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The non-bank lender has announced that it will update the way it calculates broker commissions from 1 January 2019.
Virgin Money has announced that it will change the way it remunerates mortgage brokers from next year, moving in line with the recommendations from the ASIC and Sedgwick reviews, which were backed by the Combined Industry Forum package of reforms.
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Effective 1 January, Virgin Money will calculate upfront commission on new Reward Me Home Loans and variations based on the drawn down loan balance, net of offset and redraw facilities, rather than the total approved facility.
The calculations will be based on the balance on the fifth calendar day after draw down.Christian York, Virgin Money’s head of distribution, said: “These changes reflect the importance Virgin Money places on ensuring our customers obtain loans which are appropriate in both size and structure, are affordable and meet their individual needs and objectives at the time of borrowing.”
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 and Suncorp Bank.
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.
[Related: Major bank changes broker commissions]
