Fee for service broker argues for special rates

Vanilla Loans managing director Geoff Brieger is trying to convince banks to give "the new third-party channel" or fee-for-service brokers special rates on products.

Brieger said he met with two banks last week to discuss options for brokers who refuse commissions.

"The purpose of my meeting was to explore the opportunity of creating a new third party channel for fee-for-service mortgage brokers where we could cooperate to a level of electronic lodgement and following through the loan application," he said.

"And a central point of negotiation was around prices - specially priced products for fee for service, because we know – and they openly acknowledge – that this would be the cheapest distribution channel for mortgages."

Brieger is proposing a new third party channel, which charges customers a fee, then walks borrowers into the branch to apply for the appropriate loan for their circumstances.

"We will be using software to identify the loans that fit for the customer and with authority to act on behalf of the customer we will be walking into branches and that's how we'll be doing our deals. I've already spoken to a couple of branches and they've said 'welcome'. And guess what - we don't have any service problems."

Several ideas were discussed at the meetings, but no commitments made by the banks, he said.

"The problem is they can not go out at a retail level at a price that is lower for mortgage brokers than for customers through the branch network. That's the sticky point," Brieger said.

The best suggestion, he said, was to create a different brand, or align products with a new online lodgement, direct to customer self-service type pricing.

"But that's probably two years away even if we decided we wanted to do it," he said.

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