Union broker pay plan misses the mark

A suggestion by the Finance Sector Union (FSU) to restructure brokers’ incomes is flawed, according to the Finance Brokers Association of Australia (FBAA).

The union believes there should be a universal income structure for bank employed mortgage salespeople and external mortgage brokers, however, FBAA executive director Peter White said a fee-for-service model in home loan broking won’t work.

“A broker is doing a large part of the work for the lender, therefore, it is commercially appropriate for the bank to pay them a commission for doing that work,” said Mr White.

He says while the union is very proactive in protecting the income rights of bank employees, it shouldn’t lump financial planners together with finance brokers because the two are vastly different.

“A finance broker does not give advice, as per the NCCP, but offers guidance on lending options and then assists a client through the application process to settlement, as per the lenders credit rules.

“Financial planners give advice and need to be independent as they can influence an investment market’s performance – returns and outcomes, whereas home loan brokers cannot influence any market outcomes.”

Mr White says there are around 25,000 brokers in Australia and the FSU proposal to restructure their incomes in this fashion would have a serious and negative financial impact on them.

“It potentially could cause brokers’ businesses to collapse and throw employees out of work.”

He says the FSU wants to protect the income and employment rights of banking employees, but brokers also employ people, so their staff employment rights must also be protected in addition to their business.