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Commission hikes on the horizon as lenders fight for broker market share

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Australian Broker | 03 Dec 2013, 08:00 AM Agree 0
Lender competition for broker market share has never been stronger, say industry leaders, and both brokers and their clients are reaping the benefits.
  • Steve Pacey | 03 Dec 2013, 09:44 AM Agree 0
    2008 saw the GFC drive Broker commissions down, 40% reduction. Cost of funds the driver. Fine, we are now 2013, Banks boasting record profits, cost of funding stabilized. Surely its about time to reinstate Commissions to where they were, especially trail. All brokers now have formalized qualification, Licensed, and face increased costs to run a business, yet we have Bank not paying trail in first year, and at greatly reduced rates of the past, time to start paying Brokers for out true worth.
  • oldBroker | 03 Dec 2013, 10:17 AM Agree 0
    Love when brokers say "...paying brokers for our true worth". A broker's true worth is whatever the market will bear, and many lenders have reduced commissions because they can. Remember: you don't get what you deserve, you get what you negotiate.
  • Be careful | 03 Dec 2013, 11:06 AM Agree 0
    Äggressive" consumer polices....better not let ASIC read that comment!
  • Papery | 03 Dec 2013, 11:42 AM Agree 0
    Consumers choose Brokers because we know what we are doing, we offer choice, there is a perception of trust & most people dont want to deal with the bastard banks & for most of us we dont charge & always go above & beyond whats required.
    The Banks/Aggregators/Regulators take advantage of us, with more & more being pushed onto Brokers with less reward & higher costs.
    Theres a reason that the Banks continue to make record profits. Like most big business, they take advantage of what they can when they can.

    You can bet if the Banks start paying better comms they will want more in return from somewhere & that may end up taking the form of new fees.
  • Steve McClure | 03 Dec 2013, 12:40 PM Agree 0
    When our market share was 30%, there was conjecture whether we should put our loans to banks or non banks. That argument still exists but I said at the time, our real focus should be achieving an irresistible 51%. MFAA says we are at 46%, well ahead of branches. Keep on pleasing customers and watch what happens.
  • Positivity | 03 Dec 2013, 01:41 PM Agree 0
    Homeside got it right years ago: decent upfront and ramped trail based on customer life with bank (not life of loan). Sharing profit with brokers.

    Commission cuts were started by guess who? (Westpac, 2008).

    St George played silly b*ggers with commissions too. They temporarily reverted to 0.65% and now seem overloaded, suggesting it worked
  • Broker | 03 Dec 2013, 02:15 PM Agree 0
    I refuse to support lenders that don't fully support the broker channel. I:e Westpac , lowest commission levels , longest clawback periods, ordinary interest rates , they give me no reason to recommend them to clients. It really is that simple
  • Really? | 03 Dec 2013, 03:38 PM Agree 0
    Steve P, why would you use a bank that doesn't pay trail year one if trail is so important? Your business is all about trail, you are building a potentially saleable asset, it doesn't make sense as to why a broker would support any lender that doesn't pay trail.
  • Broker 2 | 03 Dec 2013, 07:11 PM Agree 0
    Agree totally with Steve Pacey below. brokers are efficient for the banks, have quality submissions, time for the cycle to swing around again and the banks start rewarding this, share the margin I would have thought.
  • Steve Pacey | 04 Dec 2013, 12:03 PM Agree 0
    Reply to "Really'. Prior to GFG 2008, trail commissions were at least .2, some .225. and payable First year. Also sometimes you need to use CBA for customer/lending requirements, so impossible to exclude lenders due to their commission rates to Brokers.
    The point I was trying to make is that we are all paid 40% less then we were prior to 2008. I believe time has reverted back, and if anything possibly better then 2008, so why are we working for less. Maybe we should get "old Broker" to negotiate higher commissions for us all.
  • Broker | 04 Dec 2013, 05:24 PM Agree 0
    Yep , things are much better for lenders financially than 2008 and in addition we do twice as much work for about 40% less pay. The real issue here is that Brokers have lots of market share , (which should amount to some bargaining power) , BUT our Aggregators are collectively as weak as .... and / or they are owned by a bank and are therefore basically gagged. Either way you look at it , this model is not a good set up for Brokers now or into the future

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