St George has announced a simplified broker commission structure that aims to provide brokers with less variability and increased certainty of income.
St George general manager of intermediary distribution Steven Heavey told Mortgage Business that the bank’s previous commission structure was unnecessarily complex.
“We have worked closely with the industry since introducing the changes in June 2008 and while our offering was one of the more attractive in terms of commission levels, there has been room for improvement in terms of its complexity to what degree an individual broker could influence the outcomes, and we have addressed these issues,” Mr Heavey said.
The new structure, which will come into effect from 1 October 2009, will have an upfront commission of 0.50 per cent on standard loans and an extra upfront commission of 0.10 per cent for conversion rates greater than 70 per cent.
Moreover, the new structure includes trail commissions of 0.15 per cent per annum, with trail payments calculated on gross balances.
According to Mr Heavey, the new structure will make it easy for brokers to declare their earnings.
“The new structure will help brokers meet the requirements of the soon to be released broker legislation, where they are required to declare everything to the public,” he said.
But while the new commission structure is less complex than its predecessor, Connective principal Mark Haron said the new structure represents a reduction in commission.
“The previous structure was simply too complicated and this new method is a lot easier to navigate, however, brokers will be forced to take a cut in their commission under this simplified structure,” Mr Haron said.
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