Citi to restructure broker commissions
(3 June 2010 – Australia) Citibank has decided to restructure its third party commissions to be in line with the rest of the industry, as regulations around licensing force the bank to review its options.
Citibank opted not to change its third party commission rates during the global financial crisis, when other competitors reduced theirs, choosing to instead slow its lending and maintain profitability by increasing product pricing.
The bank has now announced that it will take a tiered approach to the way it distributes commissions, rewarding the top performing brokers.
The bank’s head of distribution and marketing Peter Hayward told The Adviser that from 1 July brokers will be given a score out of 100 that determines their commission payment.
The scorecard is based at the aggregator level and the bank’s BDMs will work with the brokers to improve competency, which will improve the broker's score and commission. This new approach to commissions will not only enhance transparency, but also improve broker relationships, Mr Hayward said.
Citi believes that commissions should reward the role of the mortgage broker, and I think the new tiered approach will do just that, Mr Hayward added.
The new approach will see the top performing brokers receive an upfront payment of 0.65 percent and 0.15 percent trail. Second tier performers will be eligible for 0.55 percent upfront and the same trail payment.
Those that fall into the final category, and do not adhere to competence requirements, will receive 0.3 percent upfront and no trail.
This structure does not punish brokers that do not meet certain competency requirements, rather it rewards those that excel, Mr Hayward said.
There is no limit to the number of brokers who can be in Citi’s elite first tier. 100 percent of the bank’s brokers have the ability to score 100 percent on the scorecard, in fact, the bank encourages them to strive towards this.
The bank has now announced that it will take a tiered approach to the way it distributes commissions, rewarding the top performing brokers.
The bank’s head of distribution and marketing Peter Hayward told The Adviser that from 1 July brokers will be given a score out of 100 that determines their commission payment.
The scorecard is based at the aggregator level and the bank’s BDMs will work with the brokers to improve competency, which will improve the broker's score and commission. This new approach to commissions will not only enhance transparency, but also improve broker relationships, Mr Hayward said.
Citi believes that commissions should reward the role of the mortgage broker, and I think the new tiered approach will do just that, Mr Hayward added.
The new approach will see the top performing brokers receive an upfront payment of 0.65 percent and 0.15 percent trail. Second tier performers will be eligible for 0.55 percent upfront and the same trail payment.
Those that fall into the final category, and do not adhere to competence requirements, will receive 0.3 percent upfront and no trail.
This structure does not punish brokers that do not meet certain competency requirements, rather it rewards those that excel, Mr Hayward said.
There is no limit to the number of brokers who can be in Citi’s elite first tier. 100 percent of the bank’s brokers have the ability to score 100 percent on the scorecard, in fact, the bank encourages them to strive towards this.
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