“Referral fees paid by banks are murky. Right now we don’t know who pays what to whom as part of the mortgage referral process.” Erin Turner from Choice
A little-known way of drumming up business for banks is to pay a “spotters fee” to lawyers, accountants and real estate agents.
This can result in payments of thousands of dollars to your trusted advisers when you’re going through the mortgage process. So ASIC is putting these bank payments to lawyers, accountants and real estate agents under the microscope, amid claims these fees may not serve the best interests of consumers.
While banks say the commissions are always disclosed to customers, critics argue there is a lack of transparency and the fees may not serve the interests of borrowers. APRA has confirmed it will include them in a review of remuneration in the mortgage industry.
“After all, referral fees are designed to increase business for bankers, not to get consumers a better or fairer deal on a mortgage.”
Consumer group Choice and mortgage brokers have both asked for the fees to be probed in ASIC’s review of the mortgage market. Based on experience of referral fees in other markets, Choice suspected referral fees were not in the interests of consumers.
Read full article here: SMH Article