Broker independence could be under threat: Inquiry

by Julia Corderoy16 Jul 2014
The interim report of The Financial System Inquiry has been released, and it re-opens the industry debate concerning the independence of aggregators.

The Inquiry, chaired by former Commonwealth Bank chief executive David Murray, poses the question of whether “vertical integration may have the potential to distort the way in which mortgage brokers direct borrowers to lenders.”

Australian Broker spoke to Tanya Sale, CEO of Outsource Financial – an independently owned and operated aggregator. She believes one of the biggest issues the industry faces with the growing number of bank-owned aggregators is to do with competition.

“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.”

Some in the industry would argue that it is the independence of the broker that matters – not the aggregator. However, Sale believes that competition is still under threat regardless.

“The big banks don’t fork out millions of dollars for nothing. They offer various incentives to encourage the distribution of their product,” she said.


  • by Wozza 16/07/2014 10:01:21 AM

    Been broking for 8 years and I can't recall any client that I have steered to any product because of incentives or additional commission

  • by John Whitten 16/07/2014 10:09:28 AM

    If this is the biggest issue facing our industry we have nothing to worry about. I feel that Tanya Sale is doing more to push her barrow than save our industry. I have been a member of PLAN for 13 years, and the only incentive I've had from them, is with loans to PLAN Lending I receive 100% of the commission. This has had no bearing on me sending loans to PLAN Lending. NAB have never given me any incentive other than normal commissions to put loans their way or to sell their products. If I were directed, or made to put loans to NAB, to keep my membership of PLAN, I would leave PLAN immediately as would a lot of other brokers. NAB is not that stupid.

  • by DC 16/07/2014 10:19:46 AM

    The model of bank owned mortgage aggregators (fully or partially) has worked elsewhere (Canadian market for example) for many years. There has been no negative impacts to either the broking model itself or to the consumer. In many ways its an endorsement of the mortgage broking model that has been developed. We have gone from banks looking at how to cap / manage the flows in third party in favour of their proprietary channels to now investing in it. Agree that independence is paramount to the model & so long as this continues - bank investment in the channel is a good thing.