The Commonwealth Bank of Australia (CBA) this afternoon revealed changes to broker remunerations after weeks of discussion with aggregation groups.
The new structure, to be phased in over the coming months, will see brokers forego the first year’s trail commission, with payment settling at 0.20 per cent – down from 0.25 per cent.
Up-front commissions will also be trimmed from a maximum 0.70 per cent to 0.65 per cent.
In line with other lenders, CBA will also reward brokers for cross selling, online-lodgements as well as for the quality of their business.
Kathy Cummings, CBA head of third-party banking, said the changes realigned broker remuneration with market economics and would ensure the sustainability of the mortgage broking industry.
Ms Cummings also revealed that CBA will launch a new broker website called CommBroker to help brokers track loans, along with a new broker platform and a number of service improvements.
CBA also confirmed that there are no plans to change minimum volumes though current levels would be enforced.
“We believe in providing a transparent model to the industry without favouring particular groups; our focus is on quality,” Ms Cummings said.
“At a time when some lenders are cutting commissions without any consultation or just pulling out of the industry with no notice, the message I want brokers to take from these changes is that CBA is in this business for the long-term,” she said.
PLAN Australia CEO Ray Hair said that while he does not welcome any reductions to broker commissions, he believed CBA had taken a well-structured consultative approach on the issue.
“Clearly CBA are not cutting commissions as deeply as say Westpac, and they are looking at opportunities to maximise outcomes,” he said.
“Rather than forcing brokers to cross sell, they are providing opportunities for rewards for those brokers who do."
In terms of a possible broker shift from writing CBA loans due to commission reductions Mr Hair said any response "would not be significant", however he noted that volumes could be impacted.
Who do you aggregate through?
Thank you for your vote, you can see the results here.
Mortgage Choice has announced that Citi’s former head of bankin...
The major bank has announced that it will extend the maximum loan...
Credit growth has waned as a result of a sharp drop-off in busine...