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Bankwest’s commission increase has come under fire from brokers and aggregation heads.
Earlier this week, Bankwest revealed it had increased its upfront commission payment by 20 basis points to 0.7 per cent.
However, in doing this, the bank also cut its 0.15 first year trail.
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While brokers will still come out in front in terms of commission earned, some are disappointed that the lender has removed first-year trail and potentially opened them up to a 100 per cent clawback.
Speaking to The Adviser, AFG’s general manager sales and operations Mark Hewitt said that when he was asked by the bank for his feedback on the commission change, he told them he was “wary”.
“When consulted on the change, our feedback was that we did not like the message that upfront and trail were interchangeable and it potentially leaves the door open for the upfront rate to be dialed down later on as a lender's appetite for business changes,” he said.
“Our view is that the change in structure is a backward step and that our members should be wary of it.”
Mr Hewitt’s comments were echoed by Loan Market’s national director of sales Mark De Martino, who said trailing commission is very important as it highlights the continuing work brokers do for their clients.
“My view is that brokers have had to do more work than ever before in getting a loan application approved and settled,” he said.
“I do appreciate Bankwest making a commissions increase. However it’s equally important that brokers are recognised from day one after settlement for the work they do in the ongoing administration and care of the customer. I think it’s important lenders continue to remunerate for that - in other words, trail from day one sends an important message that our lenders expect brokers to provide ongoing customer service and will pay for it. After all, you get what you pay for.
“Having said that, it’s encouraging to see a number of lenders recently making upward moves in commissions which speaks to the fact that lenders are committed to the broker channel and we are here to stay. That is good news for all of us.”
CENTURY 21 Home Loans' chief executive officer James Green lauded Bankwest’s move and said he would put the lender back on his preferred lender panel.
“Excellent and smart initiative, Bankwest,” he said. “Third party has the lion's share of mortgages and I personally would choose a higher commission over a lower one any day.”
