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Association responds to opposition's remuneration plan

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Australian Broker | 22 Feb 2019, 12:52 PM Agree 0
Labor has confirmed its stance on broker remuneration
  • Skeptikal | 22 Feb 2019, 01:08 PM Agree 0
    Why is no one saying anything about CLAWBACK!
    We may get an upfront but no one is saying how CLAWBACK will be handled
    • Annonymous | 22 Feb 2019, 05:45 PM Agree 0
      Press release says clawback limited to 2 years and cannot be recovered from the customer
  • Annonymus | 22 Feb 2019, 01:08 PM Agree 0
    If Trail commission goes that will be the end of broker businesses because if a GFC hits again and no one is borrowing, therefore no upfronts. With no trail income for businesses to continue servicing existing clients, jobs will be lost and doors closed. Broker industry will be Dead and consumers will suffer.
  • Jeff mazzini | 22 Feb 2019, 01:21 PM Agree 0
    As the saying goes its not over until it's in writing and the fight to maintain sustainable business models must continue. Perhaps a timely lesson on how aggregators must also remain viable to support brokers and brokers must also remain viable to support their already established business structures. What happens when a client or clients start to consume a brokers time with questions and or seeking ongoing support, who pays for this service? Every time I talk to a professional provider I receive an invoice for the conversation, so are brokers expected to run a not for profit business model for advice when no sales are being made.

    Also in regards to Banks and the massive law suits coming at them, one must ask will we still have a sustainable banking system left standing, as this will now make it near impossible for people to borrow as banks with also operate in an environment of fear. How will banks make profits for sustainable business models?
    Should governments and educators also be sued for not teaching financial litteracy, where does this all end. Not too good I reckon.
    • sa broker | 22 Feb 2019, 01:43 PM Agree 0
      Great point Jeff
      Surely regulators knew that Banks were using HEM, so that would suggest they accepted this practice.
      Regulators also changed the rules regarding interest only and assessment rates.
      If clients no longer have capacity to refinance, then is the only option left to sue the original Bank for not know what future holds
  • Kerry Teakle | 22 Feb 2019, 01:28 PM Agree 0
    What gives Labour the right to think they can control commercial agreements. Firstly, they need to get into government and they are loosing ground at a rate of knots with all of their other SHITE policy announcements. Also, just because Labour says doesn't make it so, it has to pass through 2 houses of parliment and cross bench and seemingly there are a lot smarter people out there than Shorten and his nuff nuffs.
    • Finance Tart | 22 Feb 2019, 02:54 PM Agree 0
      Are you a die-hard LNP voter by any chance?
    • Rose | 22 Feb 2019, 04:59 PM Agree 0
      I agree - they are interfering where they shouldn't. It is not their position or right to dictate how much we as businesses get paid. Would be good to get a legal opinion on this.
    • annonomys2 | 25 Feb 2019, 09:43 AM Agree 0
      Totally agree Kerry - this is the same party that gave the Financial Planners FOFA which at the time the finance department was headed by Bill Shorten - might be a good idea to talk to your Aggregator - I know the larger ones met with Chris Bowen and he clearly told them he was going to FOFA them - now if you don't know what FOFA means - ask your local Financial Planner - it will mean commission will be abolished (including Trail) and it will be a fee for service model and every 2 years it will be your responsability to contact your client and get them to sign a form to get approval from them for you to continue to receive your trail - if they are away, your trail stops until you have a written confirmation from them - if they dont sign, your trail stops - its a real disaster
  • upset | 22 Feb 2019, 01:29 PM Agree 0
    The death knell is upon us .No trail this is a transactional business now and if you do not write large volumes you might as well look at something else .None of this is impressive , compliance costs up compliance time up income down who wants to work in this industry. AFCA regime where we pay for any complaints against us could cost 000's even if the customer complaint is found to be wrong .

    Just need to find a job sell my book before it becomes worthless. Good luck aggregators as no one in their right mind would work in this industry and no one would want to start out either. 1.1% upfront what a joke!!!

