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Last week (29 August), the CEOs of the Commonwealth Bank of Australia (CBA) and Westpac incensed the mortgage broking industry with their comments targeting broker remuneration.
Speaking to the standing committee on economics during its review of the major banks, CBA CEO Matt Comyn and Westpac CEO Peter King said that there was an imbalance in regulations in regard to how bankers and brokers are paid.
This followed CBA coming under scrutiny from government regulators, particularly ASIC, after Comyn spearheaded a decision to increase banker pay, scrapping the 50 per cent bonus cap on top of base pay as implemented after the 2017 Sedgwick Review and increasing it to 80 per cent.
Westpac is reportedly considering to make the same move at the time of writing.
These comments were addressed in the latest episode of Broker Daily Uncut by director of Momentum Markets, Alex Whitlock, who believes this is not “an unprovoked attack on brokers”.
“Beneath it, there is something more significant, and I think there’s a debate that needs to be had,” Whitlock said.
“It’s a complicated situation … I think the time has come to start really addressing the elephant in the room and have a look at the relationships that the majors, and particularly a couple of majors, have with brokers.
“CBA’s approach now is really looking at diluting its reliance on brokers.”
Broker Daily’s coverage of broker’s pay coming under fire has been inundated with commentary from the broking community at large, expressing their displeasure with the suggestions made by Comyn in particular.
One commenter under the name “MR” said: “I am sick and tired of being constantly bashed by CBA.
“They never embraced the broker channel, and in the early days, they took out a full-page ad in the newspapers, criticising brokers.”
MR went on to say that they had “dropped using them [CBA] years ago” and “could not in good conscience recommend CBA” to their clients.
“I find them unethical,” MR said.
Another commenter under the name of “Phil” said: “It’s concerning to see some banks attempting to dictate the narrative surrounding third-party commissions, seemingly forgetting the pivotal role brokers play as business owners and partners, rather than mere employees.
“The value propositions of banks and brokers are fundamentally different, making comparisons between bonuses and commissions inappropriate.
“Unlike bank employees, brokers bear their own marketing and staffing costs (to name a few). Comparing a PAYG employee structure to that of a self-employed broker is truly comparing apples to oranges.”
If you would like to find out more about this topic, tune in to the Broker Daily Uncut episode Time for brokers to drop CBA? below:
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