The nuances of CBA multi-brand mortgage business were examined in the early stages of yesterday's banking Royal Commission proceedings. Daniel Huggins, the Commonwealth Bank's executive general manager home buying, took the stand and was there until mid-afternoon. Rowena Orr, senior counsel assisting the commission, started a line of questioning that took Huggins through his bank's approach to its mortgage brokers and ended with excerpts from a letter sent by the CBA's outgoing group chief executive, Ian Narev.As at 31 December last year, 41 per cent of CBA's home loan portfolio came via mortgage brokers, Orr noted. Huggins agreed, adding that "41 per cent of the portfolio - the back book - was with brokers but the new business being written in the first half of this [financial] year was about 36 per cent."He conceded this was part of a strategy to bring more home lending in-house: "We've been writing on slightly lower proportions through our broker network, the third party network and slightly more through the proprietary channels," he said.This meant paying fewer commissions - that is, loans that come through CBA's proprietary channel are more profitable, with a higher margin, although some of the commissions saved are re-allocated towards costs of the branch network.Huggins then told hearing that the current commission structure encourages brokers towards riskier lending. "We have acknowledged that there is a conflict in the commission structure, ... in that the commission structure is linked to the size of the loan and therefore the larger the loan, the larger the upfront commission and then, as you mentioned before the longer a loan takes to pay off," he said."That's how they [the mortgage broker] would maximise their income."Then came a letter with a long, detailed attachment from Ian Narev, who had written to Stephen Sedgwick, the independent reviewer for the Retail Banking Remuneration Review, on 10 February 2017: "A move to a flat fee payment would enable brokers to be agnostic towards loan size and leverage.  However, consideration is needed on the payment amount, on how to link the fixed payment to an underlying security rather than a product, ie to avoid unintended incentives to split loans into multiple fixed or variable products, and on appropriate clawback periods to disincentive advise the churning of loans to maximise broker income...."Huggins was underwhelmed by the letter, and its implications, and expressed reluctance to even consider actively implementing his CEO's suggestion - or at least not if CBA was left to go on its own: "One, there is a first mover problem in that the person who moved first would likely - you know, lose a lot of volume.  The second problem is you create a conflict if one person or half of the people move, and the other half don't," he said.This lined up with another observation made on that area."Any changes will need to be made uniformly across the industry and across both proprietary and broker channels to eliminate bias and avoid significant market disruption."Huggins also took the opportunity