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Government eyes commissions in mortgage broking

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Australian Broker | 22 Oct 2015, 08:00 AM Agree 0
Remuneration of mortgage brokers has been cast in the spotlight again, after the Turnbull government promised it will address “misalignment of incentives” in mortgage broking
  • Regional Broker | 22 Oct 2015, 09:11 AM Agree 0
    Time for the MFAA and FBAA to get their lobbyists going.
  • Tom | 22 Oct 2015, 09:16 AM Agree 0
    If you are going to crack down on commissions for brokers you need to then look at all industries for example the car industry, retail industry and so on. It would be a crime if some guy earns more from commissions flogging toasters at Harvey Norman than brokers get doing a great job in the mortgage industry .
  • Buddo | 22 Oct 2015, 09:21 AM Agree 0
    Ah, and there's Choice again, banging on about banning commissions. The very same commissions they wanted to earn when launching the Big Switch.

    I assume real estate commission will also be banned, as the agent could be 'influenced' to up sell a 5 bedroom home to someone who only asked for 3! Will the agent need to show that the home sold is no 'inappropriate'?

    Don't even start me on car sales & car finance!
  • AF | 22 Oct 2015, 09:36 AM Agree 0
    Would like ASIC & government to advise which other industries have income claw back threatening their income for 2 years.
  • SEQ Broker | 22 Oct 2015, 10:00 AM Agree 0
    As a broker of 10 years... Every now an then I see a lender try to entice us brokers into giving clients recommendations of that lender based on a tiny commission bump. To me the commission bump is far less important than the timely processing of a loan and the correct product structure to meet the clients needs. If you don't get this you could likely end up with a claw. I don't believe commissions change anything. Surely Choice has the research to evidence that.
  • Mountains Broker | 22 Oct 2015, 10:02 AM Agree 0
    Banning commissions and going to a fee for service will only cost the consumers more in the long run and further line the already overflowing pockets of the banks.
  • Bottom Line... | 22 Oct 2015, 10:23 AM Agree 0
    Commissions are paid at a lower rate than they were pre 2007. Trail in 2007 was 0.25%. In 2015 0.15%.

    Fee-for-service would see 80% of the market drop out and a return to the big 4 having total control of the market. The high interest rates of yesteryear (late 80's) will again have the potential to return.
  • Papery | 22 Oct 2015, 10:24 AM Agree 0
    This might reveal that commissions are actually not keeping up with the brokers workload to meet the already cumbersome compliance requirements, especially around the issues of actual affordability vs minimum servicing test and the unfairness of a 2-year claw back.... Oh wait... Now I'm dreaming!
  • Lou Scarano | 22 Oct 2015, 10:32 AM Agree 0
    CHOICE??... Do you have this view AFTER FAILING to implement your OWN (free) brokerage - only to discover you were breaking the laws and not complying with NCCP?
  • Broker | 22 Oct 2015, 11:03 AM Agree 0
    Well it has been the standard 6-8 weeks since this non-issue has been discussed.

    Just standardise commissions at whatever level and be done with it.

  • Phil in Finance | 22 Oct 2015, 12:26 PM Agree 0
    We all remember Choice and their effort with "Big Switch" loan campaign (involving them earning commissions)..... not what you may call impartial. They have a very poor understanding of our industry.
  • David in Qld | 22 Oct 2015, 12:38 PM Agree 0
    Tom & Buddo are correct - what about ALL the other industries earning commissions - we have so much disclosure now under NCCP that the client knows what we earn from day 1.
  • Broker | 22 Oct 2015, 12:41 PM Agree 0
    Choice would be better served sticking to their area of expertise, such as comparing dish washing detergents and peddling crap on A Current Affair!
  • Dave Robinson | 22 Oct 2015, 01:00 PM Agree 0
    I am with Regional Broker the associations should be getting the claw backs removed. This is a great opportunity to educate ASIC/APRA and others about how this really works. Then when they come out in the media making illogical comments we will know that it is not through a lack of education it is just who they are.

    It's not often we get an opportunity like this I really hope both associations can come together on this one topic and leverage it.
  • Coast Broker | 22 Oct 2015, 01:47 PM Agree 0
    Choice should stick to what they no best. That being comparing laundry powders. Who funds Choice anyway?
  • jitendra | 23 Oct 2015, 02:37 PM Agree 0
    So many rules and regulations that the clients know how much commission we make and sometimes the clients ask for half of the commission.
  • Charlie | 24 Oct 2015, 08:14 PM Agree 0
    There are already too many gatekeepers in the finance broking industry, including the industry associations (MFAA/BFAA), aggregators/franchisors, CIO, PI, etc that the one who does all the work (broker) earns just barely minimum wage. To shake-up the mortgage broking industry would be to get ride of gatekeepers who have no directly relations to producing the income.

    ASIC, ACCC, or NCCP are nothing more than keeping some people in their jobs, very little benefits to the end consumers in reality. The big banks would support the banning of commissions too, so the whole industry goes back to them.

    The bottom line is that brokers bring in competition to the industry and get the right finance for the clients. Any new law should be to kill the gatekeepers, allow the broker to go directly to the decision maker at the lender. It's illegal for banks to charge exit fees to a consumer, but legal for the bank to put clawback from a broker, which many brokers just flip that over to the consumer to pay, and it's all legal again?
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