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Trail ban sparks anger and questions

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Australian Broker | 05 Feb 2019, 02:05 AM Agree 0
The Royal Commission report recommended a change to broker pay
  • Andrew | 05 Feb 2019, 09:06 AM Agree 0
    Would the last person to leave please turn the lights off...
  • craig | 05 Feb 2019, 09:30 AM Agree 0
    The lights are now off! Welcome to the dark ages!
  • All over red rover | 05 Feb 2019, 09:30 AM Agree 1
    Look for certain people to be appointed to Bank boards etc in the next 3 years. as CBA got off scott free, and finally got someone to do their bidding. The Royal Commission came back with almost exactly what CBA asked for.
    I'm winding my business up, as States with low average loan sizes, will be unviable. 28,000 people looking for work - best to start before the inevitable starts to sink in.
    Do we get a payout like any other people retrenched?
  • Kris M | 05 Feb 2019, 09:43 AM Agree 1
    Mike,( my letter to MFAA CEO)

    Hope you are well.
    Is that all we propose to do for this crap recommendation.
    Why don’t we request the same politicians for setting 1 more committee which has five members 2 from Brokers 2 from Big banks and 1 from small bank and then have a commission run again to find out fraud in Banks and Brokers alike ( upto 1 year all funded and paid by the tax payer)
    and how borrowing capacities are just made up for families at banks not even able to borrow or service.( not by all but by surely by few)
    We may also have to enquire why the judgement was so biased .( can there be future benefits for family or persons in this,)
    I can see the results very soon( 1 of the banks in 1 year we will pay 0.2 as upfront and no trail.)
    Which is short all paperwork done in Au will move to Philippines.( lost skill level and employment)

    I have worked hard and so has all the brokers for 12 years on 6 to 6.5 days a week 12 hrs a day minimum to attain some Traction and create employment for 2.5 persons.( we have invested 12 to 14 hrs a loan to get done or not get done) , discussing aloan scenario when you are watching a soccer match of your kids , discussing when you on Holiday like i always do)

    I had a brain bleed in Liverpool hospital in April 2018 due to pressures of Home loans,( 5 days in emergency)
    My youngest son complains that dad does not give him family time due to work.

    Sad to hear what we do is legal and correct , what we provide is genuine service and still we are in back foot as a criminal.
    Why can 1 man action be a destroyer for so many households and what are we going to do.( just request)

    Regards

    KM


    • All over | 05 Feb 2019, 10:37 AM Agree 0
      Agreed
  • Mega | 05 Feb 2019, 09:44 AM Agree 1
    Total ignorance of the broking industry by Hayne when he says that the broker's job is done once the loan settles. Every time and I mean every time a client contacts me I look at their current position and look at the following:
    . Is loan fixed and if so when does it come off fixed so I can discuss clients requirements
    . Is loan variable and if so what is the rate. If it looks a bit high I go and seek a pricing discount
    and at no time think of how I can churn to get myself a better return

    Never in 20 years of broking have I put someone into a loan on the basis of a greater upfront. The majority of upfronts are much the same these days anyway
    A great industry that needs to support each other
  • Sitiveni | 05 Feb 2019, 09:45 AM Agree 1
    This was definitely the worst case scenario which came to fruition. I don’t know if I have the energy to go on. I might just get a job at Bunnings
  • Edward the Broker | 05 Feb 2019, 09:52 AM Agree 1
    Can someone please publish the factual information about the percentage of actual banned brokers and bad broker loans etc. We have to have these facts at hand so we can get the message out there about how clean our industry actually is. Not smears and aspersions.
    • Matt Broker | 05 Feb 2019, 10:42 AM Agree 1
      Lets look at banned bad brokers V bad Bankers Accountants lawyers and Financial planners. All I keep hearing is "perceived" conflict of interest. Big Banks win Brokers Lose. It's not a fair world and hasn't been for a long time in Australia. I have always employed a young grad to give their experience and start their corporate career the trail was how I was able to do that and continue to grown. Now will go back to doing it all alone.
  • Brenton | 05 Feb 2019, 10:10 AM Agree 1
    i think we need a royal commission into the royal commission! Haynes clearly has an agenda for him to make such radical changes that will wipe out an entire industry. For Govt to blindly announce acceptance and implementation without even referring to their own reports is simply stupid and vote chasing. For the opposition to announce they will implement all recommendations without even knowing what they are first says everything about that party, dumb as hat full of hammers!

