Hi all, I was wondering what the best practice is for claw backs, do you charge the client? Seems as though the best medicine is to stay in touch with the clients to reduce refinance risk... but i imagine you would get scenarios where customers want to move on another project within the 18 months and the current lender can't meet their needs anymore Keen to hear your thoughts!
to bill a client, you would need to do a fees statement before commencing work. We have a case by case approach at both ends ta rolf
Clawback charges to clients are likely to be outlawed within the next 12 months (one of the Royal Commission recommendations). It would be nice if they'd outlaw the banks from applying clawbacks to brokers as well, but I can't see that ever happening. As a result, I think charging for clawbacks is a bit of a moot point. Better to put the energy into avoiding situations where clawbacks occur. Personally I've never charged clawback (or any other) fees and there's no provisions for them in my brokerage agreements.
Thanks Peter, Appreciate your response as always, I saw there was a few complaint stories circulating around in the early 2010s that caused some fuss... Interesting topic of conversation Have you ever got stung/what happened?
I get stung with clawbacks a couple of times a year, it costs me money. Not much overall, but nobody likes having their income taken away especially when it wasn't your actions that caused it. Worth mentioning that most of the my clawbacks are situations where I'm refinancing the loan for some reason. Often it was part of the plan from the very beginning. I've been a broker for 15 years and never charged a clawback fee, so I've never had any complaints from clients from clients about them.
I would happily pay the broker if I moved my loan away to another lender during the claw back period. I see it as being fair to the broker and their business, as there are multiple costs associated with running their business, and I don't expect them to not get paid for the service they have already provided. Although having said that, I would generally give the original broker every opportunity to help me moving the loan before I do it myself or engage the services of another broker. The original broker has to repeatedly make mistakes for me to ditch them, or have only lenders on the panel that don't suit me
