Poll: Will commissions for brokers eventually be banned?

The government regulates the financial planning industry the way they do because the industry has form in the area of commission-driven decisions detrimental to consumers.

This is not a major issue for our industry and the MFAA has and is making sure the government is informed of the reality of the situation. Left to their own devices and absent lobbying form the association, the govt. would have delivered an NCCP Act a lot closer to the administrative nightmare faced by planners than what we ultimately received.

It was not luck that they did not.

There's no reason to think that the same approach of combating knee jerk tendencies with facts won't keep things on a sensible footing again.

Of course, running around like chooks with their heads cut off looking for conspiracies is an option as well.

Diploma in Financial Services = MFAA
You are a "Finance Professional" once you get your diploma by 30th June!(even though it isnt a regulators requirement) -Quote MFAA
The Diploma in Financial Services must be completed by our members or we will not recognise there membership - Quote MFAA
Upfronts will be stopped = Quote MFAA
Who came to the Media with the story of Banks stopping the Upfronts = MFAA
Does anyone else see the bigger picture here??

It astounds me that stories like this are continually published. I think it's time for our industry body to stand up and be counted or risk losing further ground with the brokers they are paid by to help. If the governement are looking down this path, the question would have to be asked, Why??? The current third party system in place is clearly working for the benefit of the clients, the banks and the mortgage professionals who utilise it. We should not be painted in the same colour as Financial Advisors or compared with their industry in anyway. We need some good leadership with regard to these rumors and to make sure any further reporting that is completed is unbiased and not trying to find a scoop by scaremongering. I suppose some people just like kicking a dead horse. If you want to publish something, get creative and publish something to help the industry and not hinder it.

Who in their right mind to even propose this? Who is/are these individuals making such decisions? No one is naive enough not to see the forthcoming outcome - politically and professionally. Wether there are any truth to this or not, this is such a lame political agenda. Like others say, if the banks have the majority of the market share, what will the body industry such as MFAA will they represent? brokers? who/what brokers? what would be left of it?

Unlike financial planning where the fee is directly deducted from portfolio income, the broker fee does not provide any negative to the borrower. Their rate & fees are the same whether the loan is broker or bank initiated. Perhaps the fee could be redirected to the greatest treasurer in the world.

Ken Bruns is right on the money, so to speak, the big four have for years been slowly chipping away at the broker business so complete control, hence cost control is all theirs. Fee for service dilutes the benefits of having a broker source the best option for a home loan and again is only assisting the big four to control the industry. With internet savy borrowers coming to the fore, fee for service brokers will also have a life span, not a career. A fee free service to the client is the only long term model I can see working and substaining the long term future of the industry. With only a few more years in the industry my only true concern is for the public, we offer a great service, not only to our own clients but we assist in keeping the big four a little more honest.

The MFAA will simply do as they are told by the banks. The banks and brokers alike also need to remember that brokers control over 40% of where the banks clients come from. We decide where the business is sent. It would be absolutely absurd for the bank to roll over on the brokers and they will suffer deeply for it through lost opportunity.

Banning Commissions on Brokers will not make the product offering or rates any cheaper than to those being offered at the branch... If anything it will add cost to the individual to source independent advice where brokers compare many products and lenders and banks just sell their own suites.
So I dont understand the logic of banning commission for brokers at all? If anything it reduces competition and puts the banks it a better position to price gouge the customers...

With regards to your comments Old Broker! My clients are also happy that they have got the best rate, which they have. I for one as probably all Commission only brokers act on behalf of the client and not the bank. My clients are even happier at the barbeque when they bump into your clients that have paid a fee for the same service! Even if there are brokers that simply go to the lender that is paying more commission then they are only getting an extra pint of beer more, as the lenders are paying roughly the same commissions across the board. With regards to clawback I don’t get many as my clients know they can come back to me with NO charge and let me help them again.

This is getting more ridiculous by the day and if there was ever a more opportune time for the MFAA to come out display some leadership, it is now, but I won’t be holding my breath.

