Powered by MOMENTUM MEDIA
the adviser logo
Lender

Major bank announces commission structure changes

by Annie Kane5 minute read

A big four bank has announced that it is to change broker commissions from next week, becoming the penultimate major lender to bring into effect changes off the back of the Combined Industry Forum package of recommendations.

As of Saturday, 24 November, the Commonwealth Bank of Australia (CBA) will calculate upfront commission for new home loans based on the drawn down loan balance, net of any linked offset account and redraw facility.

The calculation will be based on the 14th calendar day after the date of the drawdown to ensure that brokers are remunerated appropriately (i.e. after the customer has drawn down their funds).

The bank has become the third major bank to implement the changes, as suggested by the Combined Industry Forum’s reform package, following similar announcements by NAB and Westpac.

Advertisement
Advertisement

Speaking of the changes, Daniel Huggins, CBA’s executive general manager, home buying, commented: “As one of Australia’s leading home lenders, we recognise mortgage brokers as a key channel for customers who are looking to purchase a home.

“We are committed to supporting our brokers and driving good customer outcomes.”

Mr Huggins added that, following ASIC’s review of mortgage broking remuneration and the Sedgwick review, the bank has been “working with the Combined Industry Forum to ensure we continue to drive and deliver good customer outcomes”.

“As part of our work implementing the principles developed by the Combined Industry Forum, we are making changes to the way we calculate mortgage broker commission payments,” the EGM said.

It is believed that the bank will monitor and review all broker and customer outcomes of this change, including but not limited to the treatment of subsequent drawdowns.

The bank has not made any changes to its clawback policy.*

Lenders expected to make changes by the end of the year

CBA subsidiary Bankwest became the first lender to bring in the new commission structure, effected earlier this year.

However, NAB became the first major lender to implement the recommendations from the ASIC and Sedgwick reviews, which were backed by the Combined Industry Forum package of reforms after its changes came into effect this month.

NAB’s white label brand, Advantedge (and Advantedge-funded brands, such as Homeloans), announced the same changes, and Westpac followed suit after revealing that the bank and its subsidiaries (St.George, Bank of Melbourne and BankSA) would link upfront commission payments for standard home loans to net debt utilisation and inclusive of loan offset arrangements, rather than the approved loan limit, effective 1 January 2019.

The CIF recently hosted an event that further outlined its work on mortgage broking reforms and reiterated that lenders are expected to make the remuneration changes by December 2018.

*This story was update on 14/11/2018 to confirm that CBA's clawback policy is not expected to change under the new commission structure.

[Related: Bank announces new broker commission structure]

cba

Annie Kane

Annie Kane

AUTHOR

Annie Kane is the editor of The Adviser and Mortgage Business.

JOIN THE DISCUSSION

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

MORE FROM THE ADVISER

CEO Sleepout Pepper Money

Mortgage industry raises more than $160k in CEO Sleepout

On 23 June 2022, several CEOs and directors in the mortgage and finance industry spent a night without shelter to...

READ MORE
alex whitlock

New membership program revealed for The Adviser

Members will be able to access exclusive sales and marketing strategy, business intelligence and exclusive market...

READ MORE
Hot property TA

Hot Property: The biggest property headlines from the week 27 June to...

Welcome to The Adviser’s weekly round-up of the headline stories and news that are important not only for the...

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