Major changes upfront commission structure

by Melanie Mingas14 Nov 2018

A major bank has announced changes in how it calculates upfront commissions for its brokers.

CBA became the third of the big four to make a change, following ASIC’s review of mortgage broking remuneration, the Sedgwick Review and ongoing collaboration with the Combined Industry Forum.

Effective from 24 November 2018, the change means upfront broker commission will be calculated based on the drawn down loan balance, net of offset and redraw facility.

 “As one of Australia’s leading home lenders we recognise mortgage brokers as a key channel for customers who are looking to purchase a home. We are committed to supporting our brokers and driving good customer outcomes,” said CBA’s executive GM of home buying, Daniel Huggins

 “Since ASIC’s review of mortgage broking remuneration and the Sedgwick Review, we have been working with the Combined Industry Forum to ensure we continue to drive and deliver good customer outcomes,” Huggins continued.

 “As part of our work implementing the principles developed by the Combined Industry Forum, we are making changes to the way we calculate mortgage broker commission payments,” he added.

In practice, this means that if a customer receives a loan of $800,000 and there is nothing in the offset account 14 days after settlement, the broker will receive commission on the full loan amount. If, for example,  there is $50,000 in the offset, commission will be paid on the $750,000 used for the property purchase.

According to the bank, the majority of customers draw down their funds within 14 days of settlement.

In September, NAB became the first of the big four banks to change how it calculates broker commissions, applicable from November 2018. The following month, Westpac announced similar changes, which are due to come into effect from January.

CBA will continue to review remunerations and also consider all broker and customer outcomes as a result of any changes made.


  • by P'd off 14/11/2018 1:48:09 PM

    Here's to low rate basic loans with no offset facility.....don't mention extra repayments and redraw until the 6 month catch up. Now that's in the customers best interest!!!

    What really makes me angry is the way the lenders, aggregators, media and ASIC ignore the real elephant in the room....CLAWBACKS....there's an incentive not to switch a customer to a better option in the first couple of years of a loan......yet everyone seems to ignore it and focus on trail as the reason for not acting in the customers best interest. Seriously...who would knock back a new upfront commission just to hold onto trail....

    What a joke.

  • by Ray Weir 14/11/2018 5:00:06 PM

    If any surplus funds are not immediately required (e.g. for deposit on another property due to settle within several weeks), just park them in the Solicitor's Trust Account or an existing savings account.

  • by Fed Up 14/11/2018 5:17:33 PM

    Lets be serious. I have never encouraged a borrower to borrow more to simply stick it in an offset or redraw. There are two outcomes here:
    Winner: Bank pays less commission
    Loser: Broker receives less commission.

    More and more work for less and less income. Unless this turns around the broker industry is doomed.