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Two leaders in the third-party industry, including an aggregation head, have called for the introduction of a fee-for-service model similar to those used in other countries.
During a panel discussion at the Finance Brokers Association of Australia (FBAA) conference in the Gold Coast last week (24 November), general manager of eChoice Aggregation Blake Buchanan and mortgage industry veteran Brett Spencer discussed the implementation of fees for service in the broking industry.
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The executive of the Stargate Group and chairman of the Opica Group, Brett Spencer, argued that because “not all loans were settled”, brokers shouldn’t be “working for free”.
“I think on every transaction, just like in Canada and the UK, there should be a fee for service [because] you are doing work for somebody,” Mr Spencer said.
“You could have a varying degree of fee for services, like, you may rebate it back to them.”
Mr Buchanan said that after 25 years of operation in Australia, it was time for the industry to re-evaluate its income arrangements, but noted that brokers needed to “diversify” if a fee-for-service system was to be introduced.
“I believe that significant changes are needed to be made in the third-party industry,” Mr Buchanan said.
“[Broking] in Australia is largely 25 years of age. I think it’s a good thing that we’re reviewing where we are and making adequate changes. Now, when we talk about mandating, I believe that commitment fees are okay.
“If we were to mandate clients, why would we do so? We would do so by diversifying our offerings further.
“[So], I think mandate will be okay, but we need to diversify and justify our position on mandate.”
Mr Buchanan noted that brokers in the UK often charge a fee, and consumers understand that it is done to establish a relationship with a “true partner on the financial journey into the future”.
The eChoice general manager also said that he believes brokers are “just adequately paid” under existing arrangements, and would therefore like to see lenders increase commissions.
“I think the industry precedent is you get your commissions and your trails. I think we get just adequately paid. I’d like to see it increased, to be honest,” Mr Buchanan added.
Earlier this week, eChoice confirmed that Geoffrey Reidy and Andrew Barnden of Rodgers Reidy have been appointed as voluntary administrators of eChoice Limited and 13 subsidiary companies, pursuant to Section 436C of the Corporations Act.
[Related: Consumers don’t want to pay fees to brokers, says banking head]
