Speculation grows as brokers await Westpac commission decision
The Finance and Mortgage Advisers Association of New Zealand (FAMNZ) has responded to speculation that Westpac NZ may be planning to scrap trail commissions, urging the bank to provide certainty and fairness for advisers.
FAMNZ managing director Peter White (pictured) said while there is precedent for banks changing commission structures, the industry must not be left in the dark.
“We can’t interfere in Westpac's commercial arrangements, but the industry must be given fair notice of any change,” he said.
Trail commissions are ongoing payments made by lenders to brokers over the life of a loan. They form a significant part of many advisers’ income, alongside upfront commissions and other fee structures. Any move to remove trail would therefore have major implications for broker businesses and long-term income stability.
This comes amid growing speculation and industry concern over potential changes to bank commission structures, creating anxiety among advisers who rely on these payments for ongoing income.
Advisers need transparency
White said the level of uncertainty in the market is concerning and that advisers deserve clear communication from the bank.
“Westpac needs to be very clear as to what is happening as there is too much speculation in the market place at the moment. Advisers are rightly concerned about their future as many have trail incomes built up over 10 years of supporting Westpac.”
Protecting past trail income
FAMNZ has also called for the protection of existing trail commissions if changes do go ahead.
“We believe that if this change is inevitable, Westpac must grandfather the past until those loans expire,” White said.
“They must draw a fair and reasonable line in the sand if things are to change.”
Consultation and adviser support
While acknowledging discussions are currently taking place between Westpac and aggregators, White said he was disappointed that the bank had not more widely consulted with the industry.
“We will be monitoring this very closely and advocating for the rights and businesses of advisers,” he said.
“Not only should any changes that are made be in the interests of Westpac’s customers, but the bank also must ensure advisers, who are an important channel for them, are supported.”
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