The Finance Brokers Association of Australia (FBAA) urges Australian banks not to cut commissions and turn their backs on a financial model which has served them well over the years.
FBAA National President, Peter White, said those banks considering cutting commissions should consider the implications of such action in the broader scheme and to not prioritise the protection of short-term profit ahead of abandoning a financial model that has delivered for them time and again.
“The current broker commission structures have delivered across the board,” Mr White said.
“The commission model has formed the foundation for a mutually beneficial partnership between the lender and the broker. Simply, the broker channel has assisted the major banks and other lenders to grow their bottom-line, post record profits for shareholders and significantly enhance their customer service capabilities.
“From the borrower’s perspective, the introduction of brokers has enabled non-bank lenders to enter the market and flourish, leading to unprecedented competition and choice for the borrower. This has inturn driven down the cost of credit for borrowers and provided Australians with the most competitively priced and innovative finance.
“The emergence of the broker channel, however, would not have been possible without the current commission structures. Most brokers are small businesses and as such need to be adequately compensated to cover the cost of running a business and to sustain their livelihood.
“We all accept the pricing of debt has increased due to the credit squeeze. However, it’s widely acknowledge that liquidity will return to the credit markets in due course and it would be short sighted of the banks to turn their backs on the very brokers who have in the past supported their growth and will continue to help drive their profitability moving forward,” he said.