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Aggregator slams ABA Review's "ludicrous" broker findings

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Australian Broker | 08 Feb 2017, 08:25 AM Agree 0
The ongoing Sedgwick Review has come under criticism for missing the point about third party remuneration
  • Really? | 08 Feb 2017, 09:23 AM Agree 0
    The Banks were the ones who requested the commissions review to the government - behind the scenes.
    When the result sounded like it may not come out how the Banks wanted it; they then quickly organised their own review, with a pre-meditated outcome.
    • Dave Robsinson | 09 Feb 2017, 08:46 AM Agree 0
      That comment is the biggest conspiracy theory yet! Got any facts at all to back up that comment? So many times I hear this but each time you ask for confirmation you are met with silence. Seriously please post any proof you have, if not then surely you have better things to do with your time.
  • Herewegoagain | 08 Feb 2017, 10:31 AM Agree 0
    They will inflict "opt-in" on brokers.
  • Shaun | 08 Feb 2017, 12:04 PM Agree 0
    I think that all Mortgage Brokers should be Financial Planning qualified to make recommendations to clients about one of the most importnat financial decisions of their lives.
    • Herewegoagain | 08 Feb 2017, 01:12 PM Agree 0
      They are not making recommendations whether to purchase or not, therefore your logic is not valid. The decision has already been made before they see the BROKER. Brokers do not give financial advice. BY LAW.
  • Bank bdm | 08 Feb 2017, 12:57 PM Agree 0
    Well done AFG here. Interesting only Afg plan and fast made submissions to asic review. Whilst other smaller aggregators like cultivating their image in the trade press other walk the walk
  • hoping for positives! | 08 Feb 2017, 10:42 PM Agree 0
    Having read the ABA report twice, there seems 2 parts. One where it appears to deal with internal staff incentives and goes around in circles and at the end of the day an employer has to motivate and reward its staff to create value. The master (employer) is entitled to pay the servant (staff) their agreed payment, plus if they choose a share of value they create. They own this, control this, and as long as the consumer outcomes don't have war stories, that's business. The last thing we want is a lender bringing a new product or service to a client but not being able to communicate this.

    The second part is payments to 3rd parties (Aggregators/Brokers). Aggregators provide a massive benefit to both Banks and Brokers and the role cannot be diluted. The Banks don't have to deal individually with 20,000 brokers, provide compliance services, PD, legal agreements, PI, big technology spends that Brokers don't have the money for...... and a culture that, we all need. So questioning whatever bonus payments the aggregator they negotiate in a free market should not be questioned, particularly when there is no communication of any type from the aggregator to where the broker should focus on placing loans so the aggregator can make more.

    In relation to Brokers, ABA needs to understand that there is a major blue lender who pays less to brokers than others that somehow is growing their share above others. This is an anomaly that couldn't be captured or explained by the Sedgwick report. My question to Mr Sedgwick in the context of the seeds being planted, would be why would a broker place more loans with a lender that pays less?

    Mr Sedgwick mentioned Clawbacks in passing. Clawbacks were relevant 10 years ago when Bank's had staff who had years of experience such as the old local Bank Manager and could compete with a broker and the cost (critical mass of originated loans) was in favour of the Bank and therefore the broker has to churn to put food on the table.
    That is largely why a clawback was required. Now, Banks such as the one with a star, offer the new client $1500 waive $395 fee $1895 to join, but the broker has a 2 year contingent liability with clawback on payment for doing the work and there is no way we can pass this on to the client.

    What they are missing in who the client actually is? Mr Sedgwick, who is really the banks client? and respect for the aggregator who is, in my opinion possibly the lenders biggest client!

    And, Mr Sedgwick, were are the consumer complaints? 55% of all new home loans via brokers?

    Summary - Reform clawback, acknowledged aggregators value, acknowledge your members have been OK letting volume go to 55% .

    It is very not broke, so deliver value and break from the establishment.
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