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Commissions make credit advice ‘affordable’

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Reporter 5 minute read

The CEO of a NAB-owned aggregator has revealed his thoughts on broker commissions, stating that he believes that they are “the most affordable way for Australians to get credit advice”.

While Choice did not provide a submission to Treasury on ASIC’s remuneration review (with NAB sending one submission on behalf of the whole group and suggesting that industry “needs to make adjustments” to commissions), CEO Stephen Moore revealed that he believes the industry was “in the spotlight for the right reasons”.

Speaking after releasing the group’s white paper, A word of choice: 20 years of mortgage broking, Mr Moore highlighted that one of the trends the aggregation group had seen over the past 20 years was a “continued regulatory focus and increase in professionalism” in the broking industry. 

He explained: “The right reason is because the broker channel is the number one channel for distribution of home lending in the country and certainly growing on the commercial side.” 


Mr Moore said that Choice was “absolutely supportive of commissions”, adding: “Commissions are fair and equitable. Commissions are sustainable, and commissions are the most affordable way for Australians to get credit advice.

“For that reason, we are absolutely supportive of commission structures in the Australian landscape.”

However, Mr Moore said that the industry does need to “lift the bar” in terms of achieving quality.

The Choice CEO elaborated: “In a market that continues to evolve, the status quo is not an option. Because if you are operating at the status quo when it comes to quality, and the expectations get higher, the net result is that you end up below expectations.

“So, as an industry (and that includes all players: brokers, lenders and certainly the role of aggregators), we need to continue to lift the bar on quality in everything we do and help brokers run more successful businesses. And that includes quality business processes, quality documentation and, most importantly, continued focus on providing high-quality customer experiences. Because that is the very reason why consumers have voted with their feet today and choose to see a broker.” 


Mr Moore went on to say that he found the willingness of industry participants to work together to find a solution to broker remuneration “really pleasing”, adding that he thought it was “really important because there is a genuine potential to self-regulate in this space”.

He said that the combined industry forum was valuable and that there was a general “recognition that compliance is not, in fact, about competitive advantage; compliance is about necessity”.

According to the Choice CEO, “it makes complete sense to lift that bar when it comes to quality” and the “absolute focus on customer outcomes”.

He concluded: “In an environment where there are lots of options and different approaches you can take — if changes are made based on driving better customer outcomes — I think that just sets us up well for the future to make the right decisions when it comes to evolving our industry.”

Mr Moore revealed that the industry was working “frantically” to provide “a combination of shorter-term deliverables” that address ASIC’s six proposals — suggesting that while some changes (such as systems investment) may take time, there was a “very strong focus on making substantial progress sooner rather than later… as in, months’ time”.

According to the aggregation group’s white paper, the other five trends that the group has seen in the past 20 years include:

- ongoing expansion of the broker proposition;

- growing interest in broking as a profession;

- increasing shift from “pure broker” to business operator;

- increasing role of digital platforms; and

- industry consolidation.

The aggregation group recently announced that its 1,600-strong broker network helped achieve a new loan book milestone of $65 billion, with annual settlements of more than $17.5 billion, propelling record growth.

[Related: Realestate.com.au Home Loans portal goes live]


Commissions make credit advice ‘affordable’
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