National Bank's decision to stop paying mortgage brokers trail commissions from June is likely to be counterproductive, says New Zealand Mortgage Brokers Association chairman Geoff Bawden.
Wednesday, April 20th 2005, 8:57AM
by The Landlord
The bank's reason for cutting trails is the effects of reduced interest margins on fixed interest rate loans. Bawden says cutting trail commissions doesn't address this problem and could potentially have the opposite effect because it will encourage churn.
Discouraging churn was the reason National's parent, ANZ Bank was the first to introduce trail commissions.
"It's almost like saying (to the broker), we don't want you in this relationship long term, go away. That's not in the long-term interest of the customer and personally, I don't think it's in the long-term interest of any bank," he says.
The reason brokers have gained so much of the market is because they have filled a gap in terms of providing customers with a personal relationship that they can't get in the banking environment, he says.