    If brokers have written 50% or thereabouts of all loans since say the GFC then who is going to want to help those clients into a better deal when they lose the trail post 1/7/20? Haynes also has not understood the reason for trail. it is not paid by the consumer for services, it is paid by the banks for the broker to retain the client for the bank. We use this to run our business so when a client needs to talk over their loan options we are here to help without costing them a single cent.

    i'm hoping common sense will prevail in the end and before its too late. Right now that seems to be thrown out the window.

  • | 05 Feb 2019, 10:14 AM Agree 0
    For the life of me why this country never punish the perpertrator and always make the whole industry pay for the conduct of some. It would be cheaper and a better outcome for everyone if the disincentives is big enough to stop bad behaviour. The way this is done, the consumer will end up paying. Expect the next round of rate hike and there is nothing the government or the regulators can do anything about it.
  • Cranky Franky | 05 Feb 2019, 10:21 AM Agree 1
    Agree with all the points and sentiments here. Just too little too late from Broker representatives. MFAA FBAA where were you. Aggregators were asleep at the wheel while their business model is shot to pieces. How can our reps say they are surprised?!! Productivity and all reviews prior recommended banning trail and commissions from way back. We should have marched in the streets then. And where is the supposed panacea to all this the CIF??? Geez that strategy worked well!
    • Annoyed | 05 Feb 2019, 11:35 AM Agree 1
      Indeed the strategy was appeasement. History shows that has NEVER worked.

      The Big Banks were always using these reports to reduce commissions under the guise of "better customer outcomes".

      This was never about the customer. Other than how much they can be fleeced after competition is reduced.

      If the Royal Commission found wrong-doing by banks, how is it that the recommendations offer them rewards?
  • Cranky Franky | 05 Feb 2019, 10:25 AM Agree 1
    And a note to people expecting "common sense to prevail" ....... it won't. That ship has sailed. This is the new Australia. As someone in another post put so eloquently - dumb as a hat full of hammers.
  • Mark | 05 Feb 2019, 10:29 AM Agree 1
    Just an Idea,

    Why don't we take a leaf from the N.R.A and be form a Single Issue Interest Group?

    The public message to the Politicians could be "Legislate away our Commissions and LOSE OUR VOTES!"

    By "Our Votes", I refer to votes from ourselves and our immediately families impacted by the removal of our Commissions.

    Who will be impacted? Mortgage brokers and their immediate families, ancillary services to the mortgage broking industry etc.

    • yes | 05 Feb 2019, 10:57 AM Agree 0
      Agreed - We need someone running in the upcoming elections
    • | 05 Feb 2019, 11:36 AM Agree 0
      Not so much running for elections... but rather, we hold a large chunk of votes that they (regardless of political party) have to listen to us with regards to Broker Comms.
  • All over red rover | 05 Feb 2019, 10:32 AM Agree 0
    I'm closing mine now - job seeking from today, before the rush - need to save my home somehow, with broking no longer viable.

