The hot topic of last week was the news supermarket giant Coles hoped to expand its financial service reach into the mortgage industry.
Coles, which operates more than 2,300 retail outlets, indicated in its submission to the Murray Inquiry that it would like to expand its financial services offerings to include home loans, and pointed to overseas retailers to illustrate how it has been done.
But the majority of our commentators seemed to be sceptical Coles would do it well.
“The outlets are designed to sell products that don't require much scrutiny or professional knowledge thus slogans of ‘down, down, down’ can work. The largest debt that someone is going to take on requires appropriate services and knowledge that I cannot see a retail outlet of this type really making a dent in the system,” wrote Greg Uehling.
This view was seconded by Stedman
, who wrote: “We certainly need another uneducated lender to take the loans the majority don't like. Wesfarmers MD has tried this before, did not work out for him and Landmark.”
But other commentators thought the proposed move was a good idea.
wrote: “I think it is a great idea – anything to assist removing the dominance of the big 4. There are literally hundreds/thousands of mortgage managers/brokers who could assist Coles get into the market perhaps via a franchise of sorts?”
agreed, saying the Australian market for home loans is relatively unsophisticated.
“Coles and others will add to diversity, create new products and services and you will than see lenders sharpen their act to ensure they retain market share. Gone will be the days of the inertia of the big players and thus more competition.”
A good question was thrown up by Dave Robinson,
who noted that while competition is usually good, would ASIC have the resources to monitor Coles?
“We see they have difficulties with the major banks and lack of resources to take them on the last thing we need is a new lender treating a home loan as a simple product with no checks and balances.”
But Comment of the Week goes to Cory
for a tongue-in cheek remark.
“What if Subway got in on the act? They may cause some confusion with their loan product – SubPrime.”
Thanks to all our commentators in the past week. The article and more comments can be viewed here.