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ISSUE 8.08 April 2011
New lenders ready to join clawback club
Damian Percy
Non-banks and
second-tiers to slap brokers with new clawbacks An increasing number of lenders are instituting clawbacks in light of the ban on DEFs, it has been revealed. Among those who say they are either considering or will institute clawbacks are Bendigo and Adelaide Bank, Homeloans and National Finance Club. Bendigo and Adelaide Bank general manager of third-party mortgages, Damian Percy, said the bank is currently running numbers to find a way around clawing back broker commissions.
Percy, an outspoken critic of clawbacks, said Bendigo and Adelaide wants to remain consistent with its previous philosophy. “We’re looking at it now,” Percy said. “Our philosophy hasn’t changed, which is to the extent the borrower chooses to move, it always is and continues to be appropriate in our view that the borrower should wear that cost. Unfortunately, that’s no longer possible. We’re looking at a number of different approaches, because we have to be cognisant of how it impacts our partners, but we’re hoping we can find a way to maintain our philosophical position without costing ourselves a significant amount of money.”
According to Percy, the bank’s previous position against clawbacks has not yielded it the attention from brokers it had hoped. Percy said many brokers continue to favour major banks, even as the majors extended clawbacks and eroded trails and upfronts. “As clawbacks have been extended and upfronts diminished by the banks, those banks’ market share has historically gone up, which is very strange. Many brokers have been deeply disappointed to the point of genuine anger at the high-handed approach they felt they received from the majors, but in spite of that the majors continue to be supported,” he remarked. Percy said the bank will continue to work on ways to absorb the ban without instituting clawbacks, but could not rule out the possibility. “We’re desperately trying to find a way to remain consistent with our philosophical position, which we think is fair and reasonable,” he said. “We’re still not sure, but we’re forming the view that we might take a punt and invite brokers to express their view through showing us that there’s value in the proposition. Why do something different at your own cost if the market doesn’t value it?” National Finance Club has been among the lenders to announce the definite introduction of clawbacks. NFC revealed in April it will now clawback 100% of Page 20 cont.
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Inside this issue Forum 21 Brokers weigh in on clawbacks Viewpoint 22 Pundits analyse lender ageism Opinion 23 ‘Non-conforming’ no dirty word Analysis 24 A ‘positive’ credit reporting future? Market talk 26 The generation gap and you Toolkit 32 Getting your credit policy right Caught on camera 33 FBAA hosts industry panel