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SBS changes commission structure

Invercargill-based bank SBS has scrapped volume-based commission and changed its remuneration model for advisers, as lenders respond to Australia's Sedgwick report. 

Friday, October 26th 2018, 10:54AM

Volume-based commission will be replaced with higher flat commission as the bank moves away from the old model in light of regulatory scrutiny in Australia and New Zealand.

Changes to the commission structure include a move to 0.80% in upfront commission (from 0.70%) on loans with LVR of 85% or less. Loans with LVR of more than 85% will be paid at 0.75%, sources said.

According to marketing materials sent to advisers, commission will be capped at $15,000. Advisers say the bank previously had a $10,000 commission cap. The new cap excludes the bank’s Advance product, according to a marketing email sent on 23 October.

Shaun Drylie, CEO of SBS Bank, told TMM Online the changes were influenced by Australia's Sedgwick report, which criticised volume-based commission models and led to greater scrutiny on the relationship between banks and brokers in New Zealand.

Drylie said: "It [the Sedgwick report] highlighted concerns around providing volume-based bonuses for third party originators...that brokers could be putting deals to a bank because of their relationship, rather than acting in the best interest of the client. We felt it was a clear signal that it was appropriate for us to review our bonus structure. We didn't want to put brokers or ourselves in a position where people did not think things were happening in a transparent way."

The bank’s clawback structure remains unchanged, at 100% up to six months, 50% between 6-12 months, and 25% between 12-18 months.

It comes as the lender launched a 2-year fixed special rate at 3.95%. Drylie said the offer was a signal to the adviser market SBS was "back and ready to do business".

SBS has also introduced a broker conduct acknowledgement form. From November 1 brokers will need to sign the form as they make loan applications.

The broker conduct acknowledgement form covers topics including care, diligence and skill, advertising, advice and record keeping, as well as breach reporting.

In an email to advisers, SBS said: “At SBS Bank, we highly value the relationship we have with you and your business. Our relationships with you as a broker form a key part of our distribution strategy, allowing customers to use you as their channel of choice to access our products and services.

“We expect the highest standards of ethical behaviour, not only from our employees, but also from those that distribute our products. We are therefore making some enhancements to confirm commitment, and ensure ongoing alignment, to these expectations.”

Tags: Commission SBS Shaun Drylie

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 ▼7.09 ▲6.95
SBS Bank Special - 7.14 ▼6.49 ▲6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

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