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Scrapping commissions will kill mortgage competition, says lender

by Huntley Mitchell4 minute read
Royden D'Vaz

An Australian mortgage lender has warned that a fee-for-service remuneration model for brokers will contradict what ASIC’s review into commissions is trying to achieve.

Royden D’Vaz, national sales manager at Bluestone Mortgages, said the current remuneration model for brokers promotes healthy and positive competition between lenders, and in turn provides more choice for consumers.

“It’s clear that it is in fact thanks to the current broker remuneration model, and the free access it offers, that consumers are no longer limited in choice to the products and practices offered by the big four and other traditional banks,” he said. “And clearly consumers are voting with their feet – more than half now access their home finance through a mortgage broker.”

Mr D’Vaz said the introduction of a fee-for-service model for brokers is likely to negatively affect consumers who choose non-bank lenders over the banks, and would therefore steer business away from the third-party channel.


“The monopoly of size, scale and market share of the big four and other traditional banks means they already have extensive proprietary distribution channels,” he said.

“Some of the banks have over a hundred years of traditional savings and loan infrastructure, and do not in any way see brokers as being essential to their business success, or even necessary.

“Non-bank operators, on the other hand, have shaped their businesses in an entirely different environment,” he said.

Mr D’Vaz highlighted that brokers have played a central role in the growth of the non-bank sector, providing distribution services to the lenders and access to a growing group of customers who “are no longer required to deal solely with one of a few major players”.

“There’s no question in our mind that a change to current remuneration structures would put the use of brokers out of the financial reach of the vast majority of their target market,” he said.

[Related: Commercial lending spared from broker commission review]

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