A major bank that announced an overhaul to its commission structure has said it did so to reward broker loyalty.
Commonwealth Bank announced yesterday it would implement a new commission structure from 1 January 2015 that will see it pay 15bps year one trail for all new settlements. The bank said it is also in discussion with broker head groups on a ramped trail structure, and that full details will be announced once an agreement has been reached.
The bank's executive general manager of retail products and third party banking Lyn Cobley said the commission changes rewarded brokers loyal to the bank.
"We are very excited to reward brokers for their efforts and loyalty to the Commonwealth Bank," she said.
Before the first year trail changes come into effect, the bank will begin paying an extra 10bps of upfront commission for loans settled from 1 October to 31 December 2014.
Cobley said the bank recognised the third party as a vital channel for distribution.
"We recognise mortgage brokers are an important part of the bank's home loan distribution strategy, and they assist in meeting our customers' financial needs. We are pleased to support this channel so we can continue to help more Australians buy their own home than any other bank," she said.
Banks have been jockeying for position in the broker market of late, with several others announcing commission changes.
NAB earlier this year re-introduced year one trail, while
Westpac,
Bankwest, AMP and
ME Bank have all announced commission incentives as well. Martin North, principal of Digital Finance Analytics, recently told Australian Broker that banks had become more reliant on broker business, and were trying to grow their lending by making a stronger appeal to the channel.
