Australian Broker forum is the place for positive industry interaction and welcomes your professional and informed opinion.

63% of clients willing to pay broker direct

Notify me of new replies via email
Australian Broker | 04 Nov 2016, 07:00 AM Agree 0
While research shows clients may happily pay their broker, one industry leader has questioned the feasibility of this model
  • Regional Broker | 04 Nov 2016, 08:58 AM Agree 0
    The percentage of people not willing to pay is far too high at 37% , that represents 37% of our market and a possible loss of 37% of our income , much work to be done MFAA !! I find these types of Hypothetical questions to be misleading as the sample for the survey is usually too small to reflect the real feelings and attitudes in the market l , as an member of the MFAA , I find it amazing and quite disturbing they are spending members money on surveys like this , when they should be looking at how effective the lobbyists are in Canberra for the fees the fees we the members are paying them .
  • Broker | 04 Nov 2016, 09:08 AM Agree 0
    Considering that all broker commissions are fully disclosed in finance broker contracts , I find it very difficult to believe that 30% of broker clients are clueless as to how we are remunerated.
    I also suspect that the reason that the MFAA conducted this survey was to satisfy its sponsors…why else would they do it?
  • John | 04 Nov 2016, 09:16 AM Agree 0
    Completely agree with Regional Broker - why would the MFAA put this question in a survey for the bank to use a weapon to reduce or cut up front? Aren't they our advocate??? Also, Australian Broker and others using the wording "going direct to the bank" needs to change as its misleading - unless the consumer lodges the loan themselves they are never going direct to the lender - branch and call centre staff send the loan application to credit for assessment and verification like we do.
  • DC | 04 Nov 2016, 09:16 AM Agree 0
    What if MFAA Membership fee was reduced to $50 per annum? What if Deloitte's revenues were reduced by 75% per report/transaction? How long would they remain economically viable? Not very long at all.
    If more and more consumers are using brokers, and saying they are happy with the service, why does the structure need to change?
    If the lenders are comfortable receiving half of their business via brokers, why does this need to change?
  • Valued mortgage broker | 04 Nov 2016, 09:17 AM Agree 0
    Was this remuneration question based on the actual application scenario? What about the follow ups, variations, hypothetical questions, etc that a respected and valued credit adiver (mortage broker) answers without receiving any additional income from a lender? Would a client be "happy" to pay for this time consuming part of our value proposition?
  • Really? | 04 Nov 2016, 09:21 AM Agree 0
    So the MFAA have returned to being a spokesperson for the Majors again...their major sponsors.
    Like when certain banks wanted brokers to move into Asia, suddenly the MFAA were out spruiking brokers to expand into that region.
    Now banks have backed away from that region, we hear nothing.
    Suddenly Banks are making less profits due to APRA, and these surveys pop up to save the banks money. Sad part is the MFAA's willing compliance in being the spokesperson. Who verified the survey, to ensure these people exist?
    Nothing from the MFAA regarding Clawback, 15 day waits to book settlement in the digital age, etc etc.. Yet they find time to do this.
    No wonder certain lenders make membership compulsory.
  • Adam | 04 Nov 2016, 09:42 AM Agree 0
    Stop trying to suggest we should swap commission for fee for service. Australians won't pay someone to get them a loan, its hard enough to get them to pay for their own life insurance, let alone the $7000 would earn on a 1 million dollar deal. I mean really get a grip people!
    • David | 04 Nov 2016, 01:34 PM Agree 0
      Adam you are 110% right if fee for service comes in most of us will be working for the banks as people will go to where they can get a loan organised for free (even if it's included in the cost)
  • | 04 Nov 2016, 09:43 AM Agree 0
    I agree the MFAA are a waste of space and are corrupt as
  • Nota Fan | 04 Nov 2016, 09:52 AM Agree 0
    The MFAA is a sub-committee of the Banker's Association
  • Del | 04 Nov 2016, 10:19 AM Agree 0
    So, 22% would pay up to $500, 18% up to $1,000 and 37% said "no". That leaves just 23% that would be willing (so they say now!!) somewhere between $1,000 - $2,000. Food stamps anyone? Because that is what you will need. That wouldn't even cover your MFAA fees, licence fees, insurance, software, phone etc - nothing left to buy groceries.
  • David | 04 Nov 2016, 10:19 AM Agree 0
    In the current scenario, we can compete on an equal footing with the Banks and I'm finding that I'm securing bigger pricing discounts than Banks are offering to clients who walk in their doors. If we charge a fee on a $500,000 loan - lets say $2,000 (which most clients will refuse to pay) instead of the current arrangement of around $3,000 up front plus trail, not only are we losing significant income but it also places us at a competitive disadvantage to the Banks who don't charge the fee and who will also be loving the extra margin through not paying commission. The smaller lenders who often rely solely on the Broker network to distribute their products will not be able to afford to establish Branch networks and staff so they'll fall by the wayside. The big Banks must be chafing at the bit for this to happen.
  • Papery | 04 Nov 2016, 11:50 AM Agree 0
    We still operate in an uneven playing field.

