Marc Barlow: Slashing commissions is a bad idea

A Melbourne-based broker defends the current commission structure, but has some good ideas on how it can be improved

Marc Barlow: Slashing commissions is a bad idea

I am just a regular broker who, like many others, has built a sustainable business providing great service to my clients. I have back office staff who perform much-needed ongoing reviews to make sure our clients remain in competitively priced products. A good broker builds lasting relationships, something a lender finds difficult to match as their staff move through different roles and the client is passed on to the next file handler.

In recent days the topic of commissions has come up again, suggesting the link between loan size and broker remuneration could lead to poor consumer outcomes.

This is the system we all work in though, lender included. Profits are linked to loan size whether we like it or not. If a lender starts paying brokers a flat fee, it is likely that will mean the broker is paid less and the lender makes more profit. If the broker is unable to pay support staff, service levels slip and poor consumer outcomes become a certainty.

I take exception to any suggestion brokers are inflating the loan amount so they can be paid more because that is far from the case in my business. Responsible lending dictates the loan amount.

Commissions need to stay in their current form but I believe they should be linked to quality of the application and that should include a measure to make sure the borrower can comfortably afford the repayments.

We provide a necessary service and I don’t want to see this ruined by slashing our income to the point where all the good brokers leave. I can’t imagine a poorer outcome for the consumer if we lose all our experienced brokers and replace them with a cut priced, cookie cutter system, focused on the transaction rather than the client needs.

Marc Barlow has been mortgage broking for almost two decades, after prior employment with retail banks in Australia and the UK. Currently a mortgage broker at Mortgage Broker Melbourne based on Collins Street in the Melbourne CBD.

 
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