    So how does say an ING/AMP/Suncorp etc customer get a $20k loan top-up under this format; as the Broker has to do a full application....so would need to charge a full fee for only a $20k increase.....(plus the Broker wont go to the customer, as it's no longer viable to do so; so client will have to get a day off, and drive to the broker).
    Alternatively, If the client refinances the whole deal, they will have bank and govt fees as well as the broker fee.
    Either that, or the customer cant top-up....or they will have to do it through an overseas call centre.....who cant do the face to face interview that is required, so will the face to face rule be suspended?.....and if all that happens, and the bank stuffs up the address, or cards, etc after settlement, the customer will be left high and dry, as the Broker receives an upfront payment, not an ongoing trail to constantly monitor & service the client ongoing.
    Once the transaction is finished, so will the Broker's involvement.....a client will become a customer.....yet all this is better for the consumer?
  • Terry Feduniw | 05 Feb 2019, 10:33 AM Agree 1
    Has the Royal Commission even barely understood the Netherlands pay for service model at all?
    In the Netherlands the fees consumers pay are tax deductable, as well as many other tax deductions relating to having a home loan. This totally doesn't exist in Australia, and will never be tax deductable.
    I fail to understand how our politicians can jump on the Commissioners band wagon without comprehensively analysing the consequences to the whole banking industry. This will no doubt make owning a home in Australia more expensive, much harder to achieve and the only ones benefitting are the big banks.
    I thought the purpose of this commission was to examine the conduct of the bigger banks and their extreme pay structures to their executives.
    Obviously not, and the decisions made are not just disappointing but totally disgusting. I bet Commissioner HAYNE will retire a very rich man, and retire laughing; hey?
    Consumers should remember the name HAYNE, for this is a very dark day in Australia's history.
  • Bemused | 05 Feb 2019, 10:33 AM Agree 1
    Q - what does Mcdonalds, the political parties and the banking enquiry have in common?

    A - They all have clowns working for them.
  • Skeptikal | 05 Feb 2019, 10:35 AM Agree 1
    We have 2 years TO TOTALLY SUPPORT NON BANK LENDERS AND THE MANY BANKS WITHOUT BRANCHES. Those THAT SUPPORT brokers because they NEED us! Let the big 4 see what they have lost. Show them what Brokers are really worth!
  • Mussells | 05 Feb 2019, 10:39 AM Agree 0
    Anyone like to stand as an independent? Wonder what we’d call ourselves?
    • Shawn | 05 Feb 2019, 10:59 AM Agree 0
      "Commonsense Party"
  • Mussells | 05 Feb 2019, 10:41 AM Agree 0
    Not only were the FBAA and MFAA relatively quiet and late to the party with their response, where were the big wigs in the mortgage industry?? Didn’t expect anything from AUSSIE given their owned by CBA but surely theirs a champion out there? Where’s the strong voice?
    • IZ | 05 Feb 2019, 12:21 PM Agree 0
      If you were an FBAA member, you would know how vocal and how much work Peter White has been, and is still doing. Aggregators have been more quiet, probably because the big ones are all owned by the big Banks anyway. Aggregators also have a lot to lose, so you would expect more from them. They also live off our trail.
  • Rob | 05 Feb 2019, 10:50 AM Agree 1
    The severity of Josh Frydenberg's backflip on his stance on broker remuneration must surely have caused him whiplash. How can anyone be surprised by the recommendations when Commissioner Hayne made his feelings clear throughout the hearings. His total lack of knowledge on the industry doesn't surprise, most legal people have no idea how to manage their financial positions. How long will it take for Aggregators to realise they will become extinct just like brokers? There will be nobody left for them to take a clip from and pay them their various fees (CRM, compliance). The impacts will be far reaching and it's too late to stop this from happening. Both parties have shown that this is a vote chaser for them and we all know that pollies only care about getting elected so that they can enjoy the benefits of office (and their superannuation when they lose their seats). The future of this industry is very short.
  • Mike | 05 Feb 2019, 10:56 AM Agree 1
    Bye bye mortgage broking industry and many non bank lenders. Welcome back big 4 oligopoly, lack of competition, higher rates and poor outcomes for borrowers
  • gonski | 05 Feb 2019, 10:59 AM Agree 1
    most people have only just thought about the up front and trail. that is only half the story.

    the missed part is that hayne thinks brokers should be regulated like financial planners with a best interest duty.

    financial planners are required to give a comprehensive statement of advice each time they give advice to the client. these are legally complex documents often spanning 140 pages.

