Those in Support of the mortgage broking industry

Support your mortgage broking

 

Done. 43k signatures already.

Was there ever any proper investigation done into brokers and the actual effect of trails on their recommendations or was it just assumed that it can’t be anything but bad? Is there even that much difference in trails to make the risk worthwhile?

 

I don't know about a detailed investigation but I can say my brokers have secured excellent deals for me... much better than the deals I found. It was a bit of competition between me and one broker to see who could gind the better deal. The broker always beat me, which means I would have been worse off if it wasn't for the brokers. Besides, I hate paperwork and would gladly pay someone to take care of that.

 

Trails are excellent for clients. They allow us to do so much for our clients for free, where we'd have to charge billable hours like accountants otherwise.

At the moment we've got about 5 deals on the go that we don't get paid for, that we can do for our clients at no cost b/c we get trail. All the little $10k top ups that we do for existing clients are as much work as a refinance or purchase - we do them for free but there's no way we could if we didn't get paid trail.

We also would struggle to employ staff, which would mean the pricing and ongoing service for existing clients would also stop. It would suck for everyone, quite frankly.

 

Wouldn’t a trailing commission encourage a broker to get an appropriate loan for a client - otherwise they are more likely to refinance sooner without the broker??

I would have thought moving to a 100% upfront commission would encourage brokers to always suggest refinancing even if the existing loan is appropriate.

The other thing with the recommendations that annoys me is the “assumption” that brokers give biased advice because they get paid differing amounts from each bank.

So instead let’s make borrowers go direct to a bank - who will definitely give biased advice (ie. there never going to send a customer to another bank because there loan options are not suitable for the customer).

How leaving the upfront and trailing commissions but standardizing them across loan providers?

Regards,

Jason

 

Upfronts and trails are pretty much the same across most lenders actually. Some smaller ones offer higher Comms but most don't even consider these lensers

 

About 4 investigations. ASIC, Treasury, Segwick, another I can't remember. They all identified commissions as a potential conflict of interest, but none identified actual evidence of a conflict of interest occurring.

Furthermore several stated that alternate remuneration models are likely to put brokers out of business and they specifically stated this would reduce competition in the market. This would be a very bad outcome for consumers.

 

Productivity commission was the other body that recently investigated and reported on broker remuneration.

 

That's not quite true......

The Big four banks....

 

Reading your post makes you realise just how corrupt our political system is.
Do people still call Australia the lucky country?

 

I actually do this close to once a week. With guarantor loans being more and more common with FHBs often the parents don't bank with my employer.
I will suggest either I speak to the parents to see if I can offer them a better deal, both services and product, ideally provide them better rate, rebate to refinance and look after their banking going forward.
Otherwise I recommend they speak with the parents bank and if they're not happy and still want to proceed I will do a 2nd mortgage with the guarantors, but only as a last resort.

There have been cases where I've also sent clients to speak with brokers as I couldn't assist (no application input / credit file burnt)

 

If only all branch staff were like you Brady! Our clients would be a million times better off. (I'm not being snarky - the world needs more branchies like you.) it would be so nice to be able to live in peace with the banks - sadly, we're not on the same team and this whole RC debacle is about to kill the game all together.

 

+1

Those who followed one of my previous threads will know I was about to go it alone, and to be honest if I had I probably would have felt happy that I secured myself a better rate from a refinance (if the deal had gone through without a hitch) and been blissfully ignorant of the fact I could have had better.

Thanks to me taking a second to ask the right question I ended up going through a broker and securing a better deal through a much more favorable valuation and a better structure for my future plans.

If I had to pay several thousands up front I would probably have been turned off ever asking the question and I have no problem at all with my broker continuing to get a trail.

 

In all honest I think even the 'branchies' as you call us will evolve overtime. I see the writing on the wall starting to show now...
When/if the changes go through, it's not just brokers but also bankers who will have to pay for the services.
How long do you think it will take for the banks to start transitioning to more AI with applications
In turn they would be able to increase customer uptake of these, as they wouldn't involve as much input from banker/broker.
The vanilla deals, those that just want the loan will take this path... will it be the best option for them - probably not...

