A move to introduce a standard upfront commission paid to brokers is not necessary, according to one Perth-based mortgage broker.
Executive chairman of Loan Market Sam White recently expressed support for remuneration reform, including a proposal to standardise the upfront commissions paid to brokers as well as clawbacks.
However, speaking to The Adviser, mortgage broker at Century 21 Home Loans Ken Crawford questioned calls for such reform, stressing that commission sizes have had no bearing on his product recommendations.
“The size of the upfront commission doesn’t influence me in any way,” the broker said.
“I don’t believe it’s necessary. My consideration is first to the client, as to where the most appropriate place to put their loan is.”
Mr Crawford doubted whether all loan providers would comply with an upfront commission standard.
“I do a number of Keystart loans at 0.55 per cent. I don’t think you’re going to get Keystart to move up to a higher commission rate,” Mr Crawford said.
Mr Crawford acknowledged that such reforms might be helpful in putting to bed allegations of “conflicts of interest” from the Productivity Commission (PC).
“If paying a standard commission for all banks to brokers, both upfront and trail, was a way of overcoming some of the concerns that the PC [has] around brokers putting deals to where they’re getting the most commission, then I don’t see it as a problem,” the broker continued.
Also speaking to The Adviser, mortgage broker at Capita Finance Adam Donald backed the proposed reforms, suggesting the introduction of a standard upfront commission between 0.6 per cent and 0.7 per cent.
“I think if you have a 0.1 per cent variant and you have a bit of a difference between 0.6 per cent and 0.7 per cent, and make it all industry standard, I think that’s the best outcome for customers,” Mr Donald said.
Mr Crawford expressed his support for the standardisation of clawbacks, describing them as “the bane of [the broking] industry”.
“I’ve been [a broker] for 14 years, and clawbacks have always been a problem. [They’ve ranged] anywhere from 12 months, and in some cases, I’ve heard of clawbacks getting out to years,” the Century 21 Home Loans broker added.
Mr Donald similarly supported the idea, calling for an industry standard that would permit clawbacks within an 18-month period.
“I think it does allow everyone to be on the same page,” the Capita Finance broker said.