A big four bank has advised mortgage brokers that its upfront commission structure will change from next month.
In a note to brokers obtained by The Adviser, ANZ’s general manager of broker distribution, Simone Tilley, explained that the bank has recently completed a comprehensive review of its commission structure.
“As a result, I wish to advise that ANZ will make changes to its upfront commission structure, effective 1 February 2018,” Ms Tilley said.
“We believe that the planned changes will provide a simpler commission structure which delivers on ANZ, aggregator and broker requirements and is more transparent for the customer.
“There has been no change to ANZ’s current trail commission structure.”
From 1 February 2018, ANZ will pay an upfront commission of 62.5 basis points.
Ms Tilley explained that this base upfront rate does not include any additional LVR adjustment component calculated and payable under the new structure.
The bank currently pays an upfront commission of 57.5 basis points. However, brokers writing more than $100 million with the group receive an upfront payment of 62.5 basis points.
The new change removes the volume-based incentive from ANZ’s commission structure, something that was recommended by the Combined Industry Forum in response to the ASIC and Sedgwick reviews.
ANZ continues to pay the lowest upfront commissions of the big four banks.
ASIC’s report into broker remuneration noted that volume-based and campaign-based bonus commissions that supplement the standard commission model can create potential conflicts of interest and “higher risk that brokers will place customers with lenders for the wrong reasons”.
As such, the Combined Industry Forum outlined that by the end of 2017, industry participants “should respond to ASIC’s recommendation” to cease these payments.
The Combined Industry Forum report, which was released on 11 December, revealed that there were 38 groups collaborating on the response, including the four major banks, five industry associations, aggregators, brokerages and consumer group Choice.
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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