While two of the big five have made changes to their commission structure in recent weeks, further changes by the other majors are “unlikely”, according to Michael Russell.
Speaking to The Adviser, Mr Russell said Australia is beginning to see a return to more normal lending and as part of that, we are also seeing a return to greater competition.
According to Mr Russell, greater competition among lenders would stop further commission reductions and, in fact, could ultimately lead to increased trail payments.
“Heightened competition will encourage lenders to reward brokers for keeping loans with them for longer, so reducing commissions would not make commercial sense,” Mr Russell said.
“We need to remember that commissions were reduced at the height of the GFC but economic conditions have improved since that time. There is presently no commercial reason for lenders to reduce commissions, and I think too much oxygen goes into the issue.”
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