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Opinion is divided on why lenders have been increasing their commissions, with brokers insistent that it doesn’t influence their decisions.
This has been a big year for commissions, with Suncorp Bank the latest to increase its broker remuneration.
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It comes after NAB and Westpac increased commissions earlier in the year, while Commonwealth Bank announced plans to reform its commission structure later this year.
All the brokers The Adviser spoke to stressed that commissions don’t influence their recommendations, although some thought that other brokers might be swayed by payment levels.
HMG Home Loans director Hayley Grant said she focuses solely on her clients’ needs and is not fully aware of which lenders pay what.
However, she added that she knows of brokers who steer business away from lenders that offer less generous terms.
“I sometimes think I’m in the minority of brokers who aren’t influenced by commissions and trail. I think a majority are influenced by it,” she said.
Brisbane Financial Services director Damian Mifsud said he would never make decisions based on commissions because he would lose credibility in front of his clients.
“It probably does influence some people, but the main thing is you’ve got to weigh up the features and benefits of each bank and give the client the information and let them decide.”
Haysman Financial Services co-owner Peter Bieg said he is happy to recommend products with lower commissions when that is in the best interest of his clients.
However, he also said that it would be logical for some brokers to compare commission payments if they had to weigh up several products of equal value.
Mr Bieg said the round of commission increases in 2014 might be because the banks had become more profitable and were in a position to compensate brokers for their increased workloads.
He also told The Adviser the banks might regard commission increases as a way to capture the attention of brokers with large panels.
Assess Financial Services managing director George Kostanski said commissions don’t influence where he sends his business, although he added that he had steered clear of Westpac since the bank reduced commissions during the GFC.
“Overall, when I’m with a client, I don’t think about the commission, I think more about the client and what they want,” he said.
Mr Kostanski said one possible reason lenders might be increasing their commissions could be to stop smaller rivals gaining traction in the third-party channel.
[Related: Citibank flags possible commission changes]
