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ASIC reveals six proposals in broker remuneration review

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Australian Broker | 16 Mar 2017, 03:30 PM Agree 0
The review contains proposals around changing broker commission structures, creating clearer disclosure guidelines and more
  • Wtf asic | 16 Mar 2017, 03:32 PM Agree 0
    Changing the standard commission model to reduce the risk of poor consumer outcomes

    What the hell does that mean?
    • DB | 16 Mar 2017, 04:06 PM Agree 0
      I assume that the same commission rate applies to every lender so they may have this at 0.71% inclusive of GST across the board.
      I bet however the banks will try and make this level lower again and we take yet another pay cut!!
  • Gimmeabreak | 16 Mar 2017, 03:36 PM Agree 0
    HaHa what a stitch up!
  • What a joke | 16 Mar 2017, 03:38 PM Agree 0
    So basically in reading this they have screwed over the broker channel
  • Broker | 16 Mar 2017, 03:43 PM Agree 0
    With reference to point 1.

    So in other words reducing the amount of income a Broker receives would improve consumer outcomes - what a crock of S#@t.

    And we wait another 3-4 years for ASIC to find out how badly we get shafted by the majors remuneration agenda , what an absolute farce.
  • DW | 16 Mar 2017, 03:44 PM Agree 0
    What a complete load of rubbish! Meanwhile, branches still bend the rules. This is just more Broker Bashing in my opinion.
  • Hoff | 16 Mar 2017, 03:47 PM Agree 0
    So ASIC is telling / dictating to the banks / non banks how much brokers should be paid? So much for a free market!
    Will ASIC now also tell / dictate how much the bank CEO's are also paid? How much the local Branch manager is paid? mobile bankers etc.
    ...and as a result of all this, who is better off? has anything been achieved? ...apart from "imply" that something is wrong with the broker industry
  • Angry as hell | 16 Mar 2017, 03:49 PM Agree 0
    So reading between the lines... brokers get paid to much better put a stop to that what a complete Effin joke
  • Mega | 16 Mar 2017, 03:49 PM Agree 0
    The best thing that comes out of this is that I am 65 in 4 weeks and looking to retire in July. Leave it to you guys
  • Joe Siragusa | 16 Mar 2017, 03:51 PM Agree 0
    The greatest benefit that Brokers provide to the Consumer and Business market is facilitating the increasing competition amongst all banks and other non bank lenders. Imagine if there was no broker channel - who would educate the borrowing public of the numerous options for Residential and Commercial Lending. Who would be the conduit to competition.
  • Chris C | 16 Mar 2017, 03:52 PM Agree 0
    In my view ASIC has gone half way - if ASIC want to ban VBI payments, should not volume based Lender accreditations also be banned. Conflict of interest, competition, greed - call it what you want, if this is all in view of improving the consumer outcome, it would open doors for the smaller volume Brokers to access more loan product and it would also return the Brokers who are putting the majority of their loans through just one or two Lenders in order to retain their accreditations. Both ways, it is better for the consumer outcome. After all is not it a major part of the reason why Brokers have to go through an aggregator anyway; surely its not just for an online lodgement / payment system; most Lenders provide in this area anyway - the Aggregator (broker consolidations) holds the "volume" of loans to the Lenders every day of the year. So go the other half too ASIC, if you want an even better outcome for the consumer.
  • jabajohn | 16 Mar 2017, 03:52 PM Agree 0
    Broker of 30 years and have no idea of what lenders pays what commission. Commission does not even factor into the equation when advising on loan options. I guess ASIC mean that COMMISSION paid to brokers full stop. Abolish/reduce commission and see how much risk of poor consumer outcomes the bank give customers.

    have not see a soft dollar commission or bonus commission in years. Would like to know where this has come from.

    Jobs for the boys. Would love to see the evidence or information ASIC make these assertion on.

