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Clawbacks are here to stay, says MFAA

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Australian Broker | 09 Nov 2015, 08:11 AM Agree 0
It is not reasonable to expect clawback provisions to be removed altogether, the chief executive of the MFAA has said
  • Bottom Line | 09 Nov 2015, 09:29 AM Agree 0
    For all the words that MFAA are trying re-engineer themselves to represent brokers rather than banks, their actions still show their true colours.

    Build fancy new offices, awards nights, drinks parties, but don't go near a real issue.

    If it only affects 1-2% of deals then why are banks so belligerent about not removing it - as if the % is so low, removing it wouldn't be a problem.
  • SEQ BROKER | 09 Nov 2015, 09:39 AM Agree 0
    Sioban: I like what you had to say. Thanks for your comment. However, please don't buy the line that claw backs are in any way involved with pricing for our channel. Garbage.
    Our channel costs lenders far less than branches, staff, training, on-site visits, compliance etc. If what you said has any merit, then broker pricing should be cheaper than direct.
    Whom ever sold you on that line should have been questioned on the spot! You can't seriously think that the broker channel costs any where near the same to originate a loan for a lender as directly.
  • Oscar Hvala | 09 Nov 2015, 10:06 AM Agree 0
    Yep... I'm beginning to advise my customers about clawback and how it affects both them (no longer being my client) and me (how it takes back the money paid as commission). Clients can't believe it. Just makes them have a more cynical attitude towards banks. In a way, it is hoped it helps to capture the client's call before they make any move towards their local branch for any changes.
  • Mark | 09 Nov 2015, 10:08 AM Agree 0
    Well that's it for me and my 4 employee reps, we will be joining the FBAA as soon as this years MFAA membership is up. This MFAA is an expensive completely useless organisation. I hope other brokers will follow this lead and join the FBAA as soon as possible. At least Peter White will go into bat for us to abolish clawbacks. And please MFAA explain to me how we have different pricing than the branch channel? Biggest lot of crap I have heard for years.
  • Jim | 09 Nov 2015, 10:29 AM Agree 0
    Maybe the above contributor should concentrate on writing more loans and quit whining about abolishing clawbacks. If you write enough loans, isolated cases won't worry you too much... It's not unreasonable for the lender to recoup commission when a loan has a very short shelf life...
  • Broker | 09 Nov 2015, 10:48 AM Agree 0
    A pre-rata scenario that reduces quarterly over 18 or 24 months would be a much fairer outcome, but since when have the banks ever been fair minded?
  • PC | 09 Nov 2015, 11:16 AM Agree 0
    When we as brokers return millions of dollars in profit then we probably won't be concerned about clawback... But as it stands with lenders varying rates at will, retaining clients is becoming more & more competitive. Losing income when a loan has run over 12 months impacts on our profitability while the lenders have have earned income on the same loan so their loss if any is minimal.
  • Peter White CEO FBAA | 09 Nov 2015, 11:24 AM Agree 0
    Correction - The MFAA DOES NOT represent the views of 75% of brokers in our industry. Let's stick to facts not fiction.

    There are approx 21,800 brokers nationally & MFAA only represent its members whereby not all are brokers so that's approx 50% of brokers at best (and this editorial may not be their views at all).

  • Boris Biskupic | 09 Nov 2015, 11:28 AM Agree 0
    Totally agree with the MFAA's stance on this one. Clear communication with clients upfront, with good processes and documentation goes a long way to smoothing this issue over.
  • Russell | 09 Nov 2015, 12:13 PM Agree 0
    I will also be voting with my feet like Mark when my MFAA membership is up for renewal moving to the FBAA.
  • Don | 09 Nov 2015, 12:24 PM Agree 0
    I stopped giving business to Westpac and CBA 5 years ago, I don't have a clawback since because they stole the my clients especially Westpac and still demand a clawback!

    Forget about MFAA, bloody useless and waste of money.
  • oldschoolbroker | 09 Nov 2015, 12:44 PM Agree 0
    I never did it before but since the banks brought in clawback I have actively started to churn my book after the clawback period expires. Greedy banks gouging me and my customers only makes churning easier. When I occasionally get charged a clawback, I immediately make a point of refinancing at least 5 of that lenders loans. Banks should learn not to bite the hand that feeds them!
  • Tony O | 09 Nov 2015, 12:47 PM Agree 0
    What does Ms Siobhan mean by the following statement made "their disclosure documentation includes a clawback term"? Can we clawback clients maybe!

    What do you do when you have 2 back to back and totalling $1.2Mil and due to property sales? I'm wondering if the lenders offering incentives for clients to borrow from them at the moment have clawback arrangements/conditions in the loan documents too?

