Brokers may not be able to differentiate their service offering from that of the banks enough to justify charging a fee, it has been claimed.

Max Franchitto, a leading financial services consultant in financial planning and managing principal of MGF Consulting Group, has told Australian BrokerNews adopting a fee-for-service model could see the broker channel ultimately fade from existence.

Franchitto said, though brokers may have better service offerings than bank proprietary channels, they may have a difficult time convincing customers of this.

"There's no point in being gallant and altruistic about it and saying 'The broker shops around and gives you six or seven choices'. The psychology of the customer is still the psychology of the customer," he said.

Franchitto believes brokers will be unable to convince consumers to pay a fee while banks offer loan writing services for free, and said banks would use this as a marketing tool against the channel. He commented that the mortgage broking industry must protect commissions.

"If you remove the commissions from the mortgage broking industry, it will be a challenge to make the distribution channel survive," Franchitto said.