Yesterday, the ACCC revealed it will not oppose Australian Finance Group’s (AFG) proposed acquisition of Connective after determining “robust competition” would remain within the market even if the two groups were to merge.
Connective CEO Glenn Lees was quick to welcome the decision.
“The ACCC review has been comprehensive and rigorous and its decision is a reflection of the ever-changing competitive landscape where new technology and regulation are driving fundamental change in the mortgage broking sector,” he said.
“The merged business will provide a strong and sustainable channel for non-major lenders, deliver consumers a broad range of home loan products at competitive prices and help ensure embedding of comprehensive compliance systems whilst also enabling further investment in digital technologies and innovation.”
While the ACCC decision is a substantial step in the process, the transaction is also subject to court approval, a process which has already begun, but with an initial decision not anticipated until after the second half of 2020.
The Connective and AFG brands will continue to operate concurrently following completion of the proposed transaction.
According to the ACCC, “a substantial lessening of competition [is] not likely” to arise as a result of the merge, a conclusion arrived at after two rounds of inquiries and an extensive public review and consultation.
“Mortgage brokers will still have a range of other aggregators, should they become dissatisfied with the combined AFG-Connective’s pricing or service,” explained ACCC Chair Rod Sims.
“Lenders will likewise have a range of aggregators through which they can access potential consumers.”
The ACCC communicated that other established aggregators such as Finsure and NAB-owned PLAN Australia, Choice Aggregation Services and FAST, are likely to continue to provide strong competition within the industry.
Further, the merging of AFG and Connective will not impact the aggregator’s incentive to have lenders on their panel which are popular with consumers, as well as to maintain a broad and diverse panel of lenders so as to attract brokers.