ACCC launches CBA/Aussie review

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ACCC has issued a review of CBA's move to majority ownership of Aussie Home Loans, raising questions regarding whether the mortgage broker will remain competitive under the control of the major bank.

As part of the review, the consumer watchdog will examine Aussie and CBA's role in mortgage distribution services, including how they provide mortgage brokers with access to a panel of lenders.

ACCC says it feels CBA's Finconnect business, which distributes mortgages through professional firms, could be a stumbling block to the deal, given the extent of crossover in mortgage broking.

The commission will consider whether Aussie Home Loans is a ''unique or a vigorous'' competitor in the mortgage market and if CBA will have the "ability and incentive to foreclose its banking competitors from accessing".

It will also look into whether the move to majority ownership ''will increase prices or profit margins or decrease the quality of products'' on offer.

As reported in Australian broker last month, CBA announced its plan to increase its holding in Aussie Home Loans to 80% in December. John Symond will continue as executive chairman of Aussie and will retain the outstanding 20% shareholding.

The deal also gives CBA an option to move to 100%, which the bank is expected to act upon by August 2018.

Industry participants have until January 31 to provide their thoughts and inputs, with the ACCC to announce its findings on March 7.

 

  • Tom on 16/01/2013 5:47:39 PM

    Aussie is a key group but cant see how they are a ''unique or a vigorous'' competitor in the mortgage market and if CBA DID have the "ability and incentive to foreclose its banking competitors from accessing" then lenders would withdraw, brokers would leave and CBA would have purchased an empty vessel...

  • Diomedes on 16/01/2013 11:15:36 AM

    There is a lot that needs to be considered by the ACCC and I am confident that they will not only look at the short term broker proposition to the client as well as the business relationship between product supplyer and product distributor and how that might affect the market place long term.
    The seperation of players is important in my view for an ongoing healthy and honest market place.
    The question has to be asked why would a bank want to own a retail outlet? The answer is profit of course, BUT how much profit does Aussie make? Is the profit from Aussie going to substantially increase CBA shareholder value?

  • John Black on 16/01/2013 10:36:07 AM

    Over the years John Symond has been labelled many things but the one thing nobody can deny is that he is smart and has an innate ability to justify whatever move he makes. Built a business by bashing traditional bank lenders - then got into bed with the biggest of them when things got tough and now has cemented his fortune by selling out to them. What a story! No wonder it is said fact is stranger than fiction. Also confirms the truth in the words "that sticks and stones may break my bones but names will never hurt me"

  • Michael on 16/01/2013 10:34:13 AM

    Between PLAN, FAST and Choice, the Advantage group processes higher volumes per month than Aussie yet doesn't have a lean toward its parent, NAB.

    A professional broker will always determine the right loan for their customer every time.

  • ozboy on 16/01/2013 9:57:20 AM

    So all those people who vented here can now vent to the ACCC. Let us know when you do! ;-)

  • 1martym1 on 16/01/2013 9:54:34 AM

    I doubt they will block it. If they do I for one will view it as a really positive sign for the value of the broker proposition in general.

  • Richard on 16/01/2013 9:54:07 AM

    What a waste of time this is. The market is competitive. I don't see CBA charging high rates because of its size. Brokers would simply sell other products if they tried. Brokers will always keep the big boys honest, no matter who owns their businesses.

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