    Maybe I work in another industry..........
  • | 16 Mar 2017, 03:52 PM Agree 0
    I wonder how many nice dinners it took to convince the minister and asic to reduce commissions
  • North Brisbane Broker | 16 Mar 2017, 04:00 PM Agree 0
    On reading this, if another review is required in 3 to 4 years, has the outcome of this review actually achieved anything? Or, are the red tape brigade simply keeping themselves employed?
  • No | 16 Mar 2017, 04:00 PM Agree 0
    It will be interesting to see what is in fact implemented. If there are many changes, I suggest mass protest, state by state co-ordinated. I don't think anyone at ASIC were working when I was lodging deals at 1am this morning. Maybe they should sit with brokers and see how hard they work for a week and them may understand the industry better. They have no idea how hard we have to work to run a business and to want to reduce my income, when there is no public outcry, is shameful.
  • New Broker | 16 Mar 2017, 04:12 PM Agree 0
    As a relatively new broker, it's hard to get established. Starting from scratch income is an issue, particularly when it can take up to 3 months to receive commission to show for the hard work you have done. To announce commission changes without also showing a clear educated or statistical reason for it, make no sense to me. Have they thought about the sustainability of the industry within their proposal? How are new brokers to join the industry? It's already challenging enough.
    • Over it | 16 Mar 2017, 04:48 PM Agree 0
      Ill give you the tip mate they don't care about the industry. Banks are lobbying the government to kill us off and bring back their monopoly.
  • Broker | 16 Mar 2017, 04:12 PM Agree 0
    So I guess we can expect that the lenders start colluding and reducing commission levels ASAP , whilst pointing their finger at this farcical ASIC review.

    I note that this review found that customers receive the same rates when they go via a Broker or direct to a bank , really ???- if that was the case why do banks advertise 0.70% - 0.90% discounts off SVR on their websites when we all though that upwards of 1.30% are attainable??

  • WA broker | 16 Mar 2017, 04:21 PM Agree 0
    On a positive note, they have not advocated for a banning of commissions which frankly would have been the worst outcome. However this report will result in further uncertainty for brokers regarding the amount of remuneration received Which inhibits future planning and growth. Will now be up to our industry associations and aggregators to take up the fight again
  • Looking for a Mobile Lender Job | 16 Mar 2017, 04:22 PM Agree 0
    Has anyone considered that if commission is based on LVR as suggested unless commission rates increase with CPI our income will reduce year on year until we go broke. Great for competition. huh?
    • Brado | 16 Mar 2017, 11:04 PM Agree 0
      except that loan amounts increase regularly due to property value increases so that isnt a good argument for our industry as a whole ...
  • WA broker | 16 Mar 2017, 04:27 PM Agree 0
    Another section of the report states "the LVR of the loan and other compliance metrics" should be calculated when determining upfront and trail commissions.

    Key point here is that ASIC are not stating the banning of upfront and trail, but how it is paid depending on LVR and compliance metrics. Sure this is open to interpretation, but they are not stating to do away with commissions and introduce fee for service. So we have to take the positives when they are there.
    • Read again | 16 Mar 2017, 05:47 PM Agree 0
      They are quite clear in the report that it says... commission should not be based on the size of the loan. Secondly, the report is suggesting there is a choice conflict since lenders offer different commissions... so ASIC are suggesting that all lenders pay the commission, and secondly this should not be based on loan size. What will happen, we will all get paid a fee per loan and it will be the same for all lenders. This is essentially a fee for service... this fee, I'm sure, will be picked up by the consumer...
  • ASIC IS A JOKE | 16 Mar 2017, 04:27 PM Agree 0
    Anyone want to buy a trail book?
  • pfft | 16 Mar 2017, 04:45 PM Agree 0
    So it took them a year to spit out this pile of garbage which is basically just saying we don't like commissions or people who earn them. Good work giving the banks more ammunition to reduce payments to brokers and eliminate their competition. Most of these people wouldn't know a thing about the challenges of running a business.
  • Jay | 16 Mar 2017, 04:48 PM Agree 0
    I'm not taking a pay cut - working out now which staff member to go.
  • sigh | 16 Mar 2017, 04:50 PM Agree 0
    As someone who has worked in another sector of the industry and have been lobbying for many years, it is always being hammered home (by the who's who in Canberra) that this is the National CONSUMER Credit Protection Act, not the National Brokers Credit Protection Act.
    They don't care how many brokers they put out of business as long as consumers are protected and it makes for a "feel-good" look in the media. Sad, but true.
  • Disillusioned | 16 Mar 2017, 04:50 PM Agree 0
    All these months and a 265 page report and not a word about lender quotas and/or minimum loan volumes to maintain accreditation.
    If a broker is pressured to recommend an unsuitable loan in order to achieve minimum volume quotas, this is a breach.
    Since it is the lender policy which is the substantive underlying cause, ASIC should recommend banning such quotas to avoid the inherent conflict of interest. Always just beat the scapegoats because we cannot fight back, while the banks unethically, amorally and probably illegally continue to do whatever they like in contempt of at least the spirit of regulation if not the fact.
  • I'm worth it and more | 16 Mar 2017, 04:51 PM Agree 0
    This looks like a Bank wise list to me. Commission isn't a a nasty word everyone works for a commission its just how you get paid that commission that varies. There are 2 main types of commission models
    Type 1. Defined or Salaried commission
    This commission model uses an hourly rate method of payment (ASIC employees would be very familiar with this model). No initial or ongoing service required. This model promotes a take it or leave it attitude towards the customer. This model does not have clients. It also pays the commission even is a service hasn't been provided.
    Type 2. Variable Commission model.
    This commission model is a high risk payment method for the person receiving the payments. As such the commissions paid reflect the risk for reward by the income received. Putting it in simple terms if you do not attend to the customers needs and provide the level of service and knowledge required you will not survive on this method.
    Customer service is imperative to the success of the person on this commission model


