Weekend wrap: New data dismisses age-old commission conflict

by AB11 Jun 2016
Making broker news this week, AFG released extensive data proving broker commissions are not a form of conflicted remuneration; the FBAA is reassuring brokers after ASIC revealed it will be calling on brokers to provide data; and ME Bank announced new foreign investment restrictions.

Mortgage broker commissions are not a form of conflicted remuneration, AFG data submitted to ASIC’s mortgage broker remuneration review has found.

AFG general manager of sales and operations Mark Hewitt spoke to brokers in Sydney this week, saying the data proves the assumption that brokers are incentivised by commission is “incomprehensible”.

“We had a look at our highest payer on our panel and the lowest payer on our panel and we worked out that the differential between the average [rate of commission] and the highest paid works out to be $2.10 a week,” Hewitt told brokers.

The FBAA is reassuring brokers after ASIC revealed it will be serving notices to brokers to provide data as part of the remuneration review.  

Peter White of the FBAA spoke to Australian Broker, outlining what brokers can expect from the watchdog. 

“What will happen as of next week is notices will be served on the lenders for the data collection. The week after that the notice will be served on the aggregators. Brokers will be last on the list to get notices served on them,” he said.

“That will be about two to three weeks away before that happens.”

Finally, ME Bank has announced new and severe foreign investment restrictions.  

The move follows widespread money laundering fears and will restrict borrowers not residing or employed in either Australia or New Zealand.

“The primary driver for the latter is the ability to verify the foreign income. For a bank our size, it is difficult for us to put in place processes at suitable costs to manage this segment,” said a statement released by the lender.

“These are prudential measures designed to ensure our flow of new business in line with our target market. This is particularly important in light of changes by the majors which can increase demand for smaller banks who haven’t also applied the same policy.”