Don't be wooed by commission bumps, broker head says

by Julia Corderoy07 Aug 2014
It has been a big year for commissions, after majors, non-majors and non-banks have all revealed significant changes to their commission structure.

This has prompted questions of whether these increases in commissions can ever influence a broker’s recommendation.

FBAA Chief Executive, Peter White, wants to put this issue to bed, reaffirming that a broker's first and most important job is to find the right loan for the client’s needs. Brokers must be able to look past the commissions – regardless of any bump ups, White said.

“It is extremely important that brokers are not compromised by commission rates," he argued.

White said responsible lending under the NCCP dictated that brokers not be swayed by commissions when addressing client needs.

“The bottom line is this: If you cannot understand the needs of the client then you can't begin to structure any sort of loan for them," he said.

But this does not mean brokers should necessarily shy away from products paying a competitive commission, White suggested; merely that commission not be a driving factor in choosing the product in the first place.

“The determination by the broker can never be based on the amount of commission. If it works out that the loan that pays the highest commission is the loan that is not unsuitable for the borrower and meets their needs analysis, so be it.” White said.


  • by Bottom Line 7/08/2014 10:11:35 AM industry where some lenders have simply caught up to the others - and that's seen as a risk? No-one has gone out and separated themselves from the pack; and commissions are still lower than they were 7 years ago.
    Not sure there are too many industries that receive a lower rate of pay than they were getting 7 years ago. Yet the 'middle men' eg COSL etc have doubled their premiums in that time; Credit licence increases each year..etc etc.

  • by MCC 7/08/2014 10:13:33 AM

    Thanks Peter. A no brainer really. No matter how much the lenders try & increase market share via higher commissions , if that's the intention, it simply cannot work.

  • by Jake 7/08/2014 11:21:30 AM

    On which side is Peter White on? When lenders cut commissions we all complained and now that they're coming back slowly, the head of the FBAA is pouring cold water on it. These sorts of comments do not help the broker industry, and we thought that the MFAA was the only one in the lenders' pockets!