The Finance Brokers Association of Australian (
FBAA) has also come out in defence of mortgage brokers after an inflammatory article was published in the
Australian Financial Review (
AFR).
In the article, titled ‘Mortgage broker salad days are numbered’, the
AFR calculates that in the September quarter last year, brokers would have received upfront commission of about $300 million and locked in another $50 million in annual trailing commission.
“Brokers live in fear that commissions will be outlawed and when you look at the numbers you can understand why,” the article read.
However, the FBAA’s Peter White said if those numbers are correct, you are looking at a monthly gross income of around $4,166 when you divide it by the total number of brokers Australia-wide.
“That represents an annual income of around $55,000 which honestly can hardly be considered ‘over-the-top and excessive when the average Australian yearly income is around $70,000,” White said.
Many brokers do earn income well above this, White admitted, however, he said the remuneration is commensurate with national standards when you take into account the time spent.
“This
AFR piece from a columnist that clearly has an agenda was totally misleading and even malicious and gave the impression that brokers are blatantly ripping off customers. Self-employed people have a right to earn as much as they can just like anybody else.”
“Trailing commissions too have been unfairly maligned,” White said. “The truth is they take time to accumulate and a year’s gross trail can never be seen as excessive or wrong by anyone’s standards.”
The FBAA is concerned this type of unbalanced article can have serious implications on the current review by ASIC into broker commission structures.
“Brokers now account for nearly 54% of all loans written so we must be doing something right,” White said.
Last week the CEO of the
MFAA, Siobhan Hayden, defended brokers against allegations made in the column that the standards in mortgage broking lag behind other sectors, namely financial planning
“There are clear differences between the remuneration structures in mortgage broking and those in the financial planning and life insurance industries,” she said.
“Crucially, brokers are paid commissions by lenders; they are not paid by consumers. Commissions are also variable and reflect the cost of a mortgage.”
