Claims have surfaced that several of the big four banks have proposed measures to dramatically alter broker commission payments.
According to “sources” talking to the Australian Financial Review column Street Talk, the lenders discussed several proposals with the Australian Securities and Investments Commission (ASIC) including instituting a flat service payment to brokers for each loan or paying them a disclosed and capped upfront commission.
Under the proposed remuneration structures, this means brokers would then have to relinquish trail commission.
, chief executive officer of the Mortgage & Finance Association of Australia (MFAA), said that it was crucial that any debate on changing broker remuneration structures had input from all industry participants. This would ensure a balanced, equitable and sustainable outcome, he told Australian Broker.
“The ASIC Broker Remuneration Review process has clearly been a well informed and considered process with ASIC having taken time to consult broadly with industry to understand the complexities of the mortgage market and I am confident that the outcome of the review will reflect that.”
Peter White, executive director of the Finance Brokers Association of Australia
(FBAA), said that despite these claims made by anonymous sources, it was entirely possible that these types of proposals had indeed been put forward.
However, the banks would be “cutting off their nose to spite their face” if they changed broker commission structures dramatically, he told Australian Broker
“If banks were to take that path, I’m sure the non-bank sector and all the second tier banks would prosper enormously by it. The major banks need not delude themselves that they are the be all and end all of this world.”
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