Non-bank lenders have taken big hits to their bottom lines in the last year as ballooning funding costs and intense competition from the major banks have crunched their loan volumes. The share prices of leading non-bank lenders such as Resimac and Pepper Money have consequently taken a hammering. Resimac’s share price, which was trading around $2 a year ago, now sits below $1 after the company recently reported a 21 per cent slide in its December half profit. The immediate outlook for non-bank players looks challenging, especially in a rising rate environment in which credit demand has slowed dramatically. Resimac’s management took a bold step on Tuesday after deciding to boost the upfront and trail commissions it pays brokers for selling its loan products. In a notification sent to brokers, Resimac said it was boosting the upfront commission paid for origination of its Prime Alt Doc and Specialist loan products by 10 basis points to 0.75 per cent. Trail commission on these products has been increased by 5 basis points to 0.2 per cent. Resimac said the new commission structure would also apply to loan deals already negotiated but not settled before March 8. The target customer markets for Prime Alt Doc and Specialist products are mostly self-employed and credit-impaired borrowers. The increases announced by Resimac are significant and they are among the first to occur since the reforms to broker remuneration were implemented by the Morrison Government a few years ago. Since January 2021 brokers have been subject to a best interests duty, which requires them to recommend products that are the most appropriate for customers. Australia’s big broker aggregation platforms such as AFG might be a tad apprehensive about the Resimac announcement because it is likely the Australian Securities and Investments Commission will be monitoring their immediate impact on broker recommendations. A sharp recovery in Resimac’s volumes has the potential to trigger a regulatory response that could expose aggregators and their affiliated brokers to another bout of granular scrutiny. For its part, Resimac is justifying the material increases to its commissions on the grounds that brokers are doing more work to service non-conforming borrowers. “Resimac is committed to providing better support for brokers who service self-employed and credit impaired borrowers,” the lender told brokers in the notification. “As the specialist for this fast-growing segment, we recognised the additional time, effort and skill required for these borrowers, and we have increased the upfront and trail commissions on Prime Alt Do and Specialist products accordingly.” The desperate scramble by lenders to retain market share in the prevailing market has resulted in banks fattening cashback offers and other incentives aimed at borrowers.  For example, Westpac-owned Bank of Melbourne is offering cashbacks of up to $4000 to home borrowers who refinance from other lenders before the end of November.