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Things your bank didn't tell you
Conflicts of interest are abundant in the finance industry. Just as mortgage brokers normally receive commission for their role in selling mortgage products, bankers also generally receive performance based remuneration for selling their employers products (home loans, credit cards, personal loans, insurances etc). However, there are important distinctions between the broker and the banker which help to mitigate the broker's potential conflict of interest.
Commissions are widely used in sales roles in most industries to encourage the desired outcome - the sale. The 'conflict area' relates to the remuneration earned from a successful sale. The potential 'conflict' relates to the sale of inappropriate products motivated by the sales person's financial interest in the sale.
Helping to mitigate a conflict of interest
We believe that offering choice helps to mitigate the potential conflict.
| The conflict of interest |
Our broker |
The banker |
|---|---|---|
| Remuneration includes sales component |
yes |
yes |
| Mitigating the conflict |
||
| Able to offer more than one bank's products |
yes |
no, sorry |
| Regularly place business among many lenders |
yes |
definately not |
| Match customer needs to competing lenders products |
yes |
can't do that |
| Access to specialist lenders for specialist purposes |
yes |
sorry again |
| Able to assess suitability of one lender vs another |
yes |
nope |
| Motivated to reduce dependence on high cost products (e.g. credit cards) |
yes |
no, sorry |
| Remuneration returned if customer profitability to the bank fails to meet targets |
yes |
no way |
The banker is conflicted when it comes to providing objective advice on what is best to help you to achieve your goals.
Bankers are not able to mix-n-match products from various sources and can only discuss his or her employer's products with you.
Our brokers are well qualfied to consider alternatives and offer solutions from a wider pool of resources. This helps to ensure that our customers receive well considered solutions designed to assist them achieve their finanical goals.
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