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Mortgage broker commissions are ‘secret’ and constitute ‘well-hidden kickbacks’, according to an article published on Fairfax's Canberra Times Money page.
“There are secret commissions you are paying on everything from super to car insurance and the ban that came into effect on July 1 affecting advisers won’t stop them,” writes the author. “What’s more, most of these secret – or at least well-hidden – kickbacks finish up with the banks.”
“Mind you,” he adds, “the commission ban was never going to apply to anything recommended by advisers before July 1 and FoFA lets insurers and mortgage lenders off the hook altogether.”
The article then suggests that readers use a nominated broker in order to rebate the unfair commissions consumers ‘don’t know’ they’re paying.
A quick look at one of the sites suggested by the author, yourshare.com.au, reiterates the concept that broker commissions belong in the hands of consumers.
“If you already have a home loan, you are probably paying hundreds of dollars in fees and commissions each year,” reads the website’s home loan commission-repayment section. “And if you are looking for a new loan, you avoid having to pay them in the future [by using the site] and make substantial savings over the life of your loan.”
But MFAA CEO, Phil Naylor, says the notion that broker commissions are ‘secret’ or undisclosed is inaccurate.
“That basic premise is false. It has always been a requirement in the MFAA Code of Practice that commissions are disclosed up front to prospective clients and that principle is now law under the NCCP,” says Naylor.
“Consumers seeking to deal with a broker know upfront that the broker will be earning a commission and the amount or the method of its calculation is there for all to see. Consumers choose to deal with a broker understanding the remuneration method.”
Furthermore, says Naylor, the idea that commissions earned by brokers somehow belong to clients is also erroneous.
“The article seems to suggest that somehow a commission is money belonging to the consumer. This of course is not true in respect of mortgage brokers. The commissions are paid by the lenders and not out of consumers’ funds.”
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