    we will have to do that each and every time we do a loan whether that be a top up or product negotiation etc

    with all the cost, it's not worthwhile being a broker
  • Lisa | 05 Feb 2019, 11:18 AM Agree 0
    It's so disheartening to hear of the change that's going to happen in our industry.
    As a new to industry Broker I'm torn as to whether to get out now and save myself a lot of heartache and effort.
    Does anyone have any advice on whether I should ride this out and that things sound bad right now but will smooth out later.
    • J | 05 Feb 2019, 12:19 PM Agree 0
      Get out!!
    • IZ | 05 Feb 2019, 12:26 PM Agree 0
      Banning trail will hurt newer Brokers the most, as your trail book is not enough to live on. Those that have been around for some time would be earning a decent wage from trail and can better withstand a downturn. Trail books will become worthless however, so there goes your asset you could have sold to fund retirement down the track.
  • Broker | 05 Feb 2019, 11:22 AM Agree 1
    So no trail hey?

    So an existing client with a 500K loan wants to refinance - if trail is banned well there goes 3K of existing trail income that would've been paid over the next 5 years. So I'm now 3K down for looking after this client best interests.

    And the new upfront fee , whatever it will become likely won't even cover that loss. This has not been though through very well has it, but should we expect anything different from this bank engineered totally corrupt process?
  • Broker and broker | 05 Feb 2019, 11:39 AM Agree 1
    Brokers shouldn't be surprised at the BRC commission recommendations - after all the terms of reference were in fact written by the big4 themselves.....It should have been obvious what was coming.

    Nonetheless the key people to contact now are Bill Shorten 03 93261300 bill.shorten.mp@aph.gov.au, Chris Bowen the shadow treasurer and shadow small business minister chris.bowen.mp@aph.gov.au, Andrew Leigh the shadow minister for productivity and competition andrew.leigh.mp@aph.gov.au and Clare O'Neill shadow minister for financial products clare.oneill.mp@aph.gov.au

    I suspect when enough concerned brokers make contact the current opposition will further scrutinize the recommended changes on the grounds of competition.

    I couldn't care less if a big4 decided not to pay a broker comm - the CBA have been yearning to do this for some time. I choose not to use the big4 and haven't for years.
    But for the smaller lenders who rely on a broker network for distribution I can see how this could be viewed as anti competitive. So i don't agree that any legislative change to broker commissions are necessary rather the individual lending company be free to do as it chooses.

    Then of course there are the cross bench senators to contact.

    Ideally a senate committee needs to be established with representation from banks, brokers, small banks etc - every industry participant.

    Plenty of Water to flow under the bridge yet.
  • Kev | 05 Feb 2019, 11:46 AM Agree 0
    The government has decided this 3 days after getting the report with no consultation someone that actually know our business.
    The MFAA and the CIL should be having a meeting with the government to discuss this properly and discuss how this all benefits the big banks.

  • Skeptikal | 05 Feb 2019, 12:12 PM Agree 0
    All Brokers get together and launch a Class Action on our behalves. But we would all have to be committed. No point relying on MFAA or FBAA to do it for us. Any good solicitots out there that understand Mortgage Broking??
  • IZ | 05 Feb 2019, 12:32 PM Agree 0
    A big issue here is, that your trail book, once an asset that could be sold in future to fund retirement, will become worthless. Your only income producing asset wiped out.

    This is like telling a real estate agent that they can longer receive management fees on a rent roll. What about financial planners getting trail on your insurance policies? Most times you never hear from them again.

    Big Aggregators are owned by Big Banks, so they have also been quiet. Aggregators also rely on income from trail. They forget that they will also soon be out of business. Why are we not hearing from them?
  • Freobouy.. | 05 Feb 2019, 12:42 PM Agree 1
    Agree with all of the above . Haynes has single handedly destroyed an industry that has self regulated more than any other over the past 3 /4 years, is totally compliant and has a customer satisfaction rating of over 96%. How many other industries can claim this?? We may as well all put the cue in the rack turn off the lights and close the doors. Hayne you have no sense of reality!!
  • Hard working brokers WA | 05 Feb 2019, 12:50 PM Agree 0
    Our company has employed several families. We pro actively contact clients every 90days to ensure their loans are competitive and take time to negotiate and re-price better rates. We don’t get paid anything except our ongoing trail to do this. How can we sustain our company, team and clients interests without trail commissions?

