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Volume bonuses have been put back on the agenda after one major bank questioned the practice.
NAB’s head of retail banking, Gavin Slater, said it was a conflict of interest for banks to pay bonuses to aggregators for writing more business, according to Fairfax Media.
“At the end of the day, brokers are there to be independent and to give their customers the best advice. And when you’re paying volume-based bonuses to aggregators, I have a question around that,” Mr Slater said.
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Ballast chief executive Frank Paratore said volume bonuses were unfair to smaller aggregators and sent the wrong message to brokers.
“The banks can reward whatever performance they want, but I think that a fairer metric would be to reward for quality not quantity,” he told The Adviser.
Outsource Financial chief executive Tanya Sale said volume incentives were a bad look for the industry.
Ms Sale said questions had to be asked if a broker was to suddenly show a newfound interest in a particular product at the same time that a lender introduced a financial incentive.
“What should happen is the lenders should off an incentive to the borrower through the mortgage broker, such as waiving of an app fee or package fee, just to name an example.
“That would generate more business for the mortgage writer along with them having a valid reason of why all of a sudden they are writing that lender’s product again.”
Connective director Mark Haron told The Adviser that volume-based incentives are a conflict on interest – but one that can be managed.
“Under the NCCP, as long as brokers disclose those conflicts of interests, that puts the customer in a position of understanding how that conflict works and then that customer is in a position to make an informed decision,” he said.
[Related: Industry rejects govt claims about conflict of interest]
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