Aggregators have called it a “disaster” that the discussion around a broker fee for service model is even happening.
At a roundtable on Friday, leading aggregators gathered to discuss issues around the Royal Commission, aggregator ownership and best interest duty.
Led by Mortgage Professional Australia’s editor Otiena Ellwand, it included spokespeople from Choice, Connective, FAST, Outsource Financial, Plan, Specialist Finance Group and Vow Financial.
Brokers from around the country sent in questions and the first was around potential changes to remuneration, with the aggregator representatives agreeing the possibility of a fee-for-service model should not even be discussed.
Tanya Sale, from Outsource Financial, said, “We believe yes there will be commission changes, but they’ll be fine tweaked. We’ve just gone through two years of the ASIC review where this was discussed heavily. I think what’s going to happen is fine tweaks on the trail and the questions will always be asked on the trail … is what are we doing as an industry and mortgage brokers to earn that trail?
“I personally don’t believe fee for service will ever come into play in our industry. I think it’s a disaster we’re even talking about it. Post-GFC 98% of all mortgages in Australia was written through the major banks, now we’ve seen in the Royal Commission about the bank’s behaviour, so ask yourself the question out there why would a flat fee model come into play where that would just go straight into the hands of the banks.”
William Lockett, from Specialist Finance Group said, “The current model works very, very well … The trail commission is very, very important for brokers that do the right thing. It sets a relationship based relationship that’s ongoing, and it’s not a transactional-based relationship. In terms of fee for service … I’m surprised it’s on the table.”
Anja Pannek, Plan Australia, said, “Flat fee disadvantages competition and it very clearly disadvantages consumers in making some of the most important decisions they can make in their life. It gives consumers access to lenders who don’t have a physical footprint and the vast experience that comes with the broking industry.
“I think many of us all of us believe the changes we’ll make are very sensible, but we need to continue to look at how we can evolve the industry, it’s very, very important.”
Stephen Moore, from Choice, added, “Commission, both upfront and trail, structurally is the right approach, and from my perspective we know that it is a sustainable model from a lender perspective and we know that it’s fair and equitable and the most important thing here that gets forgotten is it’s the most affordable way for Australian’s to get credit assistance. Ultimately whatever we do here needs to have consumers in mind.”
You can view the MPA roundtable in full here.
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