New refund broker claims cash back not a marketing gimmick

by Mackenzie McCarty06 Mar 2013

Consumers deserve the ability to make an informed choice and avoid being conned by ‘wolves dressing up as sheep’, says the managing director of a new cash back model brokerage service.

Independent Mortgage Planners' (IMP) Craig Morgan says his newly-launched business model will succeed, unlike some refund-model brokers.

“We are pro-consumer and independent and we work on a fee for service basis.  So our ‘cash back’ is not a marketing gimmick,nor are we cutting off a piece of an already shrinking pie and hoping to survive on what’s left - like Refund was.  We charge a fair and reasonable fee for service and, like any professional services firm, can review our cash flow and P&L sheet and adjust accordingly.”

IMP’s  cash back home loan is based on the broker receiving an upfront fee from the client with all commission automatically refunded to the client’s home loan. A flat fee of $3,490 is charged to investigate the loan market and offer clients the best deal. After settlement of the loan, commissions are directed into the borrower's property loan account.

“The commission does not ever come to us; it goes directly from the aggregator back to the client’s loan which means that the loan will automatically be paid faster without any extra payments. The upfront commission is received within two months, and typically for a $500,000 loan this upfront commission is around $3,000. We estimate that over the life of a $500,000 home loan around $18,000 of commission is directly paid against that loan.”

Morgan says the fee is a ‘genuine fee for service’, where IMP ‘clearly’ states that they’re working on a pro-consumer basis. 

“It is specifically not a  success fee.  That said, there is a fee guarantee that basically says if, following our analysis, we can’t improve the client's position by more than our fee then they can elect to exit the agreement without cost.”

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  • by OzBoy 6/03/2013 9:42:45 AM

    Just bringing his income forward that's all. Don't know why he finds it necessary for some of the comments...perhaps it makes him feel better?!

    What about when St G/BOM/Westpac stop paying commission as they do for no reason, who will follow up the lender then?

    Clawback? From the consumer or from you?

    Another layer of complexity for the commission departments to deal with. Mmm interesting times ahead for all the admin departments.

  • by Mike Clarke 6/03/2013 9:46:39 AM

    I'm only going to say one thing. It's very much skewed to a 'transaction' based operation & not 'relationship' based. An 'adviser' can & does provide much more than just that one off transaction. Think value add.

  • by BONED 6/03/2013 9:51:28 AM

    'Commissions have to come from somewhere and the online lenders are putting gaping holes in the broker myth that ‘the lender pays our commission - so it doesn’t cost you anything’... I still can't get my head around comments like these! Lenders don't pay their staff Comm's so how do you explain accessing the same rate through a Branch. If Morgan's theory was true, then obtaining a loan via the Branch network would in fact be cheaper - but it is not! Ultimately, people with an agenda like Morgan are simply trying to justify their model. The online space is cheaper for obvious reasons - you don't need Einstein to tell you that!