Powered by MOMENTUM MEDIA
SUBSCRIBE TO OUR NEWSLETTER SIGN UP
Powered by MOMENTUM MEDIA

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Major bank responds to PC’s broker recommendations

anthonywaldron ta anthonywaldron ta
Reporter 5 minute read

An executive from a big four bank has weighed in on recommendations outlined in the Productivity Commission’s final report, which proposed the removal of trail commission and the broadening of licensing provisions to enable financial planners to offer credit advice.

Speaking to The Adviser, NAB’s executive general manager of broker partnerships, Anthony Waldron, has defended the existing broker remuneration model, warning that the Productivity Commission’s (PC) call to ban trail could have “unintended consequences”.

Mr Waldron made note of the positive effect that trail commissions have on service affordability and on enhancing competition across the banking sector.

“I think there are some questions that get raised off the back of that recommendation,” the EGM said. “We [NAB] believe that commissions make broker services affordable to customers, and that they create some alignment between the lender and the broker.

Advertisement
Advertisement

“[They also create] a level playing field for competition for all lenders, whether they be small or large and geographically dispersed.”

Mr Waldron claimed that trail commissions incentivise brokers to produce good consumer outcomes, warning that removing trail could increase churn to the detriment of borrowers.

“Trail commissions are there to both help place customer in a loan that is not unsuitable for the longer term, but also to recognise the services that a broker will provide on an ongoing basis,” Mr Waldron continued.

“There’s a risk in some of the discussion around unintended consequences if you were to remove trail.

“[Brokers] might end up in an environment where [they’re] having to write more loans and constantly having to rewrite loans, which may not be in the customers best interests and could actually create more costs for lenders and brokers, and ultimately, therefore, potentially customers.

PROMOTED CONTENT


“Theyre questions that we need to work through off the back of those recommendations.”

Mr Waldron was also asked if NAB supported the PC’s recommendation to extend provisions under the Australian Financial Services Licence (AFSL) to include credit advice.

The NAB executive said that “its probably a bit early to comment”, claiming that the bank would need to see the “specifics” of the recommendation, but highlighted the strengths of existing arrangements, echoing comments made by Mortgage Choice CEO Susan Mitchell.

“I think that if you look at a lot of industry models today, there are a number of officers that have both broking and financial planners operating out of them, in an environment where they have both an ACL and an AFSL — and thats meeting customer needs,” Mr Waldron said.

Mr Waldron is also chair of the Combined Industry Forum (CIF), which released its interim report on Monday (27 August), outlining the progress that the CIF has made in introducing broking industry reforms.

[Related: Brokerage CEO ‘encouraged’ by PC report]

Major bank responds to PC’s broker recommendations
anthonywaldron ta
TheAdviser logo

If you’re feeling overworked and overwhelmed in this fast-paced mortgage market, it’s time to make some changes, and the Business Accelerator Program can help! Tickets are on sale now. Work smarter, not harder, this year.

anthonywaldron ta

 

more from the adviser
merger puzzle Joust launches broker-borrower matching service

The online home loan auction platform has launched a new matching...

uptick graph Prospa boosted by business sentiment rise

Prospa managed a personal best of $182.7 million in loan originat...

Peter White Brokers must vaccinate: FBAA

The Finance Brokers Association of Australia has urged brokers to...