Powered by MOMENTUM MEDIA
the adviser logo
Lender

Commission cuts could dent banks? market share

by Staff Reporter6 minute read

Australia’s aggregators have warned that cuts to broker commissions could impact lenders’ volumes through the third party channel.

Recent media reports indicate that the banks are reviewing commission payments as liquidity issues continue to impact profitability.

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

William Lockett, managing director of aggregator Specialist Mortgages, isn’t surprised to see commissions in the headlines once more.

“Commissions have always been a raging debate,” he said.

Advertisement
Advertisement

But instead of a straight attack on upfront commissions, Mr Lockett believes a more likely outcome would be a shift towards a results-based rewards system.

“The banks would probably look to reward those [brokers] that reach their benchmarks. Those that under perform, or whose processes slow the banks, would receive lower commissions,” he said.

While a two tier system may solve some of the banks’ cost issues, it is unlikely to be met with enthusiasm by brokers.

“Brokers’ views on commission cuts will always be unfavourable – regardless of how logically the banks present it,” he said.

AFG’s general manager of sales and operations Mark Hewitt believes the banks may also review the brokers they distribute through.

“The banks could start to take a closer look at who they distribute their loans through – instead of taking such a broad brush approach,” he said.

Mr Hewitt is not expecting to see a change in commissions anytime soon however.

“To the best of my knowledge none of our lenders have looked at changing their up-front commissions [structure],” he said.

A change to commissions structure through the third party channel would be expected to materially hurt the banks’ market share.

“A lot of bank products are quite homogenous. Brokers will look to do the right thing by their customer, and if they can earn a higher trail at the same time then naturally this will influence their decision,” he said.

 

Commission cuts could dent banks? market share
default
TheAdviser logo
default

JOIN THE DISCUSSION

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

MORE FROM THE ADVISER

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...

READ MORE
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...

READ MORE
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 MORE
magazine
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