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A non-major lender has announced that it will change the way it remunerates mortgage brokers as it looks to strengthen ties with the third-party channel next year.
Effective 1 March 2019, Citi will begin calculating upfront commission payments for home loans on the drawn balance, net of offset, with the commission calculation made seven calendar days from settlement.
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Citi will also calculate trail commission on the utilised balance, net of offset account balance.
Citi noted that the changes will not be applicable to loans settled prior to 1 March 2019.
The bank has said that the changes reflect recommendations from the ASIC Review of Broker Remuneration and the Sedgwick review, both of which were supported by the Combined Industry Forum's (CIF) reform package.
Citi added that formal advice will follow, in conjunction with an amended Product Schedule to reflect the remuneration changes.
The lender is expected to strengthen its ties with the broker channel from February 2019.
All four major banks have committed to adopting the new commission structure, as have lenders such as Adelaide Bank, AMP Bank, Bankwest, ING, Macquarie Bank, ME Bank, MyState Bank, Suncorp Bank, Virgin Money, and the Bank of Queensland.
While Bankwest was the first lender to bring in the new commission structure (bringing it into being on 1 July 2018), NAB was the first major bank to move to the new commission structure, with both NAB (and its wholesale funding business Advantedge) moving to the new payment model last month.
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 the end of this year.
