National Australia Bank (NAB) has indicated it will seek alternatives to broker commission cuts.
Matt Lawler, NAB Broker regional general manager, told Mortgage Business that NAB is exploring and gathering feedback on reshaping rather than cutting commission structures.
Mr Lawler said brokers’ businesses will move to an “advice model”, supporting service to the client and broadening the solutions they provide.
“We see this transition to advice models as a critical success factor for businesses [brokers] in the next few years and we will be supporting this through our remuneration structures, the solutions we provide and the advice tools we develop,” Mr Lawler said.
“The recent announcement by the Federal Government to move regulation of mortgage brokers to a federal body will also support this.”
While the aggregation industry backs NAB’s approach to the sensitive area of broker commissions some aggregators doubt the practicality of some of the bank’s suggestions.
Alex Moulieris, Challenger Mortgage Management general manager of broker platforms, said that he wholeheartedly welcomed NAB’s thinking however he was unsure that broadening broker services was a workable option.
“NAB’s approach to commissions has been very positive, and I take my hat off to them as well as other lenders – such as CBA – who are engaging in dialogue about this issue,” he said.
“However in the main I would have to say that broadening the role of mortgage brokers is probably not a feasible option.”
According to Mr Moulieris, while the cross selling of ”simple products” such as home and contents insurance and credit cards could be considered, he doubted that expanding broker products provided a workable option.
“I’ve never seen a very successful model like that anywhere in the world,” he said.
Mark Lewis, managing director of Bernie Lewis Home Loans, commended NAB’s standpoint, but he too questioned the feasibility of broadening the broker role.
“It’s tough enough for brokers to keep their home loan knowledge up to speed – imagine trying to keep on top of a whole range of other products and services,” he said.
Bernie Lewis diversified into wealth management last year; the company also offers conveyancing services.
However Mr Lewis points out that all consultants specialise in one core area.
“Our mortgage consultants specialise in mortgages and our financial planners specialise in financial planning,” he said.
Both Mr Lewis and Mr Moulieris urged lenders to focus on how aggregators can work with them on back office efficiencies in response to increased funding costs.
“I’d be happy to commit to helping lenders improve efficiencies and mitigate cost pressures in whichever way we can,” Mr Moulieris said.
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