The Sedgwick review's proposed changes to bank staff's commission structure could mean in-bank brokers quit their jobs and venture out on their own, a leading union representative has said.
In an interview with the Australian Financial Review
, the national secretary of the Finance Sector Union (FSU), Julia Angrisano, said that overhauling remuneration for bankers while maintaining upfront and trail commissions for brokers would create an uneven playing field.
“Without immediate guarantees to those directly employed lenders that they won't be disadvantaged, then there is a real risk of a big exodus to the broker channel and that is something we are raising as a matter of urgency with all banks,” she told the paper.
“[Bank-based brokers] get paid a good commission and that forms part of the reason why they're lenders. If that changes and they’re not compensated for other things then they will be looking to the third-party broker channel and that is a significant concern for the entire industry.”
About the Review of Mortgage Broker Remuneration by the Australian Investments & Securities Commission (ASIC), Angrisano said she was concerned about the lag time between ASIC’s recommendations and Sedgwick’s.
She suggested the banks move towards a fee-for-service model for the third party channel and pointed towards the 2013 Future of Financial Advice (FoFA) reforms which banned commissions for financial planners.
“I think there are some clear parallels between what we saw in the way in which the income and commissions are structured for financial planners and what we’re seeing here for the third-party brokers,” Angrisano said.
“Fee-for-service is a very clear way of the customer understanding what is happening behind the scenes for that particular lender and what they receive for the service they are providing.”
She said the FSU has written to the major banks and hopes to meet with upper management over the coming weeks.
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