    TYPE 1. Defined or Salaried commission model (ASIC preferred model)
    This is the champion commission model for those that are happy with being mediocre not overly concerned about customer service and job satisfaction.

    TYPE 2. Variable commission structure (Entrepreneurial model).
    This is the model for those that want to excel. Be the best they can. Provided that exception service and prepared to ask for the business. and get paid accordingly for being exceptional at what they do.

    For me I'll take the second option every day of the week. as for Type 1 I'll leave mediocracy to shop assistants
  • disgusted | 16 Mar 2017, 04:52 PM Agree 0
    So I cant expand my business which I risked everything to start 2 years ago because this crap has been going on for a year now.

    May as well shut up shop and do something else because they will keep screwing with it until its dead now.
  • | 16 Mar 2017, 04:55 PM Agree 0
    Did they just copy and paste the sedgwick review.
  • | 16 Mar 2017, 04:58 PM Agree 0
    Can someone please tell me where i apply for all these soft dollar bonuses because i have been doing this for years and never received one.
  • PDF | 16 Mar 2017, 05:01 PM Agree 0
    Not a problem for me.

    Brokers to now receive same commission from all lenders.
    That is the only reason nearly half of customers are worried about using a broker, the (wrong) perception that the broker places the loan with a particular lender to receive more commission.

    Once that is fixed, I look forward to the other 46% of customers coming to brokers.
  • | 16 Mar 2017, 05:03 PM Agree 0
    What report did you read? There is a whole section that blathers on about commission how is a conflict of interest. Commission is on the chopping block for sure, fee for service is what the government wants because the banks are telling them that's what they want
  • OzBoy | 16 Mar 2017, 05:07 PM Agree 0
    Realising that this is only an outline I would say:
    1. Fantastic an increase in commissions paid by the lenders would indeed lead to better outcomes for consumers. I know everyone else thinks this means that commissions will be reduced...why? It doesn't say that and I think that ASIC have looked at everything we do and realise that the average income of $70K for a broker may lead to them making poor recommendations. Trying to be positive...ok perhaps I am delusional!
    2. Good start, although this will impact a lot of aggregators and franchises that pocket this money.
    3. See point above.
    4. At the end of the day I think this is good, transparency helps, not sure how Aussie will feel or all those funny little groups within the banks.
    5. Whoa that would be interesting, would love to see the measuring metrics for that.
    6. This is the one I don't get. ASIC this is your job if you are going to outsource it then why do I need an ACL. This will lead to further costs for brokers as aggregators will pass this cost on...back to point 1, what the left hand gives the right hand takes.

    So 3 months to respond. MFAA, FBAA feeling the pressure? Now is when we will ALL see exactly what our industry associations can do, communication will be paramount. I also wonder what will happen to MC's share price (will have a look after this post) YBR must be %*$&ing themselves along with the smaller aggregators or those that operate a flat fee payment system.