    • Annonymous | 22 Feb 2019, 05:38 PM Agree 0
      1.1% upfront to broker is the equivalent to the PV of upfront and trail on a 4 year 8 month loan
    • P.Doff | 25 Feb 2019, 10:34 AM Agree 0
      Too late upset, your book is already worthless!!!
    • B | 25 Feb 2019, 11:04 AM Agree 0
      Incorrect. PV on 4 years 8 months is 1.35% with a 0.65% upfront. This does not compensate for what a broker does adequately in any case. Compare what a real estate agent does for a sale vs what a broker does for a loan. 2% vs 1.35% - We are already underpaid. We should be looking at what the job is worth and not what the average commission has been.
    • SA Broker | 25 Feb 2019, 02:51 PM Agree 0
      And remember too that real estate agents 2% is paid by the client - value for time expended, in most cases I think not. Why isn't there legislation around real estate agent fees, and lawyer fees (plenty of gouging there), and accountant's fees, and plumbers fees etc etc. Let's legislate the lot so we become a communist state told what we can and can't do by the government (China, anyone?)
  • Joe Siragusa | 22 Feb 2019, 01:32 PM Agree 0
    Seems to be Policy on the run with no consultation with the industry.
  • Rocket | 22 Feb 2019, 01:36 PM Agree 0
    I wonder if we could also look at placing a cap on the wages paid to the people running these commissions? And what about a cap on the amount of profit a bank can make? Why not a cap on what all professionals can charge?

    Actually, why don't we just take away all incentive for people to work harder and just put everyone on the same wage no matter what they do? I would love to compare the hourly rate of Commissioner Hayne with that of the majority of Mortgage Brokers.

    One thing that will happen is that any ongoing loan maintenance and minor increases will have to be handled completely by banks going forward, therefore increasing their costs. I wonder if the leader of "Which Bank" has factored this into his evil plan. There will be no need for Brokers to perform these duties as they will no longer be looking to protect their trail.

    Then when the banks stuff the client around and provide the crappy levels of service they offer us, the client will likely come and ask us to move them to another bank. (I would have said lender but there will probably only be banks left)
    • TMAC | 22 Feb 2019, 03:24 PM Agree 0
      You'll have to look after your back book even with no trail. If you send the client to the bank to do the top up, they'll refi them and you'll cop a clawback. It's just crap.
  • Hail Hayne | 22 Feb 2019, 01:59 PM Agree 0
    Agregators will have to accept less otherwise they will lose their brokers if this materialize.
    I am surprise no consideration was given for agregator fees, marketing cost, customer retention, Clawbacks etc
    I predict the whole industry will be gone in a few years.
  • Todd | 22 Feb 2019, 02:08 PM Agree 0
    great statement. It’s ironic Comden says we do nothing for trail however our names and numbers are plastered all over the clients home loan statements for questions, queries etc. Don’t get me wrong, like all of us, we are happy with this, however need to be compensated for all this maintenance work!
  • Cam Shaxson | 22 Feb 2019, 02:13 PM Agree 0
    What is our Business valued on "our trail book" so effectively what will it be worth when trail ceases, will the G'ov't compensate the many 1000's of brokers with a reasonable sized trail book??
    If we have no "add on value" once we settle the loan with the client, hence the so called removal of trail. Perhaps they need to review politician remuneration when they leave politics?? Why should they be paid a pension and other benefits when they are no longer in game, what add on benefits do they provide when they quit politics???
    • SA Broker | 25 Feb 2019, 02:54 PM Agree 0
      Absolutely zero - in fact they still suck money out of the public purse - a form of trail?
  • | 22 Feb 2019, 02:26 PM Agree 0
    How does a set percentage work on drawn down for construction loans? We all know this is drawn progressively. Will it mean that brokers working in this space won't receive their upfront commissions until the final progress payment has been made? That could take 12 months and more in some cases. Seems like it is all "shooting from the hip" decisions and no real thought or analysis of implications.

  • Wa broker | 22 Feb 2019, 02:58 PM Agree 0
    Then please go - I’ll service your clients for you - 1.1% upfront is not as good as what we have but can still be negotiated higher. Considering what we were looking at 2 weeks ago I can’t believe the attitude of some - might be good for some who have been in this industry too long to go.
    • survival | 22 Feb 2019, 04:43 PM Agree 0
      Obviously you don't know how to give proper service to existing clients, or you don't give it at all. Mr Felton and Mt White, you need to work harder to educate people like WA broker, and also work harder to get trail income stay as is. That is what we pay you for. WA broker has no idea and he/she is a multimillionaire and doesn't need income to survive.
  • Broker1 | 22 Feb 2019, 03:12 PM Agree 0
    well done labour for recognizing our worth and I absolutely agree with at least a 1.10% upfront commission to the broker paid via the banks. It was about time upfront was increased in recognition of the higher education standards, additional compliance processes and additional bank requirements forced upon us in the last 5-10 years.

