Reasonable clawbacks are essential for the viability of broker commissions, non-major bank Suncorp has said in response to claims that clawing back commission from brokers is “fundamentally not fair”.
Earlier this week, the FBAA announced it would be taking a stand against “unreasonable” commission clawbacks after the major banks reported increased profits over the latest reporting season.
Speaking to Australian Broker, the CEO of the FBAA, Peter White, said clawing back commissions from brokers is fundamentally not fair in most circumstances.
However, in response to White’s claims, Suncorp Bank
’s head of intermediaries, Steve Degetto said reasonable clawbacks are an essential part of conducting business through the third party channel.
“Reasonable clawbacks are essential for the viability of broker commissions. Without reasonable clawback provisions, there could be challenges to maintaining upfront commissions as they are,” he commented to Australian Broker
In a situation where a client has refinanced a loan shortly after settlement, according to Degetto, lenders are in fact sharing the cost with brokers.
“We recognise that brokers incur costs and devote time to introducing customers to a lender and have a best endeavours approach when they introduce their customers,” he commented to Australian Broker
“Lenders also operate on this principle and incur their own costs to process the loan, as well as other third party costs such as valuations and settlement costs. It is reasonable to expect that brokers and lenders share the cost when a customer repays their loan shortly after settlement.”