The chief executive of an Australian bank has questioned the high proportion of major bank home loans written through the broker channel.
Speaking to The Adviser, Auswide Bank CEO Martin Barrett said he “gets challenged” with the significant amount of lending that goes to the major players.
“Even though the major players are unlikely to be the best value in the market at any given time,” Mr Barrett said. “That to me is a curious point.
“My question would be, 'if you really have a broad panel but you only deal with a few, is there really an independence in terms of the discussion you are having with your clients?'
“I think the regulators are playing out quite loudly at the moment, particularly for the brokers who might be owned by the big banks.”
In November, Assistant Treasurer Kelly O’Dwyer confirmed to The Adviser that she had written to ASIC requesting it undertake the review to help determine the effect of current remuneration structures on consumer outcomes.
“The review by ASIC will help to determine the extent to which misaligned incentives may be creating a conflict of interest between mortgage brokers and consumers,” Ms O’Dwyer said.
The latest AFG Competition Index for the last quarter of 2015 shows that the major banks – while still seeing the majority of broker-originated home loans – lost mortgage market share between July (74.6 per cent) and November (69.7 per cent).
The figures show that the non-major lenders regained ground over the three months to December 2015.
AFG general manager of sales and operations Mark Hewitt said the recent turnaround had been dramatic.
“We have been through a period of uncertainty and this has seen the majors use the size of their balance sheets to dominate their smaller competitors,” he said.
“This quarter the tide has turned and non-majors have had their best run since June, just prior to the regulator enforced changes to investment and interest-only lending policy being introduced.
“Over the past three months we have seen the non-majors adjust to these changes and it appears the flow of business is settling back into a more competitive pattern.”
[Related: Non-major bank strikes back]
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.
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