Westpac makes major commission changes
Westpac has made a series of sweeping changes to its commission structure for New Zealand mortgage advisers, including removing discretionary quarterly commission payments.
Friday, June 29th 2018, 9:02AM
TMM Online understands the lender has contacted bosses of New Zealand's biggest adviser groups to inform them of wide-ranging changes due to come into force in July.
The bank is increasing upfront commission to mortgage advisers from 45 basis points to 60 basis points, and removing discretionary commissions previously paid up to 15 basis points quarterly.
Westpac is also toughening up commission clawback periods. If a loan is repaid from 0-16 months after it is taken out, there will be 100 per cent clawback. If a loan is repaid between 16-26 months 50 per cent of commission will be clawed back.
It comes after Westpac conducted a major review into the way it pays commission to financial advisers. It is unclear whether some of the changes were motivated by Australia’s Banking Royal Commission, which has placed a spotlight on commission models across the Tasman.
Westpac informed the adviser market about the changes on Thursday after discussions with the country’s biggest adviser groups.
In a statement, a Westpac spokeswoman said: "These changes are intended to simplify the commission structure and administrative processes for our mortgage advisers as well as streamline our internal operations. We expect the increased upfront commission to be positively received by the industry."
Commission has been a talking point in Australia for several years. Last year, a review by the Australian Bankers' Association recommended commissions for mortgage brokers be replaced with a fee-for-service model. During this year’s Australian Royal Commission, bank executives, including those at Westpac, were grilled about their relationships with financial advisers.
Closer to home, commission has also become a more prominent talking point. The Ministry of Business, Innovation & Employment has proposed that mortgage advisers make information about commissions they receive publicly available. Advisers have hit out at the proposals, which would not force banks to reveal their own bonus structures.
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