Suncorp has moved to rein in lucrative hospitality and other “soft dollar” gifts to mortgage brokers – three months ahead of the Morrison government’s remuneration reforms taking effect.
The Brisbane-based bank’s head of partnerships Renee Blethyn told brokers in a memo that the lender would no longer be providing entertainment and hospitality valued above $300.
“We recognise that brokers are fundamental to our ability to fulfil our customer commitment and we support legislation that enables brokers to enhance customer outcomes in a competitive environment,” Blethyn told brokers.
“The Combined Industry Forum (CIF) now expects that lenders will not provide entertainment or hospitality to mortgage brokers worth more than $300 per person, per event.
“Further, criteria for attendance at an event/hospitality where a lender hosts brokers should not be based on the volume of loans written by the broker with the respective lender.”
All lenders providing gifts and hospitality to mortgage brokers will be required to cap soft dollar privileges at A$300 from January when the government’s reforms are due to begin operating.
The cap was recommended by the Combined Industry Forum – a working group of lenders, brokers and consumer representatives that advises the government on remuneration in the mortgage advice sector.
Many lenders have already curtailed what amounted to the most lucrative and indulgent forms of payola in the financial services industry.
In 2014 The New Daily exposed several lenders who were flying high-volume brokers to sumptuous banquets at the Playboy Mansion in Beverley Hills and summer parties at Spanish resorts.
Such rewards delivered privileges and benefits to brokers that were worth in excess of $10,000 a head.
An ASIC study of remuneration practices in 2017 found that the average value of soft dollar payments to brokers was around $1450 per event.
The regulator noted that brokers were eligible to receive multiple soft dollar gifts from lenders each year.