    Now, that there is some logic in the upfront lets discuss the trail. Lets not call it trail and instead "ongoing review fees" in which is paid for by the bank. I suggest this should also be standardized at .25% plus GST. This could be calculated on loan balance annually and paid monthly for the next 12 months. Yes, banks can put measures in place that appropriate service levels to the clients are being maintained. After all if the bank pays this than I'm more than happy to provide review sheets on a regular basis.

    Now onto Clawbacks, these are to be removed. These are of no benefit to the consumer and as such she be made illegal.

    The big banks wanted change so lets look to improve the model for the consumer and broker - its not all one way (the banks way)
  • Broker1 | 22 Feb 2019, 03:16 PM Agree 0
    Hear hear WA broker, hmm 1.1% or $2,000, greed at its best. it’s time for the new breed of brokers to shine and the old trail based brokers to go.
    • understood | 22 Feb 2019, 04:38 PM Agree 0
      yes it will be interesting to see you new breed go. I think you will be out within one year because you have no idea. You are not selling vacuum cleaners mate
    • The Truth | 22 Feb 2019, 10:09 PM Agree 0
      A new breed of brokers? Sounds like you do not know what you are talking about.
      The trail allows the broker to provide all services during Pre & Post-settlement, at no cost to the borrower.
      Up front, only payments will see these new greedy brokers churning borrowers every 2-3 years & not working for the borrower.
      Trail fosters Relationship building between Brooker-Borrower-Lender.
    • Fat Albert | 25 Feb 2019, 10:16 AM Agree 0
      I remember a new breed of broker once...they were called 'Refund Home Loans'...because they thought their business model didn't need trail to survive either so gave it away #WhereAreTheyNow #YourNext
    • Y H N I (you have no idea) | 26 Feb 2019, 02:23 PM Agree 0
      you won't be around long. pal. you don't know how much work is involved
  • Pointless | 22 Feb 2019, 03:31 PM Agree 0
    No surprise to hear the MFAA have rolled over and accepted no trail...

    "our priority has to be on protecting the viability of the mortgage broking industry.”

    Without trail our industry is no longer viable...
  • JSB | 22 Feb 2019, 03:32 PM Agree 0
    Disappointing that Mike from MFAA seems to be accepting to discontinuance of trail.
    Trail is one of the best ways to remunerate brokers and to ensure good customer outcomes. no argument about brokers talking borrowers into bigger loans..
    There is an argument that says that only a modest processing fee much bigger trail would be best for everyone.
    Trail is only paid on the net amount borrowed, on an ongoing basis, so that's appropriate and reflects fair cost for the lender.
    Brokers would be obliged to look after borrowers
    Lower upfront costs make it easier for consumers to change lenders.
  • Sydney Broker | 22 Feb 2019, 03:43 PM Agree 0
    Not one comment about clawback. This is insane. if we go up front or fee for service there should be zero clawback!

    Clawback under this system is a serious risk to brokers.
    • Annonumous | 22 Feb 2019, 05:42 PM Agree 0
      Clawback limited to 2 years and cannot be recovered from the customer - its in the media release
  • Broker1 | 22 Feb 2019, 03:55 PM Agree 0
    Limit to two years that commissions can be clawed back, if you have read labor’s response.
  • Vic Broker | 22 Feb 2019, 04:33 PM Agree 0
    When we speak of trail, we really should be speaking of retainer. Banks are essentially paying the broker to service a mutual customer. I think this has been lost along the way. We need to be compensated for the ongoing work we do. If the trail/retainer disappears then I would imagine a good percentage of brokers will as well. Clawbacks not even discussed is a real concern.
  • LoanPunk | 22 Feb 2019, 06:35 PM Agree 0
    Brokers do need to get with the new world pretty quick. Move on from trail and whining about how low the proposed new up front is. Get focused on your business models, get your customer retention programs in place and god forbid, even consider an additional fee. Oh and you better start thinking about what’s next...education. Good brokers will thrive.
  • bugger | 22 Feb 2019, 08:57 PM Agree 0
    It buggers belief how Kenneth was conned by the man from Conn bank in deflecting the worse of the worse atrocities done by banks to their customers and Conn bank getting off with the smallest of fines in breaching AML law.

    Does anyone spoken to any Commonwealth Bank BDM recently or at they all on garden leave?
  • Mad Broker | 22 Feb 2019, 10:12 PM Agree 0
    Trails need to stay,

    All my family & all my clients will be voting ONE NATION who have made it clear that the current broker commissions should be retained & let the market dictate future arrangements.