    Would be nice if the CEO of an organisation representing members would be more supportive and realise issues of the members!

    One for Jim and his comment: Jim, it's not the end of the world sure, but an issue that needs discussion.
  • Broke Broker | 09 Nov 2015, 01:54 PM Agree 0
    Having incurred almost $20,000 clawback in a few months after spending considerable hours to set up the loan is a kick in the guts for a small business owner. Even with Clawback provision are you going to spend more money trying to sue your client to risk other business? If MFAA is our voice I suggest they join FBAA and push lenders to scale back clawback to between 50%-70% within 12 months. At least we still get paid something, don't get involved in legal dispute with clients and the bank still earns it's Interest Margin for not doing too much at all. We need support Siobhan Hayden not just playing down the importance of something that is clearly not Equitable in any other Industry. Don't let the Banks show so much disregard.
  • Dave Robinson | 09 Nov 2015, 02:42 PM Agree 0
    "aggregators such as Connective, FAST and AFG have all confirmed to the MFAA that they would intervene and support brokers where clawback provisions have been clearly explained but the broker was still unfairly penalised." Untrue and that is the kindest way I can put that.

    Ask them for proof. This industry takes what everyone says as gospel until you ask them to prove what they said then you are labeled a smart a#@e or trouble maker simply because you called their bluff. I can tell you from hands on experience (and I have the emails to prove it) that Connective and FAST won't/can't provide any push back at all to the lenders. If you are lucky you might get them to phone someone and then come back to you with the "well we tried but no go". In these cases I put my case directly to senior management in a writing with just facts and no emotion and got the clawback refunded, my aggregator was of no use what so ever.

    I like the track that MFAA is taking of recent but please deal with facts and ask for examples instead of blindly believing everything you are told. And don't get me started on that "pricing" statement it shows little knowledge of how pricing is set. I know it must be challenging to sit between brokers and lenders but if can't start with the facts the relationship will not move forward. Of course I am assuming here that the lenders want to move the relationship forward!? ;-)
  • Fairgo | 09 Nov 2015, 02:49 PM Agree 0
    A broker introduced loan is at a reduced cost to lender than a customer dealing direct with branch. Interest rate is no different whether through branch or broker. If clawbacks remain then they should be pro rata - how can the economic loss to bank be the same at the 23rd month mark than at the 13th month mark. MFAA has lost another member.
  • Greg | 09 Nov 2015, 06:11 PM Agree 0
    If they were to be removed rates and fees would increase... Application fees would become the norm and much higher than any you see now. There are very few good reasons why a loan needs to be repaid or refinanced inside 12 months.
  • Alex | 09 Nov 2015, 06:19 PM Agree 0
    The MFAA cannot represent brokers when they are funded by lenders.

    Only ever had 1 clawback however I don't believe there should be any in place. It is a cost of doing business and already costed for broker channel.

    It seems its time to change to the FBAA and then the MFAA might try to keep the membership happy.
  • SEQ BROKER | 10 Nov 2015, 09:10 AM Agree 0
    Just had a client sell a property where settlement occurred 13 days prior to the end of the claw back clause. I have a good relationship with the client, what am I supposed to do, ask her to put off selling her property so I can stay half paid?

    Send her a bill which even though I do have a specific clawback clause in my credit quote will feel unconscionable to me. Oh and it is only one of two properties with the lender as well, so they retain the client...
  • Regional Broker | 10 Nov 2015, 09:33 AM Agree 0
    I find most of the comments interesting to say the least, particularly those who are going to"vote with their feet".

    The comments are balanced and sensible, claw backs are a fact of life, what I am saying is lets get fairness in the debate please. If a clients has to sell due to illness, divorce, death of a partner, then the bank needs to think about whether it applies a clawback.

    If there is an internal refinance by the same lender (yes CBA & ANZ it DOES HAPPEN) then there must be NO CLAWBACK! If the refinance is brokers originated, then clawbacks should apply, as it is the situation needs looking at, will we ever get rid of them completely NO.

    Nice comment Peter White CEO of FBAA, care to tell us how many members FBAA actually has?
  • GC | 10 Nov 2015, 09:55 AM Agree 0
    Siobhan and the MFAA are supposed to look after our requirements - the people they charge to represent. Instead she tries to talk us around to the banks view - that they should be allowed to steal our income.

    There is no reason for clawbacks as the commission paid is for the successful introduction to the lender. Beyond the settlement we are paid the trail for the ongoing relationship of the client and lender.

    This is the ONLY industry where a person can have his income stolen by the payer because of actions of others - either the lender or the client. How on gods earth is that right? These actions by the lenders are unconscionable and need to be stopped NOW.
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