NAB Broker announced yesterday it will gear its services towards what it believes will be an advice-based Australian mortgage broking industry.
Speaking at the NAB Broker Sydney roundtable, regional general manager Matt Lawler spoke of what he described as a “new era” of broking.
While Mr Lawler confirmed that NAB would review commissions – with a firm announcement expected towards the end of the month – he assured brokers that any action taken would not be drastic.
As revenue from home loan commissions shrinks, Mr Lawler said NAB expected brokers to move towards a more diversified role, where any shortfall in income could be compensated by selling complementing products such as insurance.
To help brokers move towards this model the lender has launched its new Valet service, which allows brokers to write insurance under the MLC banner.
“This [the Valet service] enables brokers to grow their insurance business as they transition towards the provision of a broader service proposition,” he said.
Brokers can also choose to outsource components of the loan writing process under Homeside’s Valet.
Under the Homeside Valet, brokers will forgo 0.35 per cent of up-front commission, although full trail commission will be paid on all business as the broker retains ownership of the customer.
Outsourcing, Mr Lawler said, was an easy entry point for brokers to start widening their service offering.
Chief executive of X Inc Jennifer Nielsen said she congratulated NAB Broker on its constructive approach considering current market conditions, and said the Valet option was an intelligent idea.
“I am a big fan of the thinking behind the offer and the work NAB Broker are putting into trying to make both their business needs and the broker service vehicle work in these uncertain times,” she said.
Ms Nielsen said there was certainly a market for brokers who “are too big to operate by themselves but not yet big enough to put on a support person” and that the valet option would allow them to outsource part of their business with no long-term staff obligations.
Although Ms Nielsen welcomed the offer, she said it would be brokers that would decide whether the service would take off or not.
“I’ve had a mixed bag of responses from brokers, with around a 50/50 split between those that support it and those who don’t,” she said.
Zoran Pusic, director of Clic Mortgage Brokers, said that NAB Broker’s approach to the changing market was certainly “the right one”.
“Incorporating more products into your offering is essential,” he said. “You can’t survive just selling home loans anymore.”
Mr Pusic was sceptical about the Homeside Valet’s commission compromise however, which involves a commission reduction of 35 basis points.
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