A Melbourne-based broker and former CBA employee believes the ABA-commissioned Sedgwick review is looking to “support cartel behaviour” and has used the term ‘commission’ unethically.
Following the release of the Sedgwick review Issues Paper in January, Universal Wealth Management director and AFG broker Maria Rigoni sent a submission to the review. However, the independent reviewer reportedly decided not to publish it, citing “some legal considerations”.
The Adviser has obtained a copy of Ms Rigoni’s submission, which expresses her concerns over the Sedgwick review and its remarks about mortgage broker remuneration.
“Reading the ABA submission and associated legal advice it seems that the review is seeking options to support cartel behaviours,” the submission states.
Meanwhile, Ms Rigoni argues that the use of the word ‘commission’ for receipt of remuneration is being used “unethically” to create an illusion bias of how much money a mortgage broker actually earns as take-home pay and what they are required to do to earn it.
“Bank employees are generally paid a salary and a performance bonus, mortgage broker firms are not,” she said.
“The word commission has several different meanings, nevertheless in its most simple meaning, commission is the act of passing a responsibility to someone else. It is the action of granting certain powers or authority to carry out a certain task or duty.
“For example, the ABA may commission an individual to complete a review into a subject matter. The review has a specific set task, with terms of reference and authorisation to seek confidential information, and when complete a report would be provided to the ABA and then the commission ceases to exist.”
According to Ms Rigoni, remuneration for the completed commissioned task may be on a fixed price agreement, or a sliding scale of remuneration with incentives, depending on the agreement made directly between the parties.
“Either way a payment for the commission is made,” she said. “Has the reviewer sold a product? No! The reviewer has sold his ability to perform the required task.”
In her submission, Ms Rigoni states that credit providers outsource or commission contractors to do many things, such as printing, advertising, marketing, catering, legal advice, and lead generation.
She believes it is “nonsense” for anyone to say that the labour market for mortgage brokers is principally product-related commission-based.
“Mortgage brokers are not paid for the sale of a loan product. They are paid for ‘commissioned work’ required in the introduction of loan applications from a person the lender wants to deal with.”
I concur, its the Credit Managers who should be the focus of APRA, ASIC and other departments, brokers can not approve loans so why are the being held to account for loan quality? The bank rejects loans it considers unacceptable and brokers without a monopoly do not have the power by any measure to sway a banks decision.
What about the lawyers, accountants and real estate agents getting paid “referral fees” who from the reporting I’ve seen are getting a free pass, why?