'Little doubt' vertical integration causes conflict of interest, says aggregator

by Julia Corderoy23 Mar 2016
Major aggregator AFG has claimed there “is little doubt” that majority bank-owned aggregators are influenced by vertical integration.

In its response to ASIC’s mortgage broker remuneration review scoping document, AFG agrees with the Financial System Inquiry that vertical integration in the mortgage industry may lead to a conflict of interest.  

“There is little doubt that those aggregators that are majority-owned by a lender have the potential to be influenced by that lender and that the lender has a vested interest in maximising its market share,” the aggregator said in its response.

As a result, AFG has told ASIC that there should be a threshold level of ownership that is mandatory to disclose.

“This potential conflict of interest diminishes as the level of common ownership decreases. Our view is that the threshold level of interest that should be disclosed to consumers is 20%, consistent with section 606 of the Corporations Act 2001.”

Macquarie Bank has been a minority shareholder of AFG since the lender acquired shares in the aggregator in 2001. According to AFG’s 2015 Annual Report, Macquarie Bank holds 11,184,907 shares in the company, which equates to 5.21% of issues capital.


  • by Grahame Hale 23/03/2016 8:53:54 AM

    From what I have seen, it is just the opposite. Brokers genuinely want to get the best loan for their clients.
    I am with a bank owned aggregator and while they have their own white products we fit the loan to the borrower. That is common to most brokers I have associated with.

    All banks have their niche market and cannot move out of that due to inflexibility . Macquarie have been actively pushing to take up gaps left by the banks and very successfully. Brokers want a good out come for the borrower. It very hard to tell someone they can not get a loan.

  • by Reg 23/03/2016 9:47:26 AM

    Inability to move trail from some aggregators would be something the ASIC review should look at instead.

  • by Independant 23/03/2016 10:07:39 AM

    Ownership of the aggregator has absolutely no bearing on my recommendations.