NAB becomes first of Big Four to tweak how mortgage broker commissions are tallied

NAB has become the first of the major banks to announce changes to how mortgage broker commissions are calculated.

NAB CEO Andrew Thorburn speaking to local farmers in Wagga, NSW.

The Big Four banks are finally making changes to how mortgage broker commissions are calculated, in line with proposals ASIC put forward 18 months ago, with National Australia Bank the first of the major banks to announce that commissions will now be linked to the amount drawn down rather than the total loan amount approved.

It follows NAB (NAB) on Monday breaking ranks with the rest of the big banks by keeping its variable interest rates on hold in an attempt to generate positive PR and potentially win more of the lucrative home loan market.

From November, NAB will calculate the upfront commission a broker receives for a home loan based on the amount drawn instead of the total approved facility, and net of any offset facility.

The changes stem from proposals put forward by the corporate regulator in March 2017 following its review of broker remunerations, which were echoed in the Sedgewick review of banking remuneration in April 2017.

The industry has been under immense pressure following damning revelations uncovered by the financial services royal commission. Lenders last month put an end to volume-based bonus commissions and bonus payments, again as a result of ASIC’s recommendations.

Anthony Waldron, who is NAB’s executive general manager of broker partnerships and chair of the Combined Industry Forum — a group of industry bodies, banks and mortgage brokers that was set up to facilitate progress of the adoption of ASIC’s recommendations — said the industry was making changes to focus on “doing the right thing, and to improve consumer trust”.

He said the move by NAB would see brokers continue to put customers’ interests first.

“Mortgage brokers play an important role in helping Australians arrange their home loans, and NAB continues to value and support them,” Mr Waldron said.

“We recognise that Australians increasingly use mortgage brokers, and we want to continually improve as an industry to deliver the best outcomes for Australians.”

The bank also said it would be making further changes “to ensure better consumer outcomes and improved standards of conduct and culture, while preserving competition in mortgage broking”.