    59% of Australians pick brokers over banks. There is a smell of foul play here for sure. CBA has got what it wanted.

    Hayne has a lot to answer for if he destroys this industry and the livelihoods of so many by taking us back after so much progress has been made.
  • apocalypse is here | 05 Feb 2019, 01:12 PM Agree 1
    Where are the aggregators? Coming to fight in the last round to save their own businesses from collapse! The majority of aggregators will not be sustainable with trail ceasing. Then with brokers poised to leave if UF’s are banned - not sustainable for any aggregation business. This situation also gives rise to Digital Banks. Every man/woman for themselves. Completely saddened by this outcome.
  • Disappointed | 05 Feb 2019, 01:22 PM Agree 1
    Well, not withstanding the destruction of our industry, the devalue of our business, and possible restructure of our business, you can see that shareholders are extremely excited about the report - bank shares are up 5% today for the majors. Which also shows me that the report has no credibility. Until yesterday, Shareholders were concerned about what was going to be written, so sold off shares. Now they see the report and realise that there was no issue for banks.- so price sky rockets. Of course, am I the only one to wonder who knew before hand... given that prices started rising yesterday before the report was released... no no, of course there was no insider knowledge.

    Had I gone with my gut feeling yesterday, I would have dumped every dollar I had into the sharemarket yesterday buying into the Big 4 and then lived off the commissions, sorry I meant to write dividends, I would be receiving from the banks as of today! I wouldn't have to worry about my trail book ever again....
  • Michael | 05 Feb 2019, 02:55 PM Agree 0
    On the stoke of a few ill informed public servants pens a whole industry will be washed away,

    Unfortunately we are the low hanging fruit,
  • RoyalCORRUPTION | 05 Feb 2019, 03:21 PM Agree 0
    Keyword search for "mortgage brokers" in the Banking Royal Commission report and you will clearly see that the basis of Hayne's total scorched earth destruction of the mortgage broking channel ...

    ... is "evidence" provided by the CBA ... which stands to benefit the most from the total destruction of mortgage broking in Australia.

    Hayne relies heavily on "reports" from CBA and does not refer to other more independent sources ... or to any source with experience in the mortgage broking channel.

    This Banking Royal Corruption is exactly that ... CORRUPTION at the highest level ... designed purely to totally shaft average borrowers and super turbo maximise the profits of the banks.

    Links to the report can be found here:

    https://www.ozbargain.com.au/node/436513
  • Broker's wife | 05 Feb 2019, 04:25 PM Agree 0
    Two things will influence the Government in power on this topic:
    1. Banks - #tickRC
    2. Voter opinion.

    If your business and livelihood is under threat (as it is for my family), rally support ASAP from those who believe in the benefit of broker services. If everyone sits around waiting for MFAA, Aggregators etc. to fix this - it might all be too late.

    You've only got everything to lose.

    Treasurer - The Hon Josh Frydenberg MP:
    https://treasury.gov.au/the-department/contact-us/ministerial-correspondence/
    department@treasury.gov.au
    https://www.facebook.com/australiantreasury/
    https://twitter.com/Treasury_AU

    The Hon Josh Frydenberg MP
    GPO Box 89
    SYDNEY NSW 2000
    AUSTRALIA

    The Hon Bill Shorten MP
    Bill.Shorten.MP@aph.gov.au
    https://www.facebook.com/BillShorten
    https://twitter.com/billshortenmp

    Hon Bill Shorten MP
    Suite 1A, 12 Hall Street
    Moonee Ponds, VIC, 3039
  • FP | 05 Feb 2019, 04:26 PM Agree 1
    As a Financial Adviser I've seen a lot of regulation and bad press come our way over the years, new compliance, legislated commission changes on life insurance etc etc, but nothing compares to this industry destroying recommendation from the RC.

    I heard nothing during the RC that indicated that there was large scale corruption or misconduct by the Mortgage broking industry. I heard that banks had poor lending standards and should consider an individuals ability to repay a loan better, but nothing about MBs.