    If the Big-4-Banks (especially the dishonest greedy CBA) do not like it they can all get stuffed & employ extra staff to market their productions. The broker industry should boycott them & see their market share reduce over time.

    We must make a stance & show both Labor and Liberal parties that their pro-Big-4-Banks is not acceptable.

    If we lose the trail commissions then all politicians should lose all their perks & extra superannuation payments.
  • Broker | 23 Feb 2019, 12:21 AM Agree 0
    Clawbacks should be strictly pro-rata if they cannot be passed on to clients - otherwise it impossible to forecast cash flow , not that these political nuff-nuffs would have any clue whatsoever about running a business.

    Can't think of any other profession that has to wait 2 years for clear funds, or do all the work for no funds at all. Not good enough.
  • The Customer | 23 Feb 2019, 06:45 PM Agree 1
    What brokers earn compared to what they do is ridiculous. On a 1M home loan they earn $6k upfront then .15% per year trail. If the loan lasts 10 years that’s $21k over 10 years what a rort.

    There is a place for great brokers but they need to provide true value at the right price and always act in the customers best interest not just ship a loan to the easiest place for them to pick up the best commission. That’s why the majority of broker loans still go to the big banks. I’m not sure where the balance lies but there is a answer but it may not be what brokers want to hear

    Many of the brokers I have come across are just paper shuffling used car salesmen.

    Thank goodness for the Royal Commission.
    • Rotate | 25 Feb 2019, 10:10 AM Agree 0
      Hey Customer - Bank Employee or whatever you are. Have you used a broker before, bad experience or not did it cost you anything - NO.
      $1m over 10years - $21k, that would assume it was an interest only loan - wouldn't all broker love those!!
      Wonder how much the bank makes - for their paper shuffling efforts, about $400k.
      Can't be ass'd going on about the other costs, but try finding any other paper shuffling service that's free to the customer!
      However I applaud you - for showing how ignorant the customers really are (if you are one) & when there are no brokers to help who'll you have to complain to then about the high rates you will be paying.

    • against | 25 Feb 2019, 10:11 AM Agree 0
      Hi " The Customer", Do you work for the CBA, or are you related to Matt Comyn? Why don't you run a business yourself to understand exactly what goes on? You are obviously an insurgent that wants to negatively impact proper competition and thriving small business. On second thoughts, go and get a job!
    • Gary | 25 Feb 2019, 01:42 PM Agree 0
      The trail is paid net balance of loans & the loan reduces over time, so it is not quite $21k.
      You are assuming $21k goes straight to the broker as a wage/salary & they have no costs for licencing, compliance, rent, printing, postage, computers, internet, phones, car, staff, tax etc to run their business.
      I pay myself a wage of $70k pa & the business runs at a profit of 18% after costs as above, but before tax. This leaves $4k profit over 10 years. This is not much for the risk we take in running a small business.
      We also have a 2 year clawback clause. Doesn’t matter if the customer sells, refinances or goes through a relationship split, we risk having to pay this money back to the lender for up to 2 years if the loan is repaid. No other industry I know of except insurance brokers and phone dealers as far as I know. Nobody has this clause on their salary either in any job.
      It's easy to make assumptions and make something look bad if you don't paint the full picture.
      Banks make margin/trail of 1%-2% on the loans regardless of broker introduced or direct to bank. They do have costs just like us, but most of this is profit. 3 times what we make.
      Banks have increased their margin 10 times in the past 30 months when the Reserve Bank has not moved. Have they shared any of this margin with any clients unless they asked for it. NO
      This is a free market and the banks are allowed to charge whatever margin/trail they like and nobody says anything. Why is it then wrong for a Broker to be remunerated in the same way the bank is for the loan?
      60% choose to use a broker. It took 30 years to get to here, but consumers voted with their feet over that time. If you are not one of them, then that is ok as it is your choice.
  • Sluggoinparadise | 24 Feb 2019, 08:35 AM Agree 0
    No trail Broking...

    To everything there is a season....CHURN , CHURN , CHURN!
  • Client5 | 24 Feb 2019, 10:31 AM Agree 0
    I agree with the above, and I agree with everyone including the reserve bank governer about the payments being upfront. You don’t need to get paid to call you clients every 6 months to see how they are going, it’s called client retention that leads to referrals and re-use.
  • hayne pain | 24 Feb 2019, 01:08 PM Agree 0
    Well said (the customer) I borrowed 750 k from a broker 2 years ago he refused to give me information about the trail and other information I thought I was entitled to, he was very offended by my request I even had to ask my solicitor why he wouldnt give me that information.

