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While the focus on writing loans turns to quality rather than quantity, there's differing views around how changes to conversion metrics will impact a broker's trail. This month, we asked...
WILL THERE BE FURTHER CHANGES TO COMMISSIONS OVER THE NEXT 12 MONTHS?
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YES
MICHAEL RUSSELL
Mortgage Choice
What we have seen is a return to more normal lending and as a part of that, we are seeing increased competition for businesses: lenders are unlocking LVRs and offering specials to win customer business. This heightened competition is the reason why we at Mortgage Choice don't think broker commissions will be reduced. In fact, there's an argument that trail could actually be increased. There is presently no commercial reason for lenders to reduce commissions.
YES
FRANK PARATORE
Ballast Finance
I can't see further reductions to commissions. What I can see is a tightening of the metrics around conversions - including a better quality of brokers dealing with the banks. With the NCCP, I think we'll see second tier lenders in particular, put their focus on the quality of conversions. Quality is tied to trail. Better quality brokers will see opportunities post-NCCP.
YES
MARK HARON
Connective
I don't expect any significant changes to commissions over the next 12 months. It was however, interesting to see Bankwest offer bonus commissions for quality conversions. I guess any changes to commissions in the near future will depend on the availability of credit, as well as the banks' appetite for business. I think positive changes can be expected, with funding opening up, and this will encourage improved commissions. Brokers should be looking at ways to develop their fee for service model.
NO
IAIN FORBES
AFM
I would expect no reductions to commissions at AFM over the next 12 months, as I believe brokers who confer business should be adequately rewarded. But it's hard to give a guarantee because commission changes are really outside of our control. It depends on the funder, and whether they decide to make changes to their commission structures. However, AFM has a strong loyalty with its funders and I can't expect to see any significant changes regarding commissions over the next 12 months.
YES
JEFF ZULMAN
Vow Financial
The reality is that globally, capital remains scarce and there is strong competition amongst banks. This means that banks must be increasingly efficient in how they manage and process their distribution channels. As a consequence I think there's every possibility banks will introduce a two-tier commission system that will favour certain broker behaviour, whilst the remainder will see a reduction in their commissions.
