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Boutique brokerage weighing up flat-fee model

by Charbel Kadib6 minute read

A Victorian-based mortgage brokerage is considering the adoption of a fees for service business model amid calls for regulation-driven reform to broker remuneration.

Speaking on the latest episode of The Adviser’s Elite Broker podcast, the director of Bundy Financial Services, Holly Bundy, revealed that the Victorian-based brokerage is considering a move to a fees for service model to help compensate for the increased time spent on loan applications in light of a tighter credit environment.

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Ms Bundy noted that brokers provide consumers with a superior service offering than banks, which she expects to continue attracting consumers despite the addition of a fee.  

“[A fee for service] is something we’re considering implementing,” Ms Bundy said.


“We spend a lot of time up-front finding the right solution for our clients. Will they get that if they just walked into a bank directly to get an approval for a submission?," she asked.

“There’s a whole minefield of things that we’ve got to cover off before we submit something off to a lender, to make sure that we’ve adhered to their policy and covered off any commentary around anything that they may see as being outside of their policy.”

Ms Bundy also said that she believes a fees for service model would add “further value” to the business and the service it provides to consumers.

When asked what form the potential consumer-pays model would take, Ms Bundy said: “We’re probably looking at [applying] a small flat fee at this stage. I think we’re just sitting back and waiting to see what will happen over the next four to six months.”

The director of the boutique brokerage continued: “We often get clients that [are] more than happy to pay a fee. They say, ‘how much is the fee for your service? We can pay you’.

“There will be some clients that won’t feel comfortable paying and feel that they can go directly to the bank. But are they the right clients that we want as an ongoing client?

Ms Bundy: “There are a few different things we need to cover off before we implement it, but it is something we’re considering as a flat fee at the moment.”

The debate surrounding the introduction of a fees-for-service model recently resurfaced following Commonwealth Bank of Australia (CBA) CEO Matt Comyn’s admission that he would support a Netherlands-style consumer-pays remuneration model in Australia during his appearance before the financial services royal commission’s final round of hearings.

Many in the industry have voiced outrage over the CBA CEO’s comments regarding broker commissions, with several aggregatorsbroker groups and both broker associations hitting out at what they see as “self-serving” comments aimed at driving customers back to CBA bank branches and increasing the bank’s profits.

Further, Alex Whitlock, director of mortgages at Momentum Media, wrote an open letter to the CEO of the Commonwealth Bank of Australia, warning him of the ramifications of his comments and asking him to clarify his stance regarding broker commissions.

The Adviser has not yet received a response.

Building on this, The Adviser commissioned Momentum Intelligence to produce a white paper to better inform legislators about the intricacies of third-party distribution. 

The cornerstone of the report will be a major survey of borrowers to understand the decisions behind why they chose their mortgage provider, what their sentiment and understanding was around commission and, importantly, what would influence their decision when choosing which distribution channel they would use for a home loan in the future. 

A key question will be around borrower sentiment towards paying a fee for service and how this could impact their choice to use a broker. 

Further details of the Borrower Experience Survey responses will be revealed in the March edition of The Adviser magazine.

[Related: Most brokers would dump CBA if comms go: HashChing]

Boutique brokerage weighing up flat-fee model
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Charbel Kadib

Charbel Kadib


Charbel Kadib is the news editor on The Adviser and Mortgage Business.


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