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ASIC sheds light on focus of remuneration review

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Australian Broker | 22 Mar 2016, 08:00 AM Agree 0
The deputy chairman of ASIC has said mortgage introducers will be a key focus area for the regulator in its review into the mortgage broking sector
  • | 22 Mar 2016, 08:58 AM Agree 0
    Seems lile a reasonably balanced view by ASIC. If the deputy chairman is referring to lender payments to unlicensed introducers (so called spotters fees) then we welcome the review.
  • Andrew | 22 Mar 2016, 09:52 AM Agree 0
    Real estate agencies that own mortgage broking services surely must have a conflict of interest?
  • Kym | 22 Mar 2016, 10:34 AM Agree 0
    Andrew you are right on the money...
  • The Observer | 22 Mar 2016, 05:00 PM Agree 0
    Ah yes those 0.4% of loan amount payments just for a name & number. This is an "introducer"! There should be no accountant and solicitor that should receive these commissions unless they can show how their lender “recommendation” will benefit the client.

    These professionals talk to their trusting client and can cleverly shut out the broker that could put another proposal on the table. Accountants can shut the broker out by simply not providing financials!

    The client damage here is they usually realise that they didn't get what they expected (usually a higher rate) and this is where the cost to refinance can be thousands. Refinance fees include establishment, valuations, legal fees and mortgage stamp duty that is payable for commercial loans.

    I had an example on a $4.2m loan and not surprisingly the client came back to me and said that there was a misunderstanding on the rate they were to be charged. The margin was the same, but, the benchmark on which it was applied was different which results in a different rate. I had BBSY he got the ABC Bank Bank Bill Rate (slightly higher).

    The winners and losers so far:
    Accountant got thousands of dollars for sending his trusting client to his banker mate down the road
    Banker got a client (client is all theirs without broker to keep things nice and honest)
    Client got a higher rate than he was told and now it costs him thousands of dollars to refinance

    ASIC go for it! This is gold and congratulations for being able to ferret out these nasty commissions.
  • Another Observer | 23 Mar 2016, 10:45 AM Agree 0
    What seems to be lost in some of these responses is that brokers are also implicated in any review of "introducer" arrangements. Are we saying that brokers don't obtain referrals from accountants? And if they do, are there formal written referral arrangements documented between both parties, and do all brokers have steps in place to ensure that any referral fee they pay to the accountant has been fully disclosed to the client?

    It should not be assumed that the inclusion of "mortgage introducers" in ASICs review is limited to trusted advisers referring clients to lenders - something which ASIC has provided very clear guidelines on. Brokers have broad examples of "introducer" arrangements in place themselves.

    Don't forget,this review is about identifying conflicted remuneration in the broker industry. Yes "introducers" should be considered, just as bank ownership of aggregators and real estate businesses owning broker business should be considered for any potential consumer outcome this influences.

    Always pays to keep a balanced view I would have thought?
  • The Observer | 24 Mar 2016, 12:55 PM Agree 0
    Dear Another Observer,

    The "Introducers" that I am referring usually don't hold an Australian Credit Licence or are Authorised Credit Representatives that are governed under NCCP that in turn covers referrals and any payments, if any, for these referrals that you mention.

    I mentioned Accountants and Solicitors but anybody that can receive these "spotters fees". Put differently, commissions should only be received by people licensed to provide services. Same as in every other profession.

    The Australian Broker Market accounts for what I understand as 50% of all loans written so all that remains for us to continue to do a wonderful job that we do for our clients. A little cleansing by removal of these "spotters fees" will only make create more business for us and rid ourselves of unlicensed people that belong elsewhere.
    PS I believe the Banks will move quickly to cut these "spotters fees" and I believe one has already.
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