A major lender is making changes to how mortgage broker commissions are calculated, becoming the first of the big four to do so.
NAB is introducing the changes in line with recommendations of the ASIC Broker Remuneration Review and Sedgwick Retail Banking Remuneration Review.
From November 2018, NAB will calculate the upfront commission a broker receives for a home loan based on the amount drawn instead of the total approved facility, and net of any offset facility.
This will mean that if a customer receives a $500,000 home loan and puts $100,000 of that loan into an offset account, the broker will receive commission on the drawn amount of $400,000.
NAB executive general manager of broker partnerships, Anthony Waldron, said NAB is committed to mortgage broking as a channel of choice for consumers, and that this change will support brokers to continue to put customers’ interests first.
He said, “Mortgage brokers play an important role in helping Australians arrange their home loans, and NAB continues to value and support them.
“We recognise that Australians increasingly use mortgage brokers, and we want to continually improve as an industry to deliver the best outcomes for Australians.”
Waldron is also chair of the Combined Industry Forum (CIF), which is made up of industry bodies, lenders, mortgage brokers and their representatives, aggregators, introducers, and consumer groups.
“As an industry, we are working together to make changes that are focused on doing the right thing, and to improve consumer trust,” Waldron said.
The CIF released its reform package in December 2017 – six principles that members are committed to implementing to ensure better consumer outcomes, preserve and promote competition and consumer choice, and improve standards of conduct and culture in mortgage broking.
The industry has also proposed a standard definition for ‘good customer outcomes’, which looks at the size and structure of the loan, affordability, responsible lending requirements and individual customer needs.
In coming months, NAB has said it will make further changes in line with the agreed principles of the CIF to ensure better consumer outcomes and improved standards of conduct and culture, while preserving competition in mortgage broking.