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ISCOVER
Jessica Darnbrough
More than 90 per cent of brokers believe that charging a client fee should not replace lender commissions, according to a survey conducted by The Adviser.
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The online May survey canvassed the opinions of close to 400 brokers on the future of fee for service.
While the report found brokers are split over whether or not there is a future in fee for service, one thing is clear: charging a fee should never replace lender commissions.
Broker Scott Cash told The Adviser that while in some instances it is appropriate to charge a fee, brokers should still be paid by the lenders for their service.
"Fee for service in certain circumstances is appropriate," he said. "However, for a majority of the time fees would only turn clients away. We have to remember we are providing a service to the bank and they should pay for this service."
However, AFG's state manager for NSW, Chris Slater, warned that any collective move towards fee for service could give Australia’s lenders the perfect reason to slash or abolish both upfront and trail payments.
“I can’t speak for the organisations themselves," Mr Slater said, "but I think if I was the head of one of the major lenders, I would just be sitting back and licking my lips while thinking, ‘wow, we have been funding this channel for 15 years and now the customer is going to fund it'."
Australian property finance broker John Doolan agreed and said fee for service would put the future of commissions in jeopardy.
“The banks want us to charge a fee so they can cut out paying trailing commission," Mr Doolan said. "Was it the major banks that started this fee for service rumour?”
