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I think brokers should get the same outcome that us financial advisors got. All commissions are banned in lieu of a fee-for-service model and if the broker want's to continue receiving trail payments after the first 12 months then they have to get the customer's consent every 2 years with an Opt-In form. Then they have to send a customer a fee disclosure statement every 12 months telling the customer what services they are/were/will be entitled to in addition to their bi-annual home loan statement and on top of all that force every broker to complete a 3-year university degree at their own expense of $30,000. Then we will see how many brokers are left in the industry, all in the name of "better serving the consumer". All this should weed out the cowboys right?
A very simple solution - A mandated, set rate of commission paid by all lenders. No bonuses, no volume requirements, etc. A simple % of loan value is paid. No upfront or hidden fees, clear and honest declaration of income.Even better, substantially increase rate of trail (at expense/elimination of upfront), and more brokers will do the right thing by their client by managing the loans effectively, repricing with existing lender - eliminates customer churn, assessment staff wastage and processing of short-term, loss-making loans. Everyone wins.
Re: NIM (Concerned) - I agree, however this balance would be far more easily "managed" cost IMO, than that of acquisition and processing of new loans (only to lose them 12-18 months later).I also note a large percentage of my new potential clients (~20% are seeking a $ for $ refinance only) is due to current lender incompetence and poor service. Over the last twelve months I have seen significant improvement in the existing lender's ability to reprice existing customers upon request - even those who are our clients in name only. We receive no direct payment or reward for this service (as in many/most cases we did not write original loan), however the customer obtains a good outcome (and will likely become our client in the future when their circumstances change).We operate in a small community where reputation is king - and hold such significant market share that we are able to provide this service to the public - I understand just how "lucky" we are to be in this position, however if incomes were based more on FUM and less on new business then all brokers could provide the same level of service/convenience rather than the current "churn" experienced by all, and often to the frustration of customer.
Let's be careful what we wish for. Added trail will place larger pressure on NIM
Agree with the ramped trail. However I still think the whole thing is a waste of time. Broker commission are fair and at no detriment to the client. I just hope some government person who's never written a loan in his life makes a dumb decision and send us all broke.
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