Industry divided on bank ownership of brokers

by Julia Corderoy16 Sep 2014
Banks’ ownership of brokers has been highlighted again, after reports that the banks have doubled their ownership of mortgage broker networks in the past two years alone – and it could increase as banks have been buying up “lower risk” mortgage brokers over financial planning networks.

That polarising question of whether vertical integration poses implications in regards to independence, choice and competition has also been raised again with it.

Australian Broker spoke with Ray Hair, national manager sales of non-bank lender Homeloans Ltd, who said there is nothing to worry about. 

“Lender ownership of aggregators provides the opportunity for improved relationships, service efficiencies and some influence, but it does not guarantee broker support. Mortgage brokers consider product, price and service when providing credit advice to customers. Relationships and commission are obviously important, but they are secondary to the provision of good advice and service.”

Sally Hillman, business development manager at St George Bank said that it is less ambiguous than it used to be, although it can still have an effect on some brokers.

“I have found that everything is more out in the open now in regards to who has a share in who or who owns who, so I don’t think it poses any major implications for the industry as people can make informed decisions. 

“However, I still think the overarching ownership question can still play on a broker’s mind. I have often had brokers ask me about aggregators because they know that we don’t have a share in any aggregator. I have also had brokers who have been hesitant about some aggregators because they know that they are partially or fully owned by one of the big banks.”

Tanya Sale, CEO of Outsource Financial is in fierce support of keeping aggregators independent. She previously told Australian Broker – when the financial services inquiry shone the light on vertical integration – that this is one of the biggest issues in the industry. 

“Broking evolved for a reason. It evolved to give the consumer a level playing field in relation to providing them a choice – and not just with the main four [banks]. Over 50% of mortgages in Australia are done through a mortgage broker and this [vertical integration] muddies the waters in relation to independence, choice and competition.”

 

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