However I really don't see any good reason for Banks to support Brokers with good commissions or anything else. In a growing market, if a Bank decides that they can capture more market share through the use of Brokers then that's all great for the Brokers. In a contracting market, if that same Bank decides it can service its customers adequately with its own workforce and the Brokers aren't really adding any value, then why should they encourage them? If Brokers add value to the Bank they will be rewarded, if not they won't.
If the market turns around then it will be all good news for Brokers. For a Bank, Brokers should only be used to manage the work load so they don't have to hire and fire so much to keep up with the cycles. Bit hard to complain about it at the low point of the cycle...
Keep in mind that it's the customers (eg ME!) who actually pay those broker commissions!
HiEquity you've raised some very valid points, I don't disagree with anything you've stated here. If brokers don't add value to a lender there's no reason for that lender to use brokers as a distribution network. I'm also aware that ultimately it's the borrower who pays me, via the banks. Brokers certainly don't work for free, but I'm fairly sure branch staff and dedicated mobile lenders don't either.
One of the many differences is that brokers don't work for the banks. I've never seen a branch manager suggest a consumer go elsewhere because their competitor as a more appropriate product.
All that aside, the original point I was trying to make is that if there's only half a dozen major players in the market, it's not an environment of healthy competition. Banks have cut brokers commissions because they can. I'm annoyed at this but as it will also reduce my competition it's also an opportunity (there are predictions of 30% of brokers leaving the industry over the next few years).
With only a few lenders available, what's to stop them from doing the same to consumers? We've already lenders raise interest rates beyond what many consider reasonable. Fees and charges have gone up. They engage in monopolistic practices and often perform acts which are clearly not in the interests of consumers. Again this does represent an opportunity for brokers. Unfortunately I can't see where the opportunity for consumers is.
