was as noteworthy as commission increases, which will mean 65 basis points upfront for all brokers from 1 January.
"It's very positive from a broker level that they have taken away the disparities" Foley said.
"It's always been odd when there were two brokers in one office sitting next door to each other, one is able to offer 90% [LVR] because the customer walks in the left door, but if they walk through the right door they were offered a different proposition. This way, the client is not disadvantaged."
Connective principal Mark Haron also welcomed the commission and policy change.
"From a Homeside perspective it is an excellent development, not just the commission increase but also the change to that negative segmentation process," Haron said. "It's obviously a sign that Homeside intends to develop more business."
Haron said Connective brokers would see the full benefits of the commission move. "The main thing is that brokers will see 100% flow through of the commission increase; this increase will go straight through to the broker, so it's terrific for them," he said.
However, Haron said although the Homeside changes are welcome news for the broker channel, the bank has still not brought its own NAB products into total alignment.
Haron said unlike other banks in the market, brokers are unable to compete by recommending NAB products that are available direct to customers through branches.
"While it's great from a Homeside perspective, the NAB side of things is still lagging," he said.
Foley said NAB's initiative was likely more about the group's desire to realign its own busienss than a commission increase made due to an ultra-competitive lending environment.
"I think at the moment that commissions are steady as she goes," Foley said.
"This is a recognition from NAB that 4-star brokers are already giving as much as they can, and they won't see much of an uplift there. There are other very good brokers that don't hold a 4-star rating, and now they can get some of the same benefits as 4 star brokers," he said.
Haron said commissions are another lever banks will use to try and get more business on top of interest rates and product pricing, and that NAB's move was an application of that.
Following the segmentation change, Haron also said banks had not envisaged the amount of work and effort that would be required to manage the segmentation process.
"It will no doubt take pressure off them having to manage issues pertaining to how star ratings were determined," he said.
Haron said for example, brokers had at at times been marked down as a result of a conversion where the bank had been the cause of the loan file not settling.
Foley welcomed the fact that the changes would take a level of complexity out of commission validation for aggregators.
"We pride ourselves on accurate reporting and processing of commissions, and when lenders make what could be simple more complex, it adds another layer of time to what is required.
"Brokers like simplicity, so hopefully others will follow when they next review their commissions upwards, in not making things more complicated," he said.
Advantedge general manager of broker platforms Steve Weston welcomed the NAB changes.
“It's a very positive move undoubtedly. We are now seeing credit growth slowing, and brokers are becoming more attractive to lenders than maybe they have been in the years following the GFC.”
NAB Broker revamps commission carrot