Industry needs more transparency, say brokers

The customer-owned bank also urged the federal government to “require all bank sub-brand advertising to reveal the owner bank, with the owner bank name and sub-brand shown with equal prominence”.

Another member-owned institution, P&N Bank, made a submission to the inquiry also calling for sub-brands to be more transparent.

“The oligopolistic dominance of the four big banks and their sub-brands is well documented,” P&N said.

“The situation is compounded by the fact that the major banks own a large number of home loan broking brands.”

Ray Backhouse from Ray Backhouse Financial Services agreed that sub-brands needed to be more upfront with borrowers.

“It gives the general public knowledge of the fact that the marketplace is a lot narrower than they think,” he told The Adviser.

“Although they tell you that they operate independently, clearly [their owners] have got a big influence on the availability of funds”

Les Scott from Les Scott & Associates said greater transparency would likely mean greater consumer protection.

He said the public had a right to know who owned what – especially when sub-brands promoted their ‘small bank’ status in their advertising.

Home Loan Mentors owner Virendra Anand said the banking sector would become more competitive if more transparency was introduced.

Mr Anand told The Adviser that more disgruntled borrowers would avoid sub-brands if they knew they were owned by the same banks against which they had a gripe.

However, FBAA president Peter White said although greater transparency was good in theory it probably would not benefit customers.

Mr White said “disclosure and knowledge are not synonyms” because today’s borrowers are being overwhelmed by paperwork.

“The consumer doesn’t care – as long as he’s getting a good deal,” he said.