Unloan, the direct mortgage arm of Commonwealth Bank (CBA), has defended its new referral program after copping criticism from the mortgage industry.
Launched in late February, the introducer program offers a 0.33% commission to professionals like accountants, financial planners, real estate agents, and lawyers, but specifically excludes mortgage brokers, for referring clients who settle mortgages.
This has sparked concerns about potential conflicts of interest and raises questions about equity within the industry.
Dino Pacella (pictured above left), founder of National Finance Brokers Day, shared his thoughts on the potential implications of this compensation scheme for non-broker professionals.
“Namely, is it fair for non-broker professionals to receive compensation without adhering to the same regulatory standards as mortgage brokers?” said Pacella, who is also the head of third-party relationships at Simplicity Loans and Advisory.
“Furthermore, how might this financial incentive impact the quality of consumer outcomes and the overall integrity of financial advice?”
Unloan CEO Dan Oertli (pictured above right) sees it differently.
“Unloan is a digital home loan. We're able to keep prices low by offering a simple, digital experience and reaching our customers through cost-effective channels,” said Oertli.
“If partners want to tell people about Unloan by sending them a link to our digital application, we’re happy to pay a referral fee if we enter into a loan agreement.”
One of the biggest concerns about Unloan’s latest move from the point of view of consumers is that it could potentially reintroduce the same problems of past programs.
Heavily denounced during the banking royal commission, introducer programs resulted in unlicensed introducers providing credit advice and banks breaching consumer protection laws.
Oertli said Unloan understands previous issues relating to introducer programs and “we have designed ours with them in mind”.
“All referral partners are vetted,” Oertli said.
“All referrals are made via an anonymous link to Unloan, so that partners are not involved in the collection of any information. And any payable commissions are fully disclosed to the customer by Unloan.”
Another aspect to consider is the difference in commission rates.
While non-broker professionals receive a 0.33% fee with this program, the standard commission for mortgage brokers typically hovers around 0.65%, according to Pacella.
“This discrepancy prompts reflection on whether this accurately reflects the comprehensive services that mortgage brokers provide to their clients,” Pacella said.
“It raises the question: Does CBA see 0.32% as the value assigned to the myriad tasks and responsibilities that brokers undertake to secure the best financial solutions for their clients?”
Speaking about the program, Oertli said the commissions paid are “significantly lower” than traditional broker commissions for a reason.
“… This allows us to offer lower interest rates to our customers,” he said. “We remain open to exploring all cost-effective channels to make people aware of Unloan.”
A crucial aspect that adds to the debate is the absence of clawbacks on the 0.33% offered to non-broker professionals.
Pacella said this prompts brokers to question the justification for the full clawbacks in the broker channel.
“It raises concerns about consistency and fairness in the treatment of compensation within the broader financial landscape,” he said.
As the mortgage industry navigates these multifaceted concerns, Pacella has called on the broking industry to “flex their collective muscle”.
He called for active participation and engagement to ensure the continued strength and integrity of the broking profession.
“Now is the time for the industry to unite, voice their concerns, and contribute to the ongoing dialogue shaping the future of the broking industry,” he said.
What do you think about Unloan’s referral program? Comment below.
