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More good news on commissions may be coming: Symond

Nick Bendel 2 minute read

Aussie Home Loans executive director James Symond has forecast that more lenders may follow the Commonwealth Bank’s lead in increasing commissions.

Commonwealth Bank announced yesterday that it would introduce first-year trail of 0.15 per cent from January 1 and was also considering increasing trail in future years.

It followed commission increases earlier this year from NAB, Westpac and Suncorp.

Mr Symond told The Adviser that an increase in mortgage margins had helped drive the increase in commissions – and that there may be more coming in the next 12 months.

“Do I think there are more commissions to be had? I think, from certain lenders, absolutely,” he said.

“I think we saw a strong contraction in commissions as the GFC came upon us, and all we’re seeing is commissions expanding in line with the margins on the products back to similar levels, although not quite to where they were before.”

Joe Sirianni, executive director of Smartline Personal Mortgage Advisors, said that the balance between lenders and brokers regarding commissions was now about right.

He added that the industry would benefit from a period of stability with commissions.

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“People always want more, but you’ve got to be mindful that there has to be an equilibrium for long-term sustainability,” he said.

Mr Sirianni said it could be dangerous if lenders significantly increased commissions – brokers might make investments based on the extra income, only for those lenders to conclude that commissions had reached unsustainable levels and needed to be reduced.

“In business, what we look for is consistency and stability so we can make decisions based on the facts in front of us. It’s those wild variations that can kill you,” he said.

Kathy Cummings, former executive general manager of third-party at Commonwealth Bank, said broker remuneration was more complex than just commission levels.

"Many brokers would be enjoying an increase in their commission levels as a result of the strong increases in house prices and subsequent larger loan sizes," she told The Adviser.

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“I would say the economics have to work, and while the economics may be working for some of the lenders at the moment, that situation is not necessarily sustainable long term.”

[Related: Commission increase spurs industry debate]

More good news on commissions may be coming: Symond
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