    People won't pay an upfront fee, when the alternative is to get it "free" from their bank. Your industry will survive but it will shrink to a very small niche of clientele with specialist needs.

    We trialed a "Fee for service model" on life insurance policies with a full dial down on commissions, it worked very well as a new business repellent! we would have lost 80% of new business as its hard enough to get a client to sign onto a new life policy as it is, making them pay a fee was a bridge too far.

    A question though.. When do you charge a Fee for service? is it at the outset or at completion of a loan? if you charge at completion, what happens when a deal falls over at the last minute? Do you still get paid and how hard will it be to get a fee out of client who hasn't gotten what they want?

    A true fee for service model is a reflection of your time spent so it should be charged at the outset, but with no certainty that the client will get a loan it will be a big turn off for most.

    Good luck brothers, hopefully this gets watered down and never sees the light of day

  • Jitendra | 05 Feb 2019, 04:35 PM Agree 1
    With many brokers leaving industry due to trail banned, big 4 branches will write more loans...what about lenders with no branch network? Big 4 are winners here
  • mikey b | 05 Feb 2019, 09:30 PM Agree 1
    I recently started using a mortgage broker for my home loan and I think the work they do for me and others behind the scenes is quite incredible. I work a 40 hour week just like a normal person and struggle to make ends meet and wouldn't be able to afford or even consider paying a few thousand dollars as an upfront fee for a service in the future. My view is that the broker is the one that deserves the trailing commission for the life of the loan because they're the ones going out there and getting the work. Why should the banks get the full praise when the work is virtually handed to them on a silver platter. Brokers deserve the trailing commission and more. They are giving the banks good business and should be rewarded longer term for this. I've tried a number of times in the past to speak to a lending specialist from a specific bank over the phone and from my experience I can say they lack the knowledge and wisdom in comparison to a mortgage broker. I would choose a broker any day of the week; but if the upfront fee for service kicks in the future then to be honest I probably wouldn't be able to afford this. I really hope this matter gets resolved asap. As my broker atm is very helpful to my now even though I have the loan.
  • Bill | 06 Feb 2019, 01:06 AM Agree 1
    I do not charge a direct fee for my service at any stage of dealing with customers & there is never an obligation to always deal with me or go ahead with detailed options investigated & provided.

    The trailing commission allows me to be available to talk to my clients' post-settlement with any issues they have with their loans or require guidance with any future finance matter. AT NO COST. I make that clear to the clients that the trail allows me to provide this service.

    This service can not be provided by the Lenders as their staff are not willing to help & they can never find the right experienced person to talk too (Most time waiting for a long time on the phone when they phone the call centres, branches never take calls).

    I always review loans every 2-3 years & explore what options they have, their current lender is always given the chance to match market rates, most of the time I am able to negotiate a rate where the client stays with the lender (No direct charge to the customer & I do not get any commission for this service by the existing lender) . But clients always have the option to refinance (Becuase the Broker works for the client).

    If they request a refinance I pay for the transfer costs from the upfront commission paid by the new lender. Therefore the client wins & is in full control.

    I recently started sharing my upfront commission with FHOB due to the trail commission being paid, now this will stop. Client misses out big time.

    Banks know that paying a trailing commission is cheaper than additional staff being employed (Where they need to pay rent for offices, running costs, superannuation, WorkCover, sick leave, LSL etc). Why would the banks say that it is a cost unless they want to make more profits).

    The commissioner is either insane or is getting a kickback from the Big 4 Banks who will have the power to charge what they can get away with as there will be less competition.

    How can he think that the client will be better off paying for a service that they have been getting for free? Lenders will now demand that clients go online & apply for loans with little guidance.

    All I can say is the commissioner is one STUPID person who does not live in the real world & has been paid millions for his idiot recommendations. It makes me sick that these people can continue to destroy our industry & make the client's life much harder & expensive.

    The Government will be kicked out of power if they adopt these insane recommendations.

    Look what happened with ASIC & APRA demanding reduced use of Interest only loans, The banks just increased interest rates & made Billions. (they increased rates on all products).

