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Westpac provides update on commissions changes

by Charbel Kadib11 minute read

The major bank has updated brokers on its changes to broker remuneration, which remove the claim process for upfront commissions on subsequent drawdowns.

In September, Westpac Group announced that it would remove the claim process for upfront commissions paid on post-settlement drawdowns on broker-originated home loans.

Westpac had said that for all subsequent upfront commissions payable from 1 January 2020, brokers and third-party introducers will automatically receive remuneration.

The bank had also stated that subsequent upfront commission will remain payable for each eligible home loan following the 12-month anniversary of the loan settlement.


Westpac Group has now revealed that it will commence making the first subsequent upfront commission payments from February 2020 through to Sunday, 22 March 2020.

The payments will apply to eligible loans settled from Tuesday, 1 January 2019, to Thursday, 28 February 2019, for which subsequent upfront commission will be paid on or before Sunday, 22 March 2020.

Further, Westpac added that upon completion of the first payments, all subsequent upfront commission payments will be remunerated on or before the 22nd day of the month following the 12-month anniversary of settlement.

Westpac Group joins Macquarie Bank in revising its upfront commission model.  

Prior to 1 December 2019, Macquarie calculated upfront commissions using the loan account balance (net of any offset account balances) as at the last day of the calendar month in which the loan is settled.

However, for new loans settled from 1 December 2019, upfront commissions are now calculated using the loan account balance (net of any offset account balances) as at the ninth calendar day post-settlement (10th day of the loan).

The remuneration policy changes come amid continued debate surrounding the method in which upfront commissions are calculated, which resurfaced following the government’s decision to extend the proposed net of offset payment period from 90 days to 365 days.  

In the weeks following the publication of the government’s National Consumer Credit Protection Amendment (Mortgage Brokers) Bill 2019, industry leaders noted the impact of contrasting remuneration policies adopted by lenders off the back of the Combined Industry Forum’s move to limit the upfront commission paid to brokers to the amount drawn down by borrowers (net of offset).

Some stakeholders have warned that a disparity in the policies adopted by lenders could create lender-choice conflicts, while others have highlighted the impact of policy uncertainty on broking businesses.

Such concerns have prompted calls for the standardisation of broker remuneration policies adopted by lenders.   

However, others, including ANZ CEO Shayne Elliott, have resisted the push for standardisation.

Mr Elliott pointed to the perceived benefits of remuneration policy-based competition, stating that he has a “fundamental belief in the power of free markets”.

“It’s another tool that banks have to compete and differentiate themselves, and also hold brokers to account,” he said.

“I think there are pros and cons, but personally, I think a free market solution on pricing is, overall, a better outcome.”

[Related: Macquarie to revise upfront commission model]

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