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Jessica Darnbrough
While Suncorp's planned commission changes are set to come into effect from next week, it looks very unlikely that other lenders will follow suit.
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At the end of last year, Suncorp announced it would pay its broker members 0.15 per cent trail in the first year.
In addition, the lender will pay 0.15 per cent upfront bonus commission for conversion of lodgement to settlement as well as commission on construction loans across all locations and commission on fixed and variable loans at the same levels.
NAB Broker announced similar changes at the end of last year, however Citibank's head of broker distribution, mortgages Aaron Milburn said the changes would fail to pique the interest of Australia’s other lenders.
Speaking to The Adviser, Mr Milburn said the bank had no plans to change its remuneration structure in the near future.
“We are always reviewing our commission structure to ensure it meets expectation. A good gauge for Citi is The Adviser's Non-Major Bank Ranking, in which we were rated as one of the top lenders for our commission structure. That tells me that our commissions currently sit at an acceptable level for the moment,” Mr Milburn said.
“The reasoning for this is attributed to the fact that we are at the same levels of remuneration we were pre GFC we didn’t reduce our commissions during the GFC hence the reason there is no need to review them back to pre-GFC levels now.
“Citibank has always paid up to 0.65 per cent upfront and 0.15 per cent trail starting from the first year. We have kept our commission structure fairly simple, there are no hurdles, no minimum requirements... brokers know what they get and consequently can budget and manage their business accordingly.”
And while Citibank is happy to leave current commission levels untouched, Mr Milburn said other lenders have made it pretty clear that they feel the same way.
“It has been made clear by a couple of lenders that they are comfortable with current levels. That said, I'm sure regular reviews would be taking place to remain competitive,” he said.
Late last year, CBA’s general manager mortgage wealth James Sheffield and ANZ’s head of broker distribution Meg Bonighton said the banks had no plans to change their current remuneration structure.
"Everyone has to look at the value of their proposition. Proposition can't just be about price, it has to be about service as well and obviously if you play on price, it means you haven't got great service levels," Mr Sheffield said.
