The most commented story of the week last week was again on the heated topic of clawbacks.
The article Don’t bite the hand that feeds you, says lawyer
looks at the clawbacks debate in a different light – and it’s not surprising that most brokers disagree.
voiced his disapproval of lawyer Jon Denovan’s opinion on clawbacks. “Very easy for someone sitting in a chair charging $450 per hour saying clawbacks are fair. I can't imagine him refunding his professional fees for advice given in event client losses his case based on his firms recommendations. Double standards if you ask me.”
agreed: “This idea that clawbacks are okay in the brokering industry is almost always supported by lawyers and none of them have clawbacks. Does this not seem strange to anyone else? In fact, what other industry does have clawbacks?” This commentator believes the answer is less regulation. “The banking sector in Australia worked just fine when we self-regulated.”
Other commentators agreed with Denovan. Level Head
said: “Finally a voice of reason. No one likes claw backs but let's keep it in perspective please. Love the idea of bringing back exit fees provided we can return to claw back periods of 12 months maximum.”
And some commentators were pragmatic in their assessment of whether clawbacks would be banned in future.
“Don't expect them to not continue clawbacks because they're here to stay. Just look at how lenders were dragged kicking and screaming to the altar of Swann's early loan repayment fee changes. That was the time to have clawbacks rolled, but now the chance is lost,” said OldBroker.
said it is up to the broker to insert a clause in his contract allowing a recovery of commission if client refinances or exits the loan.
But Comment of the Week goes to Change Broker,
who sums up the frustration brokers appear to be experiencing in regards to commission being taken back.
“What I took from the discussion was that mortgage brokers have no say in relationships between lenders/aggregators /and industry Bodies. Most comments were about the length of claw backs, 18 months to two years, and many were of the opinion that 12 months is enough. The frustration is the lack of a voice in the process, with industry bodies and aggregator's lacking the ability and motivation to argue a case for fairer mortgage broker conditions. Agreed the politicians got it wrong with exit fees, but for now, again, nothing has changed.”
Thanks to all our valued commentators this week – keep the debates coming over the next five days!
Read the article and more comments here.