Non-banks move on broker pay
Non-bank mortgage provider Resimac has begun taking steps to change its remumeration practices as they believe flat fee borne by the consumer is not in the best interests of the consumer.
Resimac are still working though the technical implications, but final decisions should be made by the end of the year with implementation early in 2019.
Achieving better outcomes plus an improved standard of conduct was the focal point of the current reforms to ensure better customer outcomes.
Resimac general manager, Daniel Carde said Resimac strongly supported the current model in conjunction with the six principles in the Combined Industry Forum (CIF) reform package.
“Over the longer term, this will further strengthen the broker proposition, ensuring consumers continue to benefit from strong industry competition and greater choice when accessing finance.
“Brokers are critical to ensuring Australia’s mortgage market is dynamic and efficient, and to providing a level playing field for lenders of all sizes, especially those without a branch network.
“Brokers provide consumers with access to a wide range of lenders and real choice when evaluating the most suitable loan for their purposes,” Carde said.
Carde added that Resimac already complied with many of the CIF principles including not paying volume or campaign-based commissions, plus didn’t pay ‘soft dollar’ commissions.
Carde also said Resimac’s next step will be to amend how upfront commissions are calculated to remove any perceived conflict that may encourage consumers to borrow more than they need.
Non-bank finance group, Chifley Securities said it would continue to provide upfront commissions of up to 1 per cent, with this to rate to be paid again when the loan rolls over
Chifley Securities, which lifted its lending to developers and landowners from $1.45 billion to $2 billion in the 2017-2018 financial year, now works with 3,000 brokers and is looking to double this number over the next year.
“There are more than 10,000 mortgage brokers across Australia and many of them will not have a viable business or career if trail commissions are phased out,” Chifley Securities principal Dominic Lambrinos, said
“Non-bank operators are becoming more sophisticated as our share of lending grows and we are partners with brokers, who are often treated as servants by traditional lenders.
“Mortgage brokers can make an easy transition to commercial property lending through our training & support programs and gain another income flow, which sadly I expect will be required with the expected changes to trails,” Lambrinos said.