    How much time is spent by the Broker on pre-assessment, upfront vals, lodgement, the compliance, then your deal sits waiting in a que for a response..... or the client just walks into a branch & be fully approved inside of one hour.

    True story.

    Our clients may love us & what we do, but for the most part, the average consumer does not value the service enough to part with their cold hard cash & pay what WE consider a fair fee, especially when they can contact a bank direst & get the deal done quicker & for free, leaving us to rely on commission payments under the threat of a 2 year clawback.

    And despite all the interrogation we do under the guise of Fact Finding, KYC, disclosure requirements, & prying into clients personal bank statements to ascertain how & what & why they choose to spend their income, at the end of the day, they just want an approval & want to move!

    Our industry will evolve in the next few years & Im tipping will be a different place with the rise of the AutoBots, Fintech & internet/tech savy clients & you can be assured that the big end of town will be developing the technology way faster than we will adopt to it. Its already happening.

    So, fee for service from the average punter....sure.....never gonna happen!

  • Mick | 04 Nov 2016, 06:24 PM Agree 0
    I think it's fair to say that a fee for service model won't work in the mortgage world given that all of our suppliers for a better word are also our competitors. If we had to charge a fee so would the banks for their direct clients and I think we all know the chance of that happening. The bigger threat to our industry in the medium to long term is the fintechs...whether you want to believe it or not, they will take market share..
  • Brett of Brisbane | 07 Nov 2016, 08:45 AM Agree 0
    Studies conducted out of desperation prove very little.

    Whilst the research would conclude that broking a loan for the majority of clients would not be profitable, the real point here is that access to a cheap salesforce by smaller lenders through the reward based remuneration structure of brokering, would somewhat diminish and see competition reduce dramatically. The oligopoly would gain strength, and the very consumers who would initially benefit, would become the victims.

    How would product pricing change in any way?
    What would happen to product innovation?
    How would the majors reduce their new business acquisition and existing business retention costs in the medium to long term?

    I can't see any of these being a positive benefit to the consumer base.
  • Aussie Bob | 07 Nov 2016, 09:04 AM Agree 0
    I've never seen an industry so full of whiners in all my 50 years in the workforce. I'm disgusted with the absolute lack of vision shown by the commentators to this particular report.

    Obviously very few of them seem to realise that the regulators and others are trying to force the broker community into fee-for-service and from the outside looking in the MFAA (and probably the FBAA) are fighting a rear guard action to stop that from happening. The idea that the MFAA & FBAA are somehow condoning this paradigm shift is laughable. And yet these brokers (I presume they're brokers but I may be wrong - they don't seem to be informed enough of what has been going on) are still wallowing in "the good old days". This is beyond belief.

    The fundamental changes in global financial markets and regulatory changes in Australia will require changes to how we bank, borrow and repay for decades. Every big provider like Apple, Google and so on are making innovations that will render our current market structures obsolete before the end of the this decade. Whinging about what was is not going to help step into a future that is staring us in the face.

    Oh and by the way - lobbyists are frowned upon in Canberra at the moment. And very few pollies care about brokers - they're now tarred with the same brush as financial planners, who have destroyed the trust given to them by we ordinary people.
  • Bob | 07 Nov 2016, 07:03 PM Agree 0
    That's not completely correct

    Commbank lenders can approve on the spot anything that fits policy and DUA and verify all there own documents. Less than 20% of applications require credit approval
  • TrustedAdviser | 10 Nov 2016, 01:06 PM Agree 0
    Agree Aussie Bob - quite embarrassing to know your working in the same circles as some of those who have commented above.
    You'd think were an educated and progressive profession but some of these comments unfortunately paint the opposite picture.
  • Steve Reid | 16 Nov 2016, 01:58 PM Agree 0
    Hi Guys
    If you don't think Upfront and trail Commission are dead your asleep
    It is added to the rates the borrowers Pay
    The Borrowers are much better off paying the broker a fee and getting a lower Rate ( like panning Do now )
    Fee for Service will be here ASIC are just warming us all up
    Where trying a Fee for Service Model with about a .35 discount for the borrowers and there happy to pay a service Fee
    and they get that fee back in two years or So...
    Overseas its upfront only and between .4 to .5 no trail we have been Blessed for Years... Yes our Friends the Aggravators Wont have a business if this comes in and we all hate to pay them for doing nothing
    Steve Reid
  • lol | 10 Jan 2017, 02:19 PM Agree 0
    i have an idea ... why dont you all go from MFAA (bank owned) and join FBAA (broker owned) and we would all have a strong advocate
Post a reply