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One lender has said it might follow Westpac and the Commonwealth Bank in changing its commission structure if the quality of loan submissions improves.
Citibank’s head of broker distribution, Aaron Milburn, said the bank regularly reviewed its commissions to ensure brokers are fairly remunerated.
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“One driver that would enable us to increase upfront and trail commissions is to improve the quality of submissions,” he said.
“The less time it takes for Citi to process applications the less cost involved, giving us the ability to pass those savings onto brokers."
Westpac announced in January that the bank would increase its upfront commissions, while the Commonwealth Bank revealed earlier this month that it would change its commission structure in the second half of 2014.
According to a recent poll conducted online by The Adviser, 61.7 per cent of brokers said clawback was the part of the commission structure they thought lenders most needed to change.
Another 23.3 per cent nominated trail and 15 per cent voted for upfront commissions.
The Adviser contacted 25 lenders to ask them if they had plans to change their commission structure in 2014. Twelve said no, while another 12 declined to comment. However, the final lender, Citi, revealed it was leaving the door open.
“[The quality of submissions] is something we are looking to improve through the continuation of training and education of brokers, and in turn we will continue to monitor and review our commissions,” Mr Milburn said.
Feedback from brokers and surveys suggests that Citibank had its commission structure right, he added.
“We are proud that we are at the top end of the market, offering 0.65 per cent plus GST upfront and 0.15 per cent plus GST trail from day one to our brokers,” Mr Milburn said.
