Commission clawbacks to continue, says MFAA

MFAA chief executive Siobhan Hayden said it is unreasonable to expect clawback provisions to be removed altogether.

“Alternatively, the MFAA seeks to identify initiatives that will future-proof our industry and continues to table these with our lender partners,” Ms Hayden said.

Earlier this year, in discussing clawback issues, the MFAA identified that between 1-2 per cent of total loans transacted within a year are normally exposed to a clawback, and “therefore does not constitute a major business issue for the majority of finance brokers”.

“In all industry issues, the MFAA is committed to firstly understanding the matter from all views, and then working with stakeholders to identify reasonable solutions,” Ms Hayden said.

“An initial step for finance brokers is to ensure that they educate their customers on how clawback provisions work and that their disclosure documentation includes a clawback term.”

Ms Hayden is confident these steps will go a long way to reducing the effects of clawback on broker business.

Accepting that clawbacks remains a part of doing business, the MFAA in partnership with lenders has challenged lenders to adopt ‘broker best-practice’ for the industry, such as ensuring that any lender enquiries from a broker-introduced loan are redirected back to the broker.

“NAB and ANZ are two lenders that have adopted this policy to the betterment of the industry,” Ms Hayden said.

“I would like to see all lenders adopt policies that continue to support brokers as well as help prevent any further contraction in real broker earnings.”

[Related: Banks urged to reform commission clawbacks]