the adviser logo

Consumers don’t want to pay fees to brokers, says banking head

by Reporter6 minute read
House and coins

Suncorp Bank’s CEO of banking and wealth has said that he does not believe that customers would want to pay fees to get mortgage broking advice, adding that he thinks broker commissions will therefore just be “tidied up at the edges”.

David Carter, chief executive officer for banking & wealth at Suncorp Bank, made the comments in response to a question asked by The Adviser at the bank’s recent Business Partners Summit in Sydney on Tuesday (24 October). 

To continue reading the rest of this article, create a free account
Already have an account? Sign in

When asked about his thoughts on broker remuneration, a topic currently being considered by Treasury following an extensive review, Mr Carter said: “Firstly, we are big supporters of intermediary channels — broker channels — across all of our business and we’d like to see the broker channel remain viable.

“We think customers want choice and we respect that choice, so we are supporters of a strong and professional mortgage broking industry. Professionalism carries with it some requirements.” 


Noting that the financial advice sector had been through a “pretty tough period of review” recently, Mr Carter said that he did not believe that the broking industry would have the “same extremity of outcome”, but added that “some things will have to change”.

Mr Carter elaborated: “Hopefully, mortgage brokers recognise that there is an advantage to being self-regulated, rather than being hard-regulated. So, with the question of remuneration, I don’t think consumers are wanting to pay fees to get mortgage broking advice, and I suspect politically no one is going to ask for that to happen either, given the desire to see more competition in banking, not less.

“That said, I think there are some forms of remuneration that need to be checked and looked at, particularly around transparency of ownership structures of aggregators and soft dollar.”

Mr Carter gave the example of an aggregator waiving its broker fees if they write a loan to the aggregator’s parent company.

“That sort of stuff just doesn’t feel like it’s ticking the box of professionalism and [there is] that perception of conflict. It might be a terrific solution for that client, but how do you ensure that no one thinks afterwards that it was influenced by the wrong thing?

“There needs to be good transparency and professionals just need to avoid the risk of people perceiving them to be unduly influenced in any recommendation they make (even if they weren’t)… If something goes round down the track, fighting that off is very hard. 

“So, I think commissions will remain, but I think it just need[s] to be tidied up a bit at the edges.”

Mr Carter added that he believed that upfront and trail commissions will “keep evolving” as the margin of mortgages tighten.

“I don’t know which way [commissions] will end up going,” the CEO said, “but what I do know is that margin in mortgages aren’t going up, so you have to get the equation right in how you share value.”

The combined industry forum, which comprises members of the mortgage broking, banking and consumer group sectors, is expected to submit its response to government in November (which the government has said it will take into consideration when forming its response), with an interim response expected from government in 2017 and a final response in the new year.

[Related: Banks to develop individual approaches to remuneration]



Consumers don’t want to pay fees to brokers, says banking head
TheAdviser logo


You need to be a member to post comments. Register for free today


daniel tuttlebee resimac asset fInance ta l27zun

Resimac takes controlling stake in Sonder

Resimac Asset Finance has expanded its acquisition stake in equipment finance business Sonder Equipment Finance...

asic ta 2

ASIC seeks ‘common-sense solutions’ to breach reporting

The Australian Securities & Investments Commission (ASIC) has committed to “improving” the operation of the...

andrew mills homestart ta htfetw

HomeStart drops graduate loan deposit to 2%

HomeStart Finance, a non-bank lender backed by the South Australian state government, has lowered the deposit hurdle...

Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more