Commission payments will fall in the next 10 years unless the quality of loan submissions improve, an industry executive has said.
According to NextGen director Michael Murphy, a number of funders have scaled broker commissions in proportion to the quality of loan submissions received. He said these reductions look set to worsen as lenders crack down on quality.
However, he believes reducing commissions to improve loan quality is not a good idea.
“That’s one way to try and move it but it’s a very blunt instrument,” he said.
Mr Murphy said improving quality of submissions goes back to reviewing the systems and procedures at the front end of the broker transaction.
“I see brokers going down the path of using a dynamic checklist right at the front end, by the person at the point of sale seeing the client,” he said. Mr Murphy said the checklist would include matters like the required payslips, whether they are more than 3 months old, and so on.
“A new standard will help smooth out commission leakage,” he said.
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