Overtime I think if you're good at what you do, you will always have customers.

I was never on anyones 'team' besides my customers, not the banks nor brokers.

I find it's interesting on the forum of late to see which brokers are making noise and what they're saying.
Some look like they're concerned with getting paid themselves, others more interested in making sure it's the best outcome for their customers.

The RC doesn't just impact brokers.

 

That's an interesting perspective. It makes sense in all areas to automate the stuff that's easily automatable, but not the stuff that's going to result in crappy client outcomes. Some AI is inevitable regardless of the RC outcomes in both broking and branch land I reckon. Brokers who are no more than a human rate comparison tool and paper-pusher have their days numbered regardless.

I also agree that good brokers will have customers - it's possibly more a question of will their customers have a broker?

If some brokers seem concerned about being paid, please don't see this as a negative attitude toward their clients - it's not. It more of a genuine concern that they might not be able to continue to provide a service they love providing and are extremely good at, simply because the business may no longer be viable. No great brokers = poor customer outcomes by default.

Some brokers target segments that simple can't pay. Take first home buyers - they very rarely have $2k to pay a broker, and due to their very small deposits don't have the equity to cap it onto their loan.

It's all just really poorly thought out - actually, more likely a knee-jerk reaction with zero thought given to the real outcome.

 

The fee for service model isn't a good outcome for anyone except big bank shareholders. Even if there is a level playing field across channels, I can't see that any channel (branch, broker, etc) is going to be comfortable with it. I've already explained why it's probably the worst possible result for consumers.

Simply banning commissions and creating an uneven playing field isn't good for most parties either. It kills off the broker segment, bad for competition, prices go up, bad for consumers. This has already been covered.

It also puts a lot of brokers out of jobs, plus their staff. There's currently almost 30,000 people employed by this industry who will be out of work. Many of them will seek employment in the banks themselves. With many branches closing, and services being off-shored, I imagine this would have a (further) negative effect on the staff working in branches and back offices. KPIs increase, bonus' start to evaporate, salaries stagnate. Again the winner is the shareholders as that's where the cost savings flow.

I've had some time to process this over the last 2 weeks. I don't think that commissions will be completely obliterated. Brokers payment model will change and I think there's a good chance it will remain viable overall. Some brokers will take it as a sign retire, the industry will shrink but overall I don't think it's going to disappear. I don't believe the funding model will work as well for anyone as the current model does though.

Personally I've rationalised my own options. There's a lot I can do with my experience. From my own perspective, the ones with the most to loose out of this are consumers in general.

 

And therein lies the difference between yourself, several brokers on PropertyChat and every other "branchie" lender and broker.

I've dealt with "branchie" lenders who had over decades of "experience" individually (and this is while I was working in a branch as their business partners). The crappy advice they gave and if i followed it would have stuffed up my financial / tax position. Most lenders don't know squat and are there to make targets so the get paid and go home.

If anything brokers will help competition as well as increasing the skill of "branchies".

 

Hi Brady,

My apologies - I was generalizing and I know there are exceptions to the rule. I know how good you are from using you multiple times for my CBA loans and I suspect your an exception rather than the norm.

Do you think your knowledge and openness to other ideas is typical for bank loan officers?

Regards,

Jason

 

Haha didn't even notice that it was 'that' Jason Hi

Haha pretty sure I even said to you before we don't have a particular product that suited your needs at the time, best to stay where you are.

Yes and no, just like any industry there are those that are good and those that will just chase $ and easiest path.
I know of some great bankers, who I personally use for my banking.
Funny thing is that they sit in a team/office where some of the staff next to them are terrible bankers IMO
Also they might both have the same title (maybe with slight variation), but paid completely different.

Iv'e been pretty quiet over the whole RC on here so far, like most PC is pretty heavy of brokers, they think they're gods gift which is fine, I'm not here on a commercial basis.
But finding it harder to keep quiet when it's so one sided.