After three months of consultation with key distribution groups RAMS today announced it will restructure its broker commissions.
From 15 September to 31 December upfront commissions will be reduced from their current 75 bps for low doc and 65 bps for full doc and low doc pro packs to a flat 60 bps.
Trail commissions during this period will be reduced from 25 bps for all products to 20 bps.
From 1 January 2009 for all products upfront will be paid at 60 bps and trails 15 bps.
There are no requirements for brokers to hit metrics in order to boost commission rates; instead the lender has opted for a basic structure.
“Based on our extensive discussions we understand that brokers want a simple commission model, not one with complex hurdles,” Huw Bough, head of broker business told Mortgage Business.
“When a loan is lodged they want to know what commission they can expect to be paid.”
With commissions now restructured across the bank sector, RAMS is the first non-bank lender to follow suit.
Mark Haron, a principal of Connective, did not welcome RAMS’ commission changes however he indicated that the new levels would be competitive.
“None of the new commission structures are fair, but in terms of how it [RAMS’ new commission structure] compares to the banks it is fairly similar – maybe even at the slightly higher end.”
“They did consult on the restructuring and seem to have taken on board some of the feedback provided,” Mr Haron said.
The new RAMS commission structure announcement coincided with the launch of a new 100 per cent upfront commissions promotional offer.
Between 15 September 2008 and 15 March 2009 brokers will also be given the option of an upfront-only commissions payment of 100 bps.
According to Mr Bough, the upfront-only option will help brokers boost cash flow.
“Our upfront-only commission option will give brokers choice over how they are remunerated and empower them to make the decision based on their business needs. For broker models that are reliant on paying multiple referrers, for example, a large upfront can certainly be a major asset.”
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