Commercial brokers are polarised when it comes to commission disclosure, Shawbrook Bank has revealed.
The firm’s second Broker Barometer found that 58% of respondents felt transparency around commissions is a good thing, while 27% were against it. The remaining 15% were on the fence about the merits of full disclosure moving forwards.
Brokers in favour of commission disclosure were adamant that transparency should be the cornerstone of the industry. One broker said: “It’s so important that we’re transparent in our dealings; we need to shake off the baggage associated with the credit crisis.”
However, some brokers were concerned about the possible negative impact of disclosure. Some felt that disclosing all commission could lead to a race to the bottom on broker fees. Others still felt that the importance of commission disclosure was overestimated as it shouldn’t change why or where deals get placed, given that the cost is not passed on to the client.
Karen Bennett, sales and marketing director for commercial mortgages at Shawbrook Bank, said: “The variety and strength of our intermediaries’ responses to the question of commission disclosure are really interesting. Disclosure is something we firmly believe in, but not just for the sake of getting up on a soapbox. Transparency protects everyone in the industry – not least the brokers. The FCA has been very vocal about commission disclosure and override schemes.
“To date the commercial and short term markets are outside the MMR, but brokers must be aware that they may bring further scrutiny and potential regulation on themselves if the market continues to show behaviour traits that the FCA has explicitly deemed unacceptable. Brokers should therefore be wary of working with lenders who don’t disclose commissions and should keep a keen eye on their own practices.”
