The head of one of Australia's leading banks has flagged bank ownership of mortgage brokers as an area that requires greater transparency.
Speaking on a panel at the AFR Banking & Wealth Summit this week, Suncorp CEO John Nesbitt called out a number of competitive distortions in the Australian mortgage market.
Mr Nesbitt argued that Australian lenders currently operate on an “uneven playing field” that needs to be “evened out”.
“Particularly around the risk weights, around funding benefits that flow to the majors and also around regulation and transparency around [mortgage] broking,” he said.
“Many brokers today are predominantly owned by the majors and there should be transparency there.”
Financial System Inquiry (FSI) chair David Murray was also on the panel but did not comment on the issue.
Last year, Mr Murray’s interim report found that vertical integration may have the potential to distort the way in which mortgage brokers direct borrowers to lenders.
While the report conceded that it remains unclear whether the majors are abusing their power, it did note that the Australian Competition and Consumer Commission “has taken relatively little action against the major banks in recent years”.
Smaller banks have consistently called for greater transparency of bank-owned broker groups.
In its second submission to the Murray Inquiry, the Customer Owned Banking Association argued that borrowers need to understand whether a mortgage broker is genuinely independent, whether the broker is offering products from a narrow or broad range of lenders, and whether some lenders are ‘preferred’ by the broker.
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
The financial services ombudsman has changed its rules after the ...
One in two borrowers does not believe banks always have their bes...
Here’s the weekly round-up of the biggest news stories from acr...