Connective director Mark Haron has told brokers they can expect more lenders to follow Bank of Sydney into the third-party channel.
The Bank of Sydney announced last week that it would do a “soft launch” of its third-party business in the fourth quarter of 2014 ahead of a full launch in the first quarter of 2015.
Mr Haron told The Adviser that he was very confident at least one more lender would enter the channel in the next year.
“We’re getting quite a few enquiries from the smaller regional banks and some of the mutuals as well that are very, very interested in utilising brokers to distribute their products,” he said.
Mr Haron said the challenge for those smaller lenders would be to ensure they had the capacity to service brokers.
“They’ve got to pick and choose their market, but they’ve also got to make sure their policies have some sort of niche to get the uptake from brokers,” he said.
“The other important part that we try to reinforce is channel parity, so they’ve got to make sure the offering they give to brokers is the same as what they would offer direct to the customer.”
Firstmac managing director Kim Cannon said he expected a lot of credit unions would be looking to join the broker channel – but that it already contained “far too many players”.
“If [business] is not walking in the door in branches then it’s got to be coming somewhere else, and a lot of them see brokers as an easy target,” he said.
“The market is suffering at the moment. It’s not as big as it used to be. You’ve got a lot of players out there trying to justify their existence, keep market share and get some clients in the door.”
MFAA chief executive Phil Naylor said he was unaware of any new lenders looking to enter the third-party channel but added that it would be good for brokers if it happened.
“Our complaint since the GFC has been that there are an insufficient number of players in the market, so we would welcome more players in the market,” he told The Adviser.
“There were a lot more lenders in the market and there was pressure on the big four in terms of price competition – and more importantly product innovation and service levels – and to some degree they’ve fallen away in those areas.”
[Related: Connective adds lender to its panel]