The industry has voiced its concern over the timing of St George's decision to restructure its broker commissions.
Yesterday, the major announced it would strip its 0.15 per cent first year trail commission payment altogether.
In addition, the bank said it had restructured its upfront commission structure in a bid to reward its elite brokers.
Speaking to The Adviser, St George’s general manager of intermediary distribution Steven Heavey said brokers that maintained a high conversion ratio could potentially earn more commission than they have in the past.
“Under the new changes, brokers that convert 90 per cent or more loans will receive an upfront commission of 0.70 per cent – up from 0.60 per cent,” he said.
“These changes will support our elite brokers and encourage those with lower conversion ratios to step up their game.”
But while St George is adamant the changes are a positive for the broking channel, many brokerage heads are unconvinced.
With new legislation now just around the corner, and brokerages facing increased costs in order to meet compliance requirements, LJ Hooker’s general manager of financial services Peter Bromley said he didn't understand St George’s timing for the commission restructure.
“Brokers are already facing increased business costs with the introduction of licensing and now they have to contemplate the loss of their first year trail,” Mr Bromley told The Adviser.
“Financially this is a smart move by St George. Trail commissions are now geared around when the loan balance is dropping, meaning less commission paid to the broker. They are just falling in line with other major lenders.”
Zobel Finance and Conveyancing’s Andrew Zobel agreed the timing was odd.
“Brokers already have so much to deal with in terms of licensing; many will see these latest changes as being unfair. These changes in commission could ultimately force brokers to throw their hands in the air and leave the industry altogether,” Mr Zobel told The Adviser.
Moving forward, Mr Zobel said the recent adjustments to commissions by the major banks could encourage non-banks to come back to the fore with better remuneration benefits.
“It will be interesting to see what the reaction of the non-bank sector will be. This could potentially change the mortgage broking landscape.”
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