Mortgage lenders rein in bonuses
A GROUP representing mortgage brokers says the industry has abandoned “volumebased” bonus payments that “risked customers being encouraged to borrow more than they need”.
The revelation will be made in an interim report to be released today by the Combined Industry Forum.
Members of the group include the Big Four banks, nonbank lenders, mortgage brokers and “aggregators” who act as an intermediary between lenders and brokers.
Volume-based commissions reward brokers for writing bigger mortgages.
They have come under scrutiny during the banking royal commission amid concerns brokers have encouraged consumers to take on more debt without paying heed to their needs.
The Combined Industry Forum had previously said the industry would end practices including volume-based bonus commissions, “campaignbased” commissions and other volume-based bonus payments.
Members have now ended these practices, the group will reveal today.
Campaign-based commissions are paid by lenders – on top of usual commissions and fees – to brokers who recommend their loans.
Australian Banking Association chief Anna Bligh said the interim report outlined changes that were a “giant leap in the right direction”.