Firstfolio has been slammed for its decision to charge ex-brokers of its wholly-owned mortgage aggregation business Lawfund Australia with an additional monthly administration fee of $150 plus GST.
The decision has been described by Count Financial’s national mortgage aggregator arm finconnect as nothing more than a money grab.
finconnect general manager Tanya Sale said she had received numerous calls from ex-Lawfund brokers voicing their disgust at the new administration fee, which is to be deducted from brokers’ trailer fees in addition to the 10 to 20 per cent cut that Firstfolio already receives from ex-brokers.
“In the situation of ex-Lawfund brokers, all that Firstfolio is doing is acting as a clearing house. They do not have to service any of these former loan writers. They simply collect a trail from various lenders and pay it out to the brokers,” Sale said.
Firstfolio said the fee is necessary given the increased costs associated with compliance, IT and professional indemnity insurance. It said it is not the first group to introduce such a fee to ex-brokers.
“Clearly, our preference is to reactivate our relationship with inactive brokers and members, and avoid having to charge this fee at all,” Firstfolio chief executive Mark Forsyth said.
Australian Institute of Professional Brokers (AIPB) co-founder Maria Rigoni said such fees are a blight on broker remuneration.
“In terms of Firstfolio saying brokers won’t be charged if they go back is just bribery. If they were happy they wouldn’t have left in the first place,” she said.
Firstfolio is not doing any extra work for ex-Lawfund brokers and the percentage it is currently taking from broker trails would more than cover anything it was doing, Rigoni said.
