Think through fee-for-service first: Bromley

by Ben Abbott04 Nov 2011

More thought needs to be put into the practice and implications of an industry move to fee-for-service, according to LJ Hooker Finance's general manager Peter Bromley.

Speaking at a broker panel discussion organised by PLAN Australia, Bromley said the whole industry move towards a fee-for-service or fee-for-advice model "needs more thought".

"I think it’s potentially a game-changing proposition, and I am a bit concerned when I hear so many people are charging a fee, and I don’t think we have thought it through," Bromley said.

With the industry having been founded on a proposition where the customer does not pay for their loan service, Bromley said charging a fee "changes that whole proposition".

"Do we know what our value proposition is going forward? I’m not sure we do. Because there are a whole raft of implication at all levels," he said.

Bromley said the industry needed to solidify ideas around what the new broker value proposition is, how that can be demonstrated and articulated, and what can be charged for.

The discrepancy between fee-for-service and fee-for-advice needs to be clarified, according to Bromley, as well as how much a broker should be charging for their service and advice.

"I think we have to get there, but I think we have to do a lot more work around it," Bromley said. "It has game-changing opportunities for us, as well as risks."

Related stories:

New product to ease fee-for-service shift

Control the client, control your income

Liberty to allow fee-for-service charges


  • by Chris C 4/11/2011 11:16:13 AM

    Rather than just talking about it and fear mongering as they have over the last year or so, some Brokers have already worked this out. The industry did not start up as free service as is stated here - it was initially a fee for service until the Lenders started paying up fronts and later trails to compete for the business (when it suits them) - we are just reverting back to what we had and providing we do the right thing and the customer can see their benefits it is fine. Regarding the re-introduction of fee for service, our previous advices are correct in that if we do not charge a fee for not all, but some of our work we go backwards. We don't see the Lenders or the Aggregators going backwards (do we). The possible clawbacks / tightening of Lenders commissions / NCCP extra paperwork and processes all add costs to the Brokers without the ability to cover these costs if we cannot charge a fee - so it erks me when these larger organisations come out and use smoke and mirrors to support their own cause - just like the majors stating that although the commission may have reduced and clawbacks terms hightened in the GFC that many Brokers will leave the industry bla bla bla and the ones that are left will have more loans to write and therefore eran more $ - der - simple maths here guys its still going backwards on a deal by deal basis....smoke and mirrors again to support their reasons for reducing commissions while they increase fees and margins and boasrt record profits during a GFC...............smoke and mirrors guys.