Weekend wrap: Fears amount over future of commissions

by AB18 Jun 2016
Making news this week the future of trail commissions and bonus commissions have been questioned and foreign investors were slapped with a new property surcharge.

Speaking at the FBAA National Tour in Sydney this week, Steve Weston, the former CEO of Mortgages at Barclays in the UK and former general manager of broker platforms at NAB, expressed concern about the future of trail commissions as a part of ASIC’s remuneration review.

According to Weston, Australia is one of the last markets in the world to pay trail commissions to mortgage brokers. Because of this, he said it is a reasonable assumption to say ASIC will be questioning this.

Incentive-based commissions are also likely to face the axe under ASIC’s remuneration review, the FBAA’s Peter White also told brokers in Sydney at its National Tour. 

“There is nothing fundamentally wrong with commissions that are paid to brokers today. The baseline commission is perfectly commercial,” White said.

“One thing I will say is that there are probably some commissions in the industry which are paid which are incentive based to drive volume that probably will get ruled out or challenged.”

Finally, foreign property investors in New South Wales will soon face a 4% stamp duty surcharge and a 0.75% land tax surcharge on residential property purchased and owned in the state.

According to NSW Treasurer Gladys Berejiklian the measures are expected to raise more than $1 billion over four years for “essential services across NSW” and will not have a negative impact on the property market.

“The Victorian experience has demonstrated that the measures have not had an adverse impact on the property market,” Berejiklian said.