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NAB Broker's decision to provide all of its broker partners that write Homeside products with the benefits of a four star status could see other lenders follow suit in upping commissions.
Yesterday, NAB Broker announced it would pay all accredited brokers 65 basis points upfront commission for all Homeside applications lodged from 1 January 2012 – effectively returning its up-front remuneration structure back to pre-GFC levels.
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In speaking about NAB Broker's decision to lift commissions on its Homeside products, and give all brokers access to online valuations and 90 per cent plus LVRs, the lender's general manager distribution John Flavell said the industry had changed since the introduction of NCCP legislation and so it was timely to evolve the Star Rating System.
NAB Broker's decision to tweak commissions could prompt other lenders to do the same, according to Connective principal Mark Haron.
Speaking to The Adviser, Mr Haron said while other lenders may not be as "aggressive" as Homeside when it comes to commissions, we could see other lenders tweak and re-think their current remuneration packages.
"I think we will see more and more lenders using commissions as a lever to grab greater broker market share, which would be a really positive thing for the industry."
"Hopefully, NAB's decision to tweak its segmentation policy might encourage other lenders to do the same."
Of course, NAB Broker is not the first lender to increase its commissions this year.
In March 2011, Bankwest announced it would pay brokers an additional 10 basis points upfront commission on all loans with an LVR less than 75 per cent.
While the policy was only in place for a limited time, the bank managed to pay more than $1 million in bonus commission payments to its broker partners.
"The majors are being very aggressive at the moment in terms of pricing and policy and we are determined to show we can be just as competitive," Bankwest's head of specialist lending Ian Rakhit said when the lender announced its commission increase.
So what does it all mean? Can brokers expect to see their commissions increase further as lenders increasingly look to pull other levers in a bid to win market share?
Whatever the case, brokers will be undoubtedly be happy to see their commissions increasing if not returning to pre-GFC levels.
Speaking about the changes yesterday, a majority of brokers were pleased with NAB Broker's announcement.
Prisco Minichiello welcomed the news and said the decision would ultimately help the lender win greater broker market share.
"NAB already has a competitive offering, but this will have brokers such as myself plucking the lender first when giving my clients a product comparison. Now you've struck a chord and are on the right path to winning broker support," Minichiello said.
Greg Uehling agreed and said it was good to see a lender such as NAB recognising the value brokers provide.
"I'm a Four Star broker but can never be sure whether I would hold the status as my lending is very specialised. It's great to see that NAB Broker is willing to treat NCCP licensed organisations with the respect they deserve since the expense to maintaining a brokerage is increasing, commissions should move accordingly."