This will kill the industry stone cold. We will have a lot of over qualified (diploma by end of June) people on the dole. And will spell an end to the MFAA (Mortgage Finance Accepts Anything) as we know it today.

Having been in this industry for quite some time, i am not ashamed to say i am a fee for service broker, I do not ask the banks for an upfront allowing me to shop for the best rate for my client. All i ask with my upfront fee is for 50% on engagement and 50% at settlement. Now call me silly if my upfront equates to the same as my fee for service yet my client has paid upfront , should anything happen in the front 2 years it stops the bank from clawing back anything from me as i did not get an upfront from them. My client is happy because they got the best rate possible and i have done the best job possible for them, i am happy as i have been paid for the work that i have done and the bank well.... They have been left wondering why they cant claw anything back when they attempt to poach my client...

If what is reported has once ounce of truth in it, then the MFAA should immediatly have the ''rumour'' put to bed. My only problem with that is, what the MFAA do and say are two different things !!

Can the banks please remember that the reason brokers have been paid commission is it's cheaper to source the loan via a 3rd party than through the Bank network. Also noting bank banches and Lending staff receive commissions....will this be effected also? Ken is right on the money here.

Investment Advisors control clients' money and can make poor decisions when commissions influence their investment advice. The industry has form going back many years and the reason the regulators are making changes is because of a poor track record and well documented and publicised disastrous outcomes in recent times for consumers who have trusted them. Mortgage Brokers can also make poor decisions but we don't control the client's money and the difference in commissions available in our industry would not be significant enough to be the main cause of bad advice. Most of the 'bad eggs' in the mortgage broking industry are shonks passing through who will now have a harder time getting established. There are also part timers crossing into mortgage broking from other industries (real estate etc) who seem to be operating at the edges of respectability but the regulators should be able to identify them and remove them. The industry needs to increase its vigilance against the shonks rather than focussing on making the already good people even better. Commissions are essential for this industry to remain viable for brokers and affordable for clients. Brokers are still the major factor creating competition in the market and without us the consumers will be far worse off.

Not while I'm a broker. Why would I want a job where I and everyone I work with is not paid for their results. If I wanted that there are plenty of other career options available.

I can't see any lender or agregator wanting to pay all loanwiters a salary... That is just too funny. We are paid to get the job done what could be fairer than comission?

When faced with information like this I'm reminded of the the question all good invetigators ask. Who profits?
Who would profit if commissions were declared illegal? Think about it. Would the smaller lenders and the banks who have no branch networks profit...No? who then? Ah now you have it, the big four. The smaller lenders who rely on brokers would undoubtedly suffer but the big four would do very well increasing their market share and taking a strangle hold on the overall lending scene.
Any body with a brain can see that this would ultimately be an excersise in helping the big four get rid of us pesky brokers and the other lenders we support.
This needs to be fought on the basis that it will thin the market and give the consumers less choice NOT more.

I am certain that the banks will be loving this sort of speculation. Wouldn't they love not to have to pay us trail commission or any commission for that fact. If the MFAA were truly representing the brokers and not the banks they would stop this scare mongering, an put the banks on notice if this happened it would be at their peril. Also our agrigators should stop pushing this fee for service, as it will give the banks more amunition to reduce our commissions.

How do these people making the rules expect us to earn a living, why do we allow people that do not actually work for a living as a mortgage broker and do not know what our clients are like or want, dictate how to run our industry? Do they really think that the everyday Mr & Mrs Smith will pay or can afford to pay brokers a fee! It all sounds good whilst there sat in their office on a 6 figure salary making the rules, but in reality it WILL NOT work. What will happen is the big brokers will say yes we can do it, all the small brokers will have to leave the industry and then the big brokers will say no it doesn’t work and lobby to change back. Considering half the banks own the larger brokers, they can afford to lose money.

Wow, stern stuff, "a close watch"! That's like laying on the lounge cheering for your footy team - it won't change the outcome. How about getting out in the middle and declaring that they vehemently oppose any move to fee for service? Or, are they waiting on instructions from the lenders? Brokers are watching closely.