An increasing number of lenders, including CBA, have voiced their support of the broker channel, committing to pay trail on loans with paused repayments.
Following on from several commitments by several lenders, including major bank Westpac, to continue paying trail commissions to brokers whose customers choose to access COVID-19 hardship packages, including those with repayment holidays, more lenders have come out in support of the move.
As APRA has already suggested that banks need not treat repayment holidays as arrears and commentary from credit reporting agencies outline that hardship arrangements are typically not reported as defaults, lenders are increasingly confirming that they will continue to pay trail to brokers whose clients defer their loan repayments under COVID-19 hardship arrangements.
CBA and Bankwest
The Commonwealth Bank of Australia (CBA) told The Adviser that it would be continuing trail commissions on loans with repayment holidays, with a CBA spokesperson stating: “In the current environment, the financial and personal wellbeing of our customers, partners and people remains our priority.
“As part of our support for brokers, we have made the decision to continue to pay trail commissions for loans associated with customers who defer their home loan repayments for six months.
“At the end of the deferral period, our normal commission arrangements will apply,” they said.
CBA subsidiary Bankwest likewise followed suit.
Bankwest’s GM third party, personal and business banking, Ian Rakhit, commented: “The wellbeing of our customers is our number one priority, and Bankwest is pleased to confirm our trail commission arrangements during this extraordinarily difficult time.
“Providing the customer agrees to a reduced payment plan with Bankwest, including our newly announced option to defer home loan repayments for six months for customers who may need assistance at this time, then no arrears are shown on the loan. Therefore, trail will not be impacted.”
Mr Rakhit continued: “We are also supporting our small-business customers, including a number of our broker partners, through a further package of support, including a deferral of loan repayments on business loans and home loans held by small-business customers for six months for customers in need of support.”
Non-majors AMP Bank and MyState also both confirmed their positions, with AMP Bank’s director of distribution, Adrienne Smith, telling The Adviser: “AMP Bank is offering a pause on home loan repayments for clients who are experiencing ongoing financial challenges as a result of COVID-19.
“Our focus is on supporting brokers and advisers during this challenging period.
“We would like to reassure brokers and advisers that we will continue to make trail commission payments on these home loans while clients have their loan repayment paused, which can be up to six months.”
MyState Bank also said that trail commissions will continue to be paid to brokers regardless of if customers are receiving hardship assistance through deferring their repayments, providing that customers have a COVID-19 hardship agreement in place with the bank.
MyState’s general manager of banking, Tony MacRae, said: “While we have measures in place to support customers during this unprecedented time, we have taken the proactive stance that we continue to support our brokers.
“This decision provides certainty and support for brokers to ensure their income is not impacted in what is going to be a challenging period for the entire nation”.
Teachers Mutual Bank
Teachers Mutual Bank Limited has said it will continue to honour all trail payments for brokers up to 30 June in respect of their clients who have been granted financial hardship as a result of being adversely affected by COVID-19.
The bank said it will review again prior to 30 June to assess whether it needs to be extended.
Mark Middleton, Teachers Mutual Bank Limited’s head of third party distribution, said: “As a mutual bank and a community, it is important to us that we come together with our broker partners and our members to support each other, and look forward for better times ahead.
“We are so grateful for the support that brokers continually show our Bank and we are pleased to be able to support them in a challenging time. Our aim is to keep our lines of communication open and continue to work together with our broker network to serve our members.”
ANZ and NAB have not yet revealed their stance on trail payments for loans with repayment deferrals, but announcements are expected in the coming week.
A spokesperson for the Australian Banking Association told The Adviser earlier this week that its members “acknowledge that mortgage brokers play an important role in supporting competition in the home-lending market”.
“They are also conscious of the fact that brokers are small businesses in their own right and will require support,” they said.
“Member banks are aware that these difficult circumstances may be impacting upon brokers.
“The industry is currently focused on rolling out the financial support packages for consumers and businesses impacted by the outbreak of COVID-19, but banks are also working through other aspects related to the mortgage broking channel,” the spokesperson continued.
“In coming days, individual banks will be in touch with brokers to confirm their approach on issues around face-to-face requirements and commission arrangements for brokers.”
[Related: More lenders confirm COVID-19 trail payments]
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.
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