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NAB backs remuneration structure but calls for ‘improvements’

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Reporter 3 minute read

The major bank has written to brokers highlighting that it supports the current broker remuneration structure but recognises that “improvements” can be made.

The bank’s general manager of broker distribution, Steve Kane, sent an email to NAB-accredited brokers this week reaffirming the bank’s belief that the remuneration structure for brokers “enables greater access and affordability to lending” for consumers. 

In the email, Mr Kane said: “At NAB, we’re focused on helping customers through every stage of the home loan process.
 
“This means continually supporting mortgage brokers, who we believe play an essential role in providing strong consumer outcomes and enhancing competition in the home loan market.
 
“NAB remains committed to mortgage broking as a channel of choice for consumers.” 

“We have been honest and upfront that changes need to be made”

The major bank is a key player in the Combined Industry Forum (CIF), with its executive general manager of broker partnerships, Anthony Waldron, chairing the cross-industry group.

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As such, Mr Kane highlighted that while the bank supported the current remuneration structure for brokers, it recognised that “improvements”, such as those put forward by the CIF in its reform package, could be made.

“Through the CIF, and throughout the various inquiries into mortgage broking, NAB has always been upfront, open and transparent with brokers about our views and our position and our support of the industry,” Mr Kane said.
 
As we have said publicly, it is NAB’s position that, rare exceptions notwithstanding, upfront and ongoing trail commissions do not lead to poor customer outcomes.

“We believe that the current remuneration structure enables greater access and affordability, for all consumers, to lending via brokers.
 
“However, we recognise that improvements can be made. And we have not shied away from this, or sought to mask this; we have been honest and upfront that changes need to be made in the interest of ensuring the continued growth of the mortgage broking industry.”

As such, the bank said that it was “supportive of and working towards implementing the six reform principles agreed to by the CIF”, which it believes will “ensure better consumer outcomes, preserve and promote competition and consumer choice, and improve standards of conduct and culture in mortgage broking”.

The principles are:

  • To tie the standard commission model to facility drawdown net of offset
  • The immediate cessation of volume-based and campaign-based commissions paid by lenders and aggregators
  • Providing soft dollar benefits based on a balanced scorecard and good customer outcomes, and capping benefits given by lenders
  • Having clearer disclosure of ownership models and commercial relationships (where ownership is greater than 20 per cent) on all marketing materials, including websites, to enable consumers to make more informed choices
  • Giving both ASIC and consumers clearer disclosure and information on where loans are written, commissions paid and interest rates, to increase transparency and accountability in the industry
  • Introducing an improved governance framework that monitors and identifies risks, and requires the industry to take action and continuously improve where issues are identified

Mr Kane concluded: “These reforms are a positive step towards setting new standards and shaping the future of the broking industry.
 
“I believe — NAB believes — that, together, we can continue to strengthen the mortgage broking industry to deliver for Australian consumers.”

[Related: NAB says brokers are a ‘force for good’, backs trail]

NAB backs remuneration structure but calls for ‘improvements’
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