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Bank overhauls rem model, reduces upfront commissions

by Reporter10 minute read
Bank overhauls rem model, reduces upfront commissions

A non-major lender has announced a raft of changes to its broker remuneration structure, including a reduction to upfront commissions.

Bankwest has overhauled its broker commissions and clawback structure, effective for settlements from 1 January 2021.

The changes include:

  • a 5 bps reduction to the upfront commission rate from 0.7 per cent to 0.65 per cent (excluding GST);
  • the removal of the clawback at six months based upon net of offset position;
  • assessing upfront commission payments at day 14;
  • moving from a six-month review to a 12-month review, with no clawback if the net of offset position changes; and
  • moving to a tiered clawback model, whereby the clawback percentage reduces each month post-settlement during the first 18 months.

The non-major claimed that the changes “align to the wider market”, adding that the new model offers “fair and reasonable remuneration for the efforts of the broker and costs to the bank”.


“Bankwest remains committed to our own strategy of becoming the best broker bank in Australia, delivering market-leading technology and service to brokers,” the lender added.

“Bankwest recognises the critical role brokers play, and we continue to make significant investment in the channel.”

The Commonwealth Bank subsidiary is the latest lender to adjust its commission model, joining the likes of ME Bank, WestpacMacquarie and Teachers Mutual Bank.

The remuneration policy changes come amid continued debate surrounding the method in which upfront commissions are calculated, which resurfaced following the government’s decision to extend the proposed net of offset payment period from 90 days to 365 days.  

In the weeks following the publication of the government’s National Consumer Credit Protection Amendment (Mortgage Brokers) Bill 2019, industry leaders noted the impact of contrasting remuneration policies adopted by lenders off the back of the Combined Industry Forum’s move to limit the upfront commission paid to brokers to the amount drawn down by borrowers (net of offset).

Some stakeholders had warned that a disparity in the policies adopted by lenders could create lender-choice conflicts, while others have highlighted the impact of policy uncertainty on broking businesses.

Such concerns have prompted calls for the standardisation of broker remuneration policies adopted by lenders. However, others, including ANZ CEO Shayne Elliott, have resisted the push for standardisation.

It is expected that lenders will continue to announce their amended commission structures ahead of the introduction of the best interests duty on 1 January 2021.

[Related: Conflicted remuneration defined in new regulations]

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