MPA asks three brokers their thoughts on the banning of volume-based commissions.
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MPA asks three brokers their thoughts on the banning of volume-based commissions.
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Fabio De Castro
Mortgage broker
Oxygen
“Yes. Many see the benefit of a broker as impartiality. Volume-based commissions give the impression that brokers are not impartial. Consequently, they have become quite controversial. Anything that brings into question the integrity of the industry should be reviewed. As an alternative, volume-based commissions could be replaced by quality-based incentives. A commission scheme that rewards quality is efficient for the lenders because it incentivises the broker to complete a quality application that progresses to approval quickly and smoothly. It’s better for clients because it is more transparent and removes any doubt that brokers are offering products based on remuneration.”
Sean Murphy
Associate director
MyMortgageFreedom
“There’s no doubt our interests should always be aligned with our customers’ objectives, and our advice should not be biased in any way.
However, if we build an organic relationship with a lender that is willing to provide a premium service to our clients, competitive pricing and broad product options that suit our customers, then I don’t think it is a bad thing to be rewarded for your support. It is still a business relationship, so long as that lender is not recommended to clients that are not suitable in order to build volume. Organic reward would be the key for me.”
Aaron Christie-David
Managing director
Atelier Wealth
“The short answer is yes. Our role is to always act in the best interests of our clients, giving them choice and recommendations without bias. Volumebased commissions can introduce bias, and banning them changes the focus from quantity to quality metrics. Loan sizes vary from a new entrant broker compared to an experienced broker, and from regional to metropolitan markets, which makes it inequitable to benchmark a broker’s performance based purely on volume. Quality metrics keep us accountable to get our applications to a high standard and to ensure our recommendations are based on merit, not on maintaining our volumes.”
Fabio De CastroMortgage broker
Oxygen
“Yes. Many see the benefit of a broker as impartiality. Volume-based commissions give the impression that brokers are not impartial. Consequently, they have become quite controversial. Anything that brings into question the integrity of the industry should be reviewed. As an alternative, volume-based commissions could be replaced by quality-based incentives. A commission scheme that rewards quality is efficient for the lenders because it incentivises the broker to complete a quality application that progresses to approval quickly and smoothly. It’s better for clients because it is more transparent and removes any doubt that brokers are offering products based on remuneration.”
Sean MurphyAssociate director
MyMortgageFreedom
“There’s no doubt our interests should always be aligned with our customers’ objectives, and our advice should not be biased in any way.
However, if we build an organic relationship with a lender that is willing to provide a premium service to our clients, competitive pricing and broad product options that suit our customers, then I don’t think it is a bad thing to be rewarded for your support. It is still a business relationship, so long as that lender is not recommended to clients that are not suitable in order to build volume. Organic reward would be the key for me.”
Aaron Christie-DavidManaging director
Atelier Wealth
“The short answer is yes. Our role is to always act in the best interests of our clients, giving them choice and recommendations without bias. Volumebased commissions can introduce bias, and banning them changes the focus from quantity to quality metrics. Loan sizes vary from a new entrant broker compared to an experienced broker, and from regional to metropolitan markets, which makes it inequitable to benchmark a broker’s performance based purely on volume. Quality metrics keep us accountable to get our applications to a high standard and to ensure our recommendations are based on merit, not on maintaining our volumes.”
