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Refund Home Loans (Refund) is adamant its business model will remain unchanged despite reductions of up to 30 per cent in bank commissions.
The franchise broking business is based around sharing broker commissions with customers.
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Wayne Ormond, Refund’s managing director claimed franchise applications and loan volumes were flying high in spite of the announcement of widespread bank commission cuts.
“The cuts have made no difference,” he said.
“Our customers decide they are better off dealing with us than other brokers because they get something from us rather than nothing from them.”
While Mr Ormond conceded that Refund would “slightly adjust” the amount of commission refunded to the client to offset reduced earnings for franchisees, he claimed franchisees were better equipped than other brokers to adapt to the new broking environment.
“I guess the difference between us and other mortgage brokers out there is we’re used to working with reduced commissions,” he said.
In stark contrast to other brokerages’ sentiments and a drop in loan volumes nationally, Mr Ormond said that business was booming for Refund.
“The slowdown in volumes hasn’t affected us – our volumes keep increasing every month and so do our franchise numbers,” he said.
Mr Ormond told Mortgage Business that he receives around 800 franchise inquiries a month – many of which are from established brokers.
“I think one reason we attract a lot of inquiry from existing brokers is they are looking to go somewhere with a point of difference.
“All the other brokers out there are doing the same thing; we’re doing something completely different. If you’re not going to go to a bank direct then you’re going to go to a broker that offers a point of difference, or why bother,” he said.
Mr Ormond also revealed that the discount broker would seek opportunities to expand its business model into other sectors of financial services.
“We’re talking about up skilling our brokers and looking at other industries that correlate with home loans.
“We see an opportunity where we could give some commission back to customers in financial planning and general insurance.
Published: 24-06-08