    A casual observation, do you think ASIC liked the process so much that they flagged they want to go again in a couple of years?
    • | 16 Mar 2017, 05:38 PM Agree 0
      Gotta stay relevant or their funding will be cut
  • WA broker | 16 Mar 2017, 05:11 PM Agree 0
    The report stated that a conflict of interest is possible where commissions are based on the size of the loan only - and have stated ways which this can be rectified via LVR and compliance taken into consideration. And have not advocated removing commission. Am not saying we don't have a fight on our hands, but saying this is the end of commissions is not factually correct. But I hear your frustrations regarding this report, and how much longer it will take to determine the end result
    • Not so fast | 16 Mar 2017, 06:17 PM Agree 0
      I think what most people are saying is that this is the start of the end. We all know that they're not saying they're going to ban broker commissions... the worry is where it is all headed... and it's quite obvious that the direction is headed toward a fee for service in the coming years.
  • | 16 Mar 2017, 05:18 PM Agree 0
    So in 3 years we go through all of this again. So what I see is don't hire anyone and start looking for another industry to be in because we are going to keep sticking our nose into this until it is so over regulated and unprofitable that it dies and our buddies at the bank can get their market share back.
  • Interesting | 16 Mar 2017, 06:23 PM Agree 0
    It also seems this is an attack on smaller lenders. Perhaps the bigger lenders can't afford to compete with the smaller lenders. For example, you may have not have the same clawback, slow turn around times as the larger lenders. So perhaps they are trying to steer the business more towards the big banks again.
  • Obvious agenda | 16 Mar 2017, 07:11 PM Agree 0
    Oh it's so obvious that this is nothing but a broker bashing agenda. Take a look at their so called info graphic "what we found". There must be areas where the broker channel outclasses the direct channel.. But they've decided to highlight only the negative areas against the broker, obviously that info graphic is trying to imply it's better to just go through to the lender directly.
  • Not Happy Jan! | 16 Mar 2017, 08:28 PM Agree 0
    As usual ASIC have failed miserably to understand all aspects of our profession.
    - If Professional Licenced Mortgage Broker Commissions are to be standardized to the benefit of the consumer, then WHY hasn't ASIC eliminated "Claw-Back" on Upfront Commissions as well, particularly as they want a level playing field, more competition from the banks, more disclosure, for the benefit of the consumer? Some Lenders do not even have Claw Back!
    - This smells more of what the banks want to fatten their Bonuses (which aren't being touched) and Outrageous Profits; talk about double standards.
    - They are laughing at us!
    - Wake up!
  • | 16 Mar 2017, 09:40 PM Agree 0
    Time to look for another job ?
  • Broker | 17 Mar 2017, 12:42 AM Agree 0
    Just wasted 2 hours of my life reading this report.

    According to findings #29 and #32 , these buffoons at ASIC still believe the following:

    (1) That a client can borrow more if they opt for an interest only loan, would they mind informing us which lenders don't assess borrowing capacity at P&I payments as I don't know of any.

    (2) That it is a common finding that commission variations of 0.30% were not uncommon , really???

    The only thing that I take out of this report is that ASIC now believe that Brokers are overpaid simply because the banks conflicted research told them so, and as the banks have lost control over brokers ever increasing market share, the only strategy that the banks have left to drive down the overall annual amount paid to Brokers, is to reduce commissions once again and layer it with this bulls&%t that paying us less will result in better consumer outcomes , what a convenient finding!

    • | 17 Mar 2017, 09:43 AM Agree 0
      Re point (1) - ASIC's sample loan data was from 2012 and 2015, which was before they issued their report into interest only loans (where they found that some lenders were not assessing borrowing capacity on P&I over the reduced loan term)
    • | | 17 Mar 2017, 01:12 PM Agree 0
      You are correct so would you say then that the ASIC report is out of date on the day it was released?
  • Nick | 17 Mar 2017, 09:02 AM Agree 0
    Absolutely spot on Joe. I've recently left the banks after 15 yrs of commercial banking. Why? Because we are not, in my opinion, fair to existing and long-term customers and for that reason alone i absolutely support customers utilising the broker channel to source more competitive offers. A popular misconception seems to be that brokers act only to collect commissions - that is entirely ridiculous because, if you're not focused first and foremost on relationship, then repeat and referral business will not be forthcoming. Cheers
  • Are these people delusional | 17 Mar 2017, 09:15 AM Agree 0
    So commission based on LVR sounds very clever... so the people who need the most guidance and advice will now get neither because their loans will be worth less than this in a better financial position.
  • Pfft | 17 Mar 2017, 11:20 AM Agree 0
    MFAA response is predictably weak.

    "Everything's fine no need to upset our corporate overlords"

    No wonder people are flocking to FBAA. Look forward to seeing Peter Whites thoughts.
    • Peter | 07 Apr 2017, 06:32 PM Agree 0
      I doubt FBAA are any better
  • Wayne | 19 Apr 2017, 10:33 AM Agree 0
    Hi Guys

    I do think standardising the upfront and trail would be a good idea
    and bring all lenders onto a level Playing Field
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