KIRAN SALDANHA of The Finance Professionals and CLAIR GEORGE of 1st Street Home Loans share their thoughts on mitigating the risk of commission clawbacks.
Video transcript below:
Donna Sawyer, Australian Broker News TV.
Donna Sawyer: Banks are in the firing line again, this time for their commission clawback policies. Kiran Saldanha of the Finance Professionals says banks aren’t treating mortgage brokers as valued clients and haven’t been since the GFC.
Kiran Saldanha, The Finance Professionals
Kiran Saldanha: Lenders have forgotten that they actually, we are their customers and in that service chain they have forgotten where the broker fits in. In fact 2012 has been a perfect example of a back flip by some of the lenders such as St. George. We have seen NAB change their star rating policy. And it’s realising that, yes you know, the broker really plays an important part in distribution of the product, but more so the management of how that lender is perceived in the open market.
Donna Sawyer: Clair George of 1st Street Home Loans takes a different view. She says, banks current clawback policies are fair, but the system would be improved by taking into account each individual broker’s record.
Clair George, 1st Street Home Loans
Clair George: It would be great to see the banks look at a policy of where they think about of a particular broker’s quality of loan book with them and look at it more on a case by case basis rather than an individual loan being refinanced or property being sold within the clawback period.
Donna Sawyer: So what can brokers do to avoid being bitten by commission clawbacks? Both Kiran Saldanha of the Finance Professionals and Clair George of 1st Street Home Loans agree, it all comes down to communicating with your client.
Kiran Saldanha: I think really understanding the position a broker plays in that discussion with the client has been something I have really focused on and if someone had to sit down and look at what they had to do for their ASIC licence registration, one of the things was a risk assessment of business and funny enough in this business, our biggest risk is the way we earn our income. If we can’t diversify the way we earn our income as well as improve our relationship with the client through different relationships that we have. I have got relationships in property, direct relationships with lenders where we actually have the entire facility of products, where we have the fee for service option and really providing that edge in terms of where we fit into the discussion rather than be a face for a bank or for any other service provider.
Clair George: First and foremost, I spent a long time in establishing my client’s goals and needs and if we do that thoroughly and place him into the right loan, there shouldn’t be any need to refinance during the clawback period and certainly if a client is looking to sell within a short term we know about that and you know it should come as no surprise if we are clawed back. Aside from that we contact all of our customers post settlement to make sure that the client, that the loan that we have placed them in is working well for them and to get through any teething problems that they have there.
Donna Sawyer: This is Donna Sawyer reporting for Australian Broker News TV.