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The abolition of exit fees could force lenders to review broker upfront commissions, Barnes Home Loans executive director Janelle Rayner has said.
Speaking to The Adviser, Ms Rayner said clawbacks will become inevitable under the government’s new legislative policy.
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“As a group, the non-banks have tended to pay higher commissions to the broker sector, but without the protection of deferred establishment fees, upfront commissions may need to be reviewed,” she said.
“Brokers have already experienced a 30 per cent reduction in their incomes. Some of our smaller brokers may not have sufficient trails to support clawbacks. We have seen our broker panel restricted due to the NCCP and I believe the exit fee ban will result in further reductions as to where we can source our business.”
Ms Rayner said product choice may also be reduced as a result of the ban on exit fees.
“We have done an analysis across our niche product range, and low doc clients tend to refinance in their second or third year. Higher establishment fees may eventually be introduced for these types of loans,” she said.
