Broker will rebate commissions

A Newcastle mortgage broker, Independent Mortgage Planners, has changed the structure of its business from a standard commission-based revenue model to a flat-fee brokerage with a rebate of all commissions to customers.

IMP's managing director, Craig Morgan, said the broker would charge A$3490. After settlement of the loan, upfront and trail commissions will be rebated.

IMP is affiliated to the aggregator PLAN Australia.

Lenders pay upfront brokerage of around 60 basis points ($1800 on an average-sized $300,000 loan). Trail commissions are around 20 to 25 basis points a year.

Morgan said: "We give each customer an analysis of how they come out under our fee structure. If we can't show them how our deal improves their position we call it quits."

Morgan said the group had been considering a change to its business model for a while, but the timing of the change coincides with amendments to the National Consumer Credit Protection Act, which took effect last week and which restricts the use of terms such as "independent".

The Consumer Credit Legislation Amendment (Enhancement) Act 2012 prohibits the use of "independent", "impartial" and "unbiased" by brokers unless they receive no commission or other benefit from lenders.

Morgan said one of the benefits of the flat fee model is that IMP can recommend low-cost loans offered by lenders that do not pay broker commissions. These include loans.com.au, State Custodians and Ubank.