Recent commission incentives are certainly good for brokers, but not necessarily good enough
Recent commission incentives are certainly good for brokers, but not necessarily good enough
Lenders would have brokers believe they’re living in a golden age when it comes to commission (although pre-GFC brokers might disagree). With CBA just last week announcing the return of first year trail, following similar moves by the other majors, talk about commission has tended to drown out other criteria by which brokers pick lenders. Sarah Megginson has been investigating the topic for the forthcoming MPA issue 14.11, and she’s found three broker demands which commission alone won’t solve.
Read MPA’s full investigation, ‘Commission vs. Service’ in issue 14.11, on desks next week. You may also want to see our 'Brokers on banks' and 'Brokers on non-banks' reports.
Lenders would have brokers believe they’re living in a golden age when it comes to commission (although pre-GFC brokers might disagree). With CBA just last week announcing the return of first year trail, following similar moves by the other majors, talk about commission has tended to drown out other criteria by which brokers pick lenders. Sarah Megginson has been investigating the topic for the forthcoming MPA issue 14.11, and she’s found three broker demands which commission alone won’t solve.
1. Clawback reform
“Keeping in contact with my clients after settlement to make sure they’re still happy with their situation is a big part of my job. However, if I ring a client a year later and they tell me they’ve found a bank with a better rate and they would like to refinance their loan, I can get clawed back if I help them refinance,” says Josh Bartlett, mortgage broker at Loan Market. Reform to the rules around commission clawbacks would be welcomed, so brokers can help their clients make the best decisions for their situation without “getting penalised by clawbacks for doing so”.2. Faster turnaround times
Bartlett points out that it’s not just when processing the loan application itself that brokers – and their clients – require feedback from lenders. Pre-application services such as property valuations or LMI premium calculations are often deal-breakers for would-be borrowers, which is why “turnaround time when it comes to getting answers from the bank is important,” Bartlett says. “I value a lender whose BDM is honest, proactive and can get back to me promptly with an answer. Banks should invest in solid training for their BDMs before investing into new commission structures.”3. Fair play
“We’ve had a number of members telling us that bank branch managers have intentionally tried to influence their clients to switch to bank products directly, bypassing the broker who introduced the client to the bank in the first place,” says Peter White, FBAA chief executive officer. “If the banks truly… want to increase broker business, then they must educate their branch managers to support brokers, not intentionally try and claim brokers’ clients.”Read MPA’s full investigation, ‘Commission vs. Service’ in issue 14.11, on desks next week. You may also want to see our 'Brokers on banks' and 'Brokers on non-banks' reports.
