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Bank announces broker commission changes

Bank announces broker commission changes

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A non-major lender has announced that it is implementing changes to its broker commission payment model, including changes to trail and the adoption of CIF recommendations, effective from 1 July.

Bankwest has said that it is bringing in the changes to “align itself with evolving industry practice and regulator expectations”.

The changes, which will be effective on settlements from 1 July 2018, include: 

  • The reintroduction of Year 1 trail commission
  • The reduction of trail commissions in Year 3 to 0.15 per cent and from Year 5 and onwards to 0.20 per cent
  • The adoption of the Combined Industry Forum (CIF) recommendations on paying commissions on utilised funds and net of offset

There will be no changes to the upfront commission rate.

Current commission rate New rate from 1 July 2018
Upfront 0.70% 0.70%
Year 1 0% 0.15%
Year 2 0.15% 0.15%
Year 3 0.20% 0.15%
Year 4 0.20% 0.20%
Year 5 onwards 0.25% 0.20%

 

Commenting on the industry recommendations, Bankwest general manager for third party Ian Rakhit said: “Bankwest has been a very long-standing supporter of the broker industry, going back to the very start some four decades ago, and we remain committed to brokers as a channel of choice for customers.”

He added: We support the current upfront and trail model as well as the improvements to the model outlined in the ASIC review and the Combined Industry Forum (CIF) recommendations.  

We understand the lack of Year 1 trail has been outstanding for some time and we are pleased to reintroduce this to bring us back in line with the market.

“Our contract stipulates that trail commissions represent payment for continuous customer maintenance and services, and we believe trail remains warranted for brokers to ensure ongoing support is provided to customers they refer to Bankwest.”

The bank is the first lender to make major moves to change broker remuneration following the ASIC remuneration review, Combined Industry Forum package reforms and the ongoing commissions.

The Adviser has asked Bankwest's parent company, CBA, if similar changes will be made by the major bank but has not yet received a response.

[Related: NAB backs remuneration structure but calls for ‘improvements’]

Bank announces broker commission changes
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