    We need politicians that understand that a good Broker will always look after the client's interests & is the only one that wants a long term Financial Relationship with them. Trailing commission works to the borrower advantage!

    Back to the dark ages & a lot of people out of a job & the Big 4 with start making record profits.
  • Shane | 06 Feb 2019, 09:05 AM Agree 1
    Does Kenneth Hayne have a personal banker at CBA. Is there a conflict of interest

    Is there an insider who can advise
  • Royal Dipstick | 07 Feb 2019, 12:45 PM Agree 1
    So anyone wanting to refinance to a lower will have to pay an upfront fee which would defeat the purpose of the money you would have saved ....yeah real smart Hayne you dipstick.......me thinks best interests were only for the banks
  • Maggie | 09 Feb 2019, 06:27 PM Agree 0
    Does anyone have this evidence that Haynes mentions from CBA ? Id like to see it. Has it been examined and verified, and even if correct ( which I doubt) why not just standardise the upfront not make consumer pay ( which they clearly wont ).
  • J Dredd | 14 Feb 2019, 10:21 PM Agree 0
    There’s still a place for mortgage brokers, just change the revenue model. As has already been said, move to a flat fee which actually reflects the amount of work hours involved or move to charging by the hour. This will be a major step change with the removal of trailing commissions but the gravy train has come to the end of the line. Time to grab your bag and alight onto the platform.

    • IZ | 15 Feb 2019, 11:47 AM Agree 0
      How can you charge a flat fee, when the loan could be $100,000 or $1,000,000? This hasn't been said at all. Before trail, the fee was still a percentage. To compensate for loss of trail, that needs to be 1.1%. Bnaks will still be ahead I'd imagine. We would also need to be able to charge the client for clawbacks. I don't know anyone that likes to work for free or lose their upfront that they spent 1-2 years ago.
      How is trail a gravy train? Will Financial Planners lose their trails on your insurance policies? Will Real Estate agents lose their rent rolls? Bank staff don't service their existing clients loans, so is their salary a gravy train too? I suggest you pack your bags and work in the Netherlands. You won't last 5 minutes on their model.
  • Tim | 15 Feb 2019, 04:31 PM Agree 0
    So do you spend ten times as much man-hours to process a $1,000,000 mortgage loan verse a $100,000 one? Why do you brokers deserve 10 times the money for doing essentially the same amount of work? Why is a flat fee a broken model when there are plenty of independent financial planners in Australia using that model?

    I got my risk insurances through an independent financial adviser who charged a fixed fee and the premium on the insurances were calculated on a nil-commission basis. This gave me 30% discount on the insurance premium. If it works for them, why does it not work for brokers especially if you guys think your services are valuable and worth $$$ to pay.



    • IZ | 15 Feb 2019, 06:15 PM Agree 0
      Which independent financial planners? They also charge thousands for producing a piece of paper such as an S.O.A. They also charge the client directly for this. 96% of people said they would not pay an upfront fee to a Broker. The ones that would said they would pay $500. There would be no incentive to refinance as there would be no saving if a fee was added on top. This reduces competition.
      Secondly, if you expect Brokers to live on a $500 upfront payment and no trail you are dreaming. By the time they pay licence fees, mandatory Professional membership fees, Professional Indemnity Insurance, other running costs and Aggregators taking 10%, how many Brokers will there be? They certainly won't be employing anyone.
      The average Broker is earning approx $78,000 according to the ABS, so do you think that is over the top?
      The example of the Netherlands flat fee model has been a disaster. This first hand from relatives in the accounting and financial services industry there.
      You also forgot to include the trailing commission your financial adviser gets on your insurance premiums, every year, increasing as your premiums increase every year. Now that's a rort. They want to stop trailing commissions to Brokers, which decreases as the loan decreases, for services and communications provided monthly. Your financial adviser would be lucky to contact once a year if ever. I know my previous CBA adviser never contacted me after his sale to me.
      Comparing a Broker to a financial adviser is bollocks. You must be one of them. If you think Broking is so easy, give it a go. The most highly regulated industry in the country. Sounds like you need to go and do some actual research before commenting.
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