Following months of considerations and discussions with broker groups, Adelaide Bank has decided on its clawback structure.
Following the ban on exit fees, Adelaide general manager of third party lending Damian Percy told Australian BrokerNews the bank would have to mull clawbacks, a policy of which Percy had previously been highly critical. Percy today announced that the bank had decided to offer brokers commission options both with and without clawbacks.
"Ultimately we came down to four options - two with no clawback (including an all trail model) and two with higher up-fronts and tiered clawback provisions," he said.
Percy told Australian BrokerNews the first option will carry no clawback, an upfront of 0.50% and a trail 0f 0.15%. The second option will carry a 100% clawback for the first 12 months and a 50% clawback from 13-18 months, and will include a 0.65% upfront and 0.15% trail. The third option will also carry a 100% clawback to 12 months, and will extend the 50% clawback horizon to 24 months, but will draw a 0.70% upfront and 0.15% trail. The fourth option will carry no clawback or upfront, but will include 0.40% trail commission.
Percy said feedback on the restructuring has been positive, and that the models would allow brokers to "balance their commission structures between lenders and choose the model best suited to their long-term strategy". He said the commission options currently operated at a broker group level, but that the bank was investigating allowing individual brokers to choose their commission structure.
"Adelaide Bank has a vested interest in ensuring that a successful broker sector is maintained and though economics is a significant driver of commissions, flexibility in commission structures is one way we hope we can assist with the ongoing sustainability of broker businesses," Percy said.
Second tiers 'buggered' without brokers
Bendigo and Adelaide mulls clawbacks