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Brokers unjustly targeted with cuts to commissions

Media Release

With Australian banks moving to cut commissions, the Finance Brokers Association of Australia (FBAA) believes brokers are being unjustly targeted to carry the burden of the ‘credit crunch’.

FBAA National President, Peter White, said that while he accepts margins on loan products have taken a ‘hit’ due to the increased cost of funding, it’s unfair to single out brokers and expect them to take all the ‘pain’ so the banks can continue to post record profits.

“Margins on loans and mortgages are being squeezed regardless of how they are introduced, whether it be via a broker or the bank itself. With this in mind, will the banks be adjusting internal staffing and other sales and marketing overheads as well to reflect the increased cost of funding or will it just be brokers who are left to bare the ‘hurt’ alone,” Mr White said.

“There are many links that comprise a lender’s sales and distribution chain, and the FBAA feel that a disproportionate component of the increased cost of funding is falling on the broking community.

“Brokers are a vital part of the banks’ sales and marketing function and I think it’s fair to question how other areas of sales and marketing will be impacted. Many major financial institutions don’t blink twice at multi-million dollar corporate sponsorships and with their livelihoods at stake a lot of brokers would rightly be questioning how this type of expenditure will be affected.

“Having significantly assisted the banks and other lenders to post record profits for shareholders over the years, I think the vast majority of brokers would feel they have been unjustly targeted by these commission cuts.

“Everyone accepts the going is tough at present. Borrowers have had to wear interest rate increases above the RBA rate due to the dislocation to the credit markets and now brokers will be significantly impacted as well with the commission cuts. It seems everyone has been dealt some ‘hurt’ by the banks but what isn’t suffering is their collective bottom-line,” Mr White said.

Please contact Matt Paterson on 0402 140 757 with media inquiries.