    I hope he has to sell his wifes Mercedes as a result of the changes as he doesnt deserve to be in the industry. His rivers of gold will transform into puddles of urine.

    Hopefully a group of professionals that work for the customer will survive and volumes will double.
    • Sydney Broker | 25 Feb 2019, 12:06 PM Agree 0
      Hi Hayne Pain
      I'm sorry you had to go through that experience, however I suggest that broker is in the minority. Just like any service or professional, there are good and bad apples and unfortuantely you had a bad apple and we would also like those gone from our industry.
      It has been a requirement to disclose upfront and ongoing commission since 2009 and all professional brokers have been doing this since then. We have nothing to hide as we are paid by the lenders to provide a service to you. It's a win/win you don't pay but you receive choice from the various lenders on a broker panel.
      I agree, if we lose those types of brokers, then there will be more business for the rest of us doing the right thing.
    • hayne pain | 25 Feb 2019, 08:42 PM Agree 0
      Thanks Sydney Broker.
      It would be nice to believe this is a minority experience but every body on this forum knows thats not true.
      Just like thinking the new government and their well thought out response to the problem wont cause a significant downfall in your industry.
      I am just a novice investor yet I can see a dead cat bounce from market manipulation on things like MOC shares. It will be a slow death for the industry in my opinion with maybe 25% surviving, the churn will be the exacerbation on the trail destruction and I will take advantage of it just like everybody else.
  • | 25 Feb 2019, 09:04 AM Agree 0
    If they want to make broker payments the same, since the RC was originally about BANK misconduct why not set the interest rates as well and have them the same for every bank. Hang on... that’s right... they deregulated banking didn’t they... or did they???
  • help | 25 Feb 2019, 09:34 AM Agree 0
    we need to keep fighting so the politicians understand what trail income is all about. Up to you MFAA, FBAA
  • Oscar W | 25 Feb 2019, 09:39 AM Agree 0
    So by the sounds of things, as it is currently, anyone wanting a top up and not using it immediately, means that a broker also has no income for the work carried out. May have to wait months for remuneration and then, only on the portion the client has used.
  • Paul Hamilton | 25 Feb 2019, 10:23 AM Agree 0
    The Reserve Bank Governor said on Friday that he believes trail makes sense.
    The Productivity Commission said that trail should be banned as it is a disincentive for brokers to switch customers. If that is their basis for not recommending trail this underlying assumption is simply wrong. They clearly don’t understand that the broker will be paid another upfront and then continue to receive trail.
    The decision makers and authors of these reports are really lacking in their understanding of the market. With all the current indicators suggesting that customers love brokers, why are we shifting. Swallow your pride pollies and maintain the status quo.
    • Gary | 25 Feb 2019, 12:15 PM Agree 0
      Well said Paul
  • Andrew Holmes | 26 Feb 2019, 11:48 AM Agree 0
    Trail has always been a deferred upfront payment. Always. The banks came up with this to reduce their costs to do business with brokers. We have to stop selling trail to the public as a payment for ongoing customer service. Its not and hard to sell as such. I know many brokers that provide excellent ongoing service and only a minor few that don't. But the same brokers with or without trail would continue to offer great ongoing service as this brings in something far more important - referral and repeat business. I do not want to lose my trail built up over 18yrs and I know its true value. But we are shooting ourselves in the foot pushing this as ongoing servicing. Its deferred upfront. Comyn knew this and pulled a fast one with convincing Hayne its for ongoing services. My own opinion only. Easier to sell deferred payment paid by the bank then ongoing service by the broker. And our aggregators must be really nervous having to negotiate their own costs/fees direct with lender as opposed to deducting it from our commissions. At this stage the 1.1% must be passed through to broker in total under this policy. The Liberals are meeting today apparently to confirm what actual policy and payment. Happy lending. Andrew
  • seqbroker | 26 Feb 2019, 06:46 PM Agree 0
    Hmm at 37% taking, aggregators need to change their structures..
  • SEQ Broker | 15 Mar 2019, 01:32 PM Agree 0
    Hmm, Lets look at this from a macro view. If labor gets in, our careers and incomes are probably the least of our worries.
    Being Spent into the stone age as they attempt to:
    * Funnel funds to their union mates
    * Spend us to the moon to try to keep the economy afloat (By employing more minions)
    * Spend a generations worth of wealth (again) to appease their greens mates who likely put them in government anyway.

    Someone said "money cant buy you love""
    In the lefts case it is "money cant buy you a balanced budget"

    Whinge over.
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