The former head of third-party at one of the major banks has suggested that broker commissions should be altered to reward more experienced brokers, sparking debate among brokers about how to reward high achievers.
“I have the view that new entrants to the industry shouldn't be paid the same as brokers who are obviously very experienced and know what they are doing and consistently submit really good quality loans,” Kathy Cummings, who headed up CBA’s third-party and mobile banking services until early 2015, told The Adviser.
“They are a far better proposition for the banks and therefore the aggregators could and should leverage that.”
Ms Cummings declined to elaborate on how such a proposal could work in practice.
The Adviser took the suggestion to brokers, who shot it down. Even the more experienced loan writers who were set to benefit personally from such a proposal were less enthusiastic about the idea. Many were particularly concerned about how such a model would affect recruiting and retaining new talent.
WA-based broker Timmy Wong from Finance Achievers has been broking for two years and said it would be unfair to base commission on a broker’s level of experience.
“As new brokers are yet to have built up a large database they are generally more available if the client has questions, and they will continue to keep them updated at every stage of the loan process, just as an experienced broker would,” Mr Wong said.
“Overall the amount of time and work completed by a new broker is just as much as any other broker.”
Time Home Loans director Ruan Burger, who has been operating as a broker for nine years, said rewarding those who are more experienced is unfair to the younger brokers who work just as hard.
“I know many young brokers that work twice as hard, are more committed and are just as passionate about lifting the profile of the industry as some of their experienced counterparts,” he said.
“Why would we want to create an uneven playing field when we are already facing scrutiny over commissions? We want this industry to prosper and grow, not discourage new blood.”
Meanwhile, Top Mortgages co-founder Mike Watts said it would be unfair if a broker’s commission was determined by their level of experience, noting that all brokers need to fulfil the same requirements to operate.
“Every broker that has completed these requirements deserves an equal amount of commission for each loan written,” he added.
Mr Watts has been in the industry for 12 years and said that experienced brokers already have a leg up over the less experienced.
“Where a broker has a larger level of experience, you could easily assume they would have a natural advantage both in product and bank policy knowledge, along with a greater understanding on how to generate new business,” he said. “This is a natural advantage they would have which would enable them to earn a higher income.”
“The more experienced a broker is, the more likely they will have a healthy database and hopefully a good reputation,” agreed Just Imagine Finance broker Catherine Salat, who has also been a broker for 12 years.
“That broker will earn more income based on more volume.”
[Related: Bank reveals new broker strategy]
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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