FBAA defends brokers, slams AFR

by Julia Corderoy30 May 2016
The Finance Brokers Association of Australian (FBAA) has also come out in defence of mortgage brokers after an inflammatory article was published in the Australian Financial Review (AFR).

In the article, titled ‘Mortgage broker salad days are numbered’, the AFR calculates that in the September quarter last year, brokers would have received upfront commission of about $300 million and locked in another $50 million in annual trailing commission. 

“Brokers live in fear that commissions will be outlawed and when you look at the numbers you can understand why,” the article read.

However, the FBAA’s Peter White said if those numbers are correct, you are looking at a monthly gross income of around $4,166 when you divide it by the total number of brokers Australia-wide.

“That represents an annual income of around $55,000 which honestly can hardly be considered ‘over-the-top and excessive when the average Australian yearly income is around $70,000,” White said.

Many brokers do earn income well above this, White admitted, however, he said the remuneration is commensurate with national standards when you take into account the time spent.
“This AFR piece from a columnist that clearly has an agenda was totally misleading and even malicious and gave the impression that brokers are blatantly ripping off customers. Self-employed people have a right to earn as much as they can just like anybody else.”

“Trailing commissions too have been unfairly maligned,” White said. “The truth is they take time to accumulate and a year’s gross trail can never be seen as excessive or wrong by anyone’s standards.”
The FBAA is concerned this type of unbalanced article can have serious implications on the current review by ASIC into broker commission structures.
“Brokers now account for nearly 54% of all loans written so we must be doing something right,” White said.

Last week the CEO of the MFAA, Siobhan Hayden, defended brokers against allegations made in the column that the standards in mortgage broking lag behind other sectors, namely financial planning

“There are clear differences between the remuneration structures in mortgage broking and those in the financial planning and life insurance industries,” she said.

“Crucially, brokers are paid commissions by lenders; they are not paid by consumers. Commissions are also variable and reflect the cost of a mortgage.”


  • by P Thom 30/05/2016 9:21:53 AM

    The facts are most brokers earn much less than $55,000 more like $25-30k, if that. It's the old 80/20 rule, I don't see what the problem is? Clients want money, brokers meet that need. Let's face it, banks were caught sleeping at the wheel! Try getting them to answer the phone!

  • by Steve McClure 31/05/2016 12:24:36 PM

    The article in question seems it's been written simply after reading other articles, then makes an assumption that brokers fear commissions might be banned. Nothing is further from reality.

    Instead, consumers fear that the pure competition that brokers bring to the table (literally), would be severely diluted if commissions were removed. They understand that if the fairness of the broker industry wasn't there to legally act in their interests - the winners are the biggest banks with the biggest advertising campaigns, regardless of their rates, service & delivery standards.

    I don't know why AFR doesn't have their journalists research and present the article better, by speaking to industry insiders. If only their distribution and advertising base was growing as strongly as the popularity of broking industry.

  • by 26 years in 8/06/2016 8:52:49 AM

    One only has to look at the major shareholders in Fairfax to conclude that those same shareholders would benefit greatly from the major banks regaining market share. No great surprise that a Fairfax publication would publish an article like this, in my experience.