My finance broker was free!
You set up a meeting with your broker, but he didn’t charge you. This doesn’t mean he’s providing a lower level of service or expertise, it just means that his company is paying for it. Some companies will structure their revenue model differently and rely on their commissions for income instead. It’s a gamble but its also a competitive business.
A minority of MFAA accredited finance brokers rate their intellectual property as a service worth paying upfront. Be that as it may, about 90 per cent of the over 10,000 MFAA accredited finance brokers do not charge a fee for their advice, they however rely on lender commissions for their income.
The reality on the field though is that, buyers do shop nowadays, and brokers may be left doing a lot of work with no remuneration for it, to support this was the introduction of the National Consumer Protection Act 2009- that prompted a lot of brokers to start charging. It shouldn’t therefore come as a surprise in the future if more brokers start charging for their services.
The main and obvious advantage of meeting a finance broker who doesn’t charge a fee is that it lowers the cost of obtaining finance and, despite public debate, the different finance modes offered by the various lenders does not impact the finance brokers recommendations.
If a broker prioritises commissions over a client, not only is it against ethics agreements that demand they do not suggest loan products that are unsuitable for clients, which they happen to be bound by, but their business would suffer as clients would realize they would get a better deal elsewhere.
It is your decision, be it with a broker who charges fees or relies on commissions, MFAA accredited finance brokers are bound by ethical standards, which require them to give appropriate advice. Find out more about your local finance broker here. [http://www.mortgageandfinancehelp.com.au/find-a-credit-adviser]
*This information is not to be relied upon without speaking to your finance broker, tax agent or financial adviser.