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Banks squeezing brokers out: Driscoll

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Australian Broker | 10 Feb 2011, 06:00 AM Agree 0
The next three years will see brokers pushed out of the market by banks, Mortgage Ezy's Garry Driscoll has told an industry conference
  • Andrew Gardner | 10 Feb 2011, 01:51 PM Agree 0
    I wonder what basis Gary's article is based upon, sound a fraction self serving?
  • Andrew Hunter | 10 Feb 2011, 02:06 PM Agree 0
    I couldn't agree more and the last place I would want to be is a credit representative with an aggregator owned by the same banks - they own your files.
  • Phil | 10 Feb 2011, 02:12 PM Agree 0
    Well the MFAA would deny this, but its happening in the financial planning world too. What are we doing about it? nothing. Why don't our broker contracts protect this from happening? After commission cuts, more MFAA requirements, higher PI cover and over regulation from the Gestapo.... what have we got in return? NOTHING.
  • M. J. R | 10 Feb 2011, 03:02 PM Agree 0
    In many previous blogs over the last six years I've spoken of the overt steering occuring within the industry. All steering and marginal pressures are designed to achieve a set goal.

    The goal is 'effective-control' and the player in this drama is commonly known as a bank.

    Banks want to control all the distribution pathways, and if they can't, then by hook or by crook they will work away at the marginal edges for as long as it takes so that their end-game is achieved.

    Commissions; legislation, compliance, inter-industry ownership and industry body control (Via sponsorship instruments) are essential elements within a strategy that only a well resourced entity can aim for.

    The core issue within this whole industry has been that 'for the most' brokers, managers and so on just don't have the organisational depth or expertise (and wallet) to compete with, let alone understand that's just how banks work!

    Banks have this industry locked up.... if you are a broker, then you are already thinking about exiting.... if you are a mortgage-manager then the other pressures from ASIC, compliance, administration, margins, returns, ROE, ROA and mouths to feed are really starting to hit home.

    The truth is, banks encouraged a great deal of the compliance and ensured that these pressures on many fronts, would combine to help people to exit.... it's been one of the best games played over the last decade, it just astounded me how many couldn't see it.

    The brutal truth is; brokers are dead in the water, on-line platforms will kill this game, costs have gone through the roof, returns are down by an average of 30 plus per cent, commissions are set to vanish due to some very clever bank games; aggregators are essentially dead (the writing is on the wall) and industry bodies have a shelf life of about another 5 years if they are lucky.

    And if you don't believe me, just answer this question. Does Jane who works at the NAB front counter writing John Smiths home loan have all your costs of compliance? Me thinks not.

    .... and she gets to go home at 4.30.

    If anything, dominating the industry-ifrastructure and industry-furniture (such as marketed National non-bank brands)
  • DBroker | 10 Feb 2011, 10:00 PM Agree 0
    It is not only the banks but also the aggregators that hinder on the brokers'way by not allowing them doing business with the other lending institutions which are not on their panels.And most of those aggregators are already being manipulated by the banks that have financial interest in them.Think about that!
  • Spinner | 10 Feb 2011, 10:04 PM Agree 0
    M.J.R you are joking.

    This is the Brokers time. If you can't see that your cooked. Read Porters 5 forces, eventually the firms in oligopoly try an break from system growth to please share value. Ar la ANZ offer. Going home at 4.30pm is bludging. Go home at 4.30pm and I'll do the two interviews for them after this.

    Moreover, the advice we provide, I have been overwhelmed by the expectation of a fee. Say what!

    Specialisation my friend.

    Brokers exist becasue Banks
  • Jim | 11 Feb 2011, 12:07 PM Agree 0
    Seen the writing on the wall for a few years now.
    Those who swallowed the propaganda continue at their own peril.
    Broking is just like MLM. The fat cats prosper while the majority fail
  • M.J.R. | 11 Feb 2011, 01:18 PM Agree 0
    Dear Spinner.

    Normally I would agree, but it's the aggregate-pressures that are steering decision making..... by that I mean, the day-to-day pressures that impact the lifestyle of loan writers.

    The pressures are so, that many appear to be making decisions to exit based on them doing their own analysis of how they are being impacted.... organisational-theory aside for one minute, it's the silent, un-reported conversations occuring right now, right across this industry... conversations between mates over coffee, whereby the topics of margins, commissions, extra-workloads, returns and banks new I.T. platforms on the horizon that speak of the future composition.

    I agree some will remain, and of those specialisation is the key.... but even there I see problems, in particular from large. established Financial Planning groups and to a degree within smaller markets, the well established Planners & Accounting firms.

    Regardless, it's all good fodder for blogs during lunch-time :)
  • Spinner | 11 Feb 2011, 09:53 PM Agree 0

    I think what we are saying is the days of the single accountant and single financial planner are gone as regulation and specialisation saw them either sell or join a bigger group that provides resources. Brokers are following the same path. The highly fragmentented industry will consolidate to groups that enable better efficiency with better long term prospects. CBA brought out a special today that brokers are by far the best source for the Bank to spread the word. Also read today an economist suggests CBA's move will lead to a mortgage war. (Fulfiling Porters 5 forces that firms in oligopoly eventually move to sustain growth).

    For every broker thinking of exiting the industry, remember its always darkest at dawn.

    The exceptional top 10% can operate successfully as sole operators, however the majority should consider joining forces for efficiencies.

    Agree - good debate!
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