The Finance Broker Association of Australia (FBAA) has announced it will be undertaking a global review of mortgage broker commissions to help build a case to keep trail commissions in Australia.
The FBAA’s Peter White
said the association will be reviewing the UK, USA and New Zealand mortgage broker markets, while further evidence will be gathered on the broker commission market in Canada.
The future of trail commissions was bought into question at the FBAA’s National Tour held last month, when Steve Weston, the former CEO of Mortgages at Barclays in the UK and former general manager of broker platforms at NAB
, pointed out that Australia is one of the last markets in the world to pay trail commissions.
“The other big, big difference is on remuneration – and that is something we should be concerned about with ASIC because regulators will speak to their international counterparts,” Weston told brokers.
However, White says there is “nothing exceptional” about the way the base-line commissions are structured in Australia’s broking environment – and a global review will highlight that.
“This research will clearly show that our commission structure is of an international standard, creates the right consumer outcomes, is commercially fair and appropriate for the extensive work done pre and post settlement for the bank and the client by the broker,” White said.
“This will form part of our arsenal and strengthens our industry position that the current commission structure is fair and equitable and in no need of a radical overhaul.”
ASIC’s report and recommendations on its mortgage broker remuneration review is due to government at the end of this year.
“We will continue communications with the federal minister,” White said.