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BankWest’s commission guarantee to its top six aggregation groups has ended and a new reduced remuneration structure has been announced.
The changes follow the bank’s decision in April last year to freeze commission levels for its key partners until the end of 2008.
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Under the new agreement, effective as of 1 March, a new upfront commission of 0.50 per cent will apply for all top six partners.
Trail commissions will now be 0.15 per cent in years one and two and then 0.20, 0.225 and 0.25 per cent in the subsequent years.
The upfront commission will be subject to review at the end of June this year.
Brendan O’Donnell, chief executive officer of Choice Aggregation Services, said that while reductions to commissions were certainly not welcomed, BankWest’s changes would bring the bank’s commission structure in line with other lenders’.
“It’s also a simple commission proposition without cross-sell requirements, with a trail that rises over the initial few years of the life of the loan,” he told Mortgage Business.
But while Mr O’Donnell was not pleased about the reduction in commission, he believed that the move demonstrated that BankWest remained dedicated to third-party distribution.
“In our conversations with BankWest we’ve been assured of the lender’s ongoing commitment to the broker channel as well as the continued strength of its broker proposition – around 80 per cent of its business is currently originated by brokers.”
Mr O’Donnell said the acquisition of the BankWest by CBA may also bode well for brokers.
“I think an important point is that we’ve had firm confirmation from the lender that it’s in a stronger funding position as a result of the CBA acquisition,” he added.
“On another note it would seem that their retail branch expansion will be limited on the east coast, therefore ensuring strong continued distribution via brokers.”
BankWest’s commission changes follow recent commission revisions from other lenders including Suncorp and NAB.
