The non-bank lender has announced that it has extended its commitment on trail commission payments to brokers for borrowers impacted by COVID-19.
In March this year, Pepper Money was the first lender to announce that it would continue to honour all trail payments for customers affected by the coronavirus pandemic until at least 31 December, regardless of whether a customer goes into hardship or not (terms and conditions apply).
According to Pepper, this measure, which related to trail on both mortgages and commercial loans, was taken to “ensure that brokers are not also impacted during these difficult times”.
The lender has now announced that it will extend its commitment to honour all trail payments for customers affected by COVID-19 for a further 12 months, until at least 31 December 2021.
It will review this position after this date, Pepper Money added.
Commenting on the extension, Pepper Money general manager, mortgages, Aaron Milburn said: “Pepper Money was proudly the first lender to support the broker channel with this commitment in March this year.
“By extending the time frame today, we are providing brokers with the support and certainty they need beyond 2020 and well in 2021.”
Recent data from the Australian Prudential Regulation Authority (APRA) showed that loan deferral exits have picked up pace, with figures for the month of September revealing that only 6.7 per cent of all loans are still impacted, while the volume of loans held by authorised deposit-taking institutions (ADI) has fallen for the third month in a row.
According to the Australian Bureau of Statistics (ABS), in October, 7 per cent of all businesses reported that they were deferring loan repayments, a drop from 16 per cent of businesses in May.
A range of other lenders confirmed in March that they would continue to pay trail to brokers whose customers chose to defer loan repayments under COVID-19 support packages, as questions were raised as to how trail commissions would be treated under these arrangements.
The Westpac group (including Westpac, BankSA, Bank of Melbourne, and St.George Bank), confirmed that they would continue to pay trail to brokers under their hardship packages, while Auswide said it would continue to honour trail payments on loans under the six-month deferral arrangements, and Adelaide Bank said it would continue to pay brokers trail for loans with repayment deferrals.
Bank of Queensland and Virgin Money also said it would continue paying trail commission to brokers where a customer accesses relief due to COVID-19.
The announcement from the lenders followed a statement from APRA that banks need not treat repayment holidays as arrears, commentary from credit reporting agencies that hardship arrangements are not typically reported as defaults, and a message of support from the Australian Banking Association.