Q. What do you think about recent commentary suggesting broker remuneration should be capped?

White noise is a distraction

Despite consumers voting with their feet, recent disappointing public statements suggest some have seen an opportunity to deflect attention by demonising small business operators who have driven a fairer go in the market.

A broker’s pay must cover the overheads of running that small business, for licensing, for the oversight of regulators, and for employing people. The fact that a broker is also on the hook for the entirety of that pay to possibly be clawed back for up to two years due to no fault of their own, is unlike any other industry. To suggest that this is comparable to a PAYG bank employee with the certainty of a salary requires a strong rebuttal.

The white noise about brokers is a distraction from the fact that Australian consumers are choosing to engage a broker who knows their circumstances and understands which lenders may be in the best position to be able to help them.

Ill-informed and strategic

I’m not sure if the current storm will blow over soon concerning big banks calling for broker commissions to be capped. But I don’t see anyone actually comparing apples with apples here, which highlights just how ill-informed and strategic this current commentary is.

For example, in some cases, CBA pays mobile bankers $200,000 plus super, plus motor vehicle, plus bonus. There are many brokers who, after the costs of running their business, would never earn close to this amount, let alone be paid to have four weeks a year of holidays and accumulate long service leave!

Would Messrs Comyn and King suggest that someone who has invested so much, be compared to a salaried employee with guaranteed income, holidays and bonus, and have their earnings capped? Of course not.

Of course we aren’t on a level playing field … the banks have always had the upper hand!

An attempt to dilute the broker market

The recent CBA commentary is an attempt to dilute the mortgage broking market, which, as we know, has now captured over 73 per cent of the market share. Any further commentary from banks about their plans for broker commissions should be viewed as price signalling and reviewed by the ACCC.

Brokers are small business owners who operate independently, providing personalised service and tailored solutions to their clients. This individualised approach sets us apart from the traditional banking model. As we’ve argued in the past, it’s an attempt at reducing competition, which is a threat to customer interests. We just know it best.

Taking aim at broker pay

Let’s not forget that banks often pay referrers almost as much upfront as they pay brokers, without clawbacks, best interests duty, or accountability – and that’s on top of a banker’s salary. This issue issue was front and centre in the Royal Commission.

Despite brokers handling 75 per cent of all new home loans, AFCA data has shown that complaints against brokers are nominal and represent just 0.3 per cent of all complaints. Meanwhile, banks are lifting bonus caps back to 80 per cent, despite the Royal Commission’s clear findings on how these incentives led to poor outcomes.

It’s not about capping pay – it’s about who you’re working for. Brokers are legally bound to put clients first. Banks are not. And that sums up the difference.