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Brokers have 'important role' in mortgage market, says CBA

by Reporter11 minute read

The big four bank has told the Productivity Commission that it believes brokers “should and will continue to play an important role in the mortgage market”.

Writing in response to the Australian Government’s Productivity Commission into competition in the Australian financial system, CBA said that it believes Australia’s current legal and regulatory framework was “appropriately balanced to promote customer outcomes through competition while ensuring that the financial system remains stable and customers are adequately protected”.

Noting that competition in the mortgage market is “intense”, the big four bank highlighted that part of this competition is “facilitated by the role of mortgage brokers”.

CBA noted that the volume of mortgages originated by brokers has increased from 47.7 percent in 2012 to 54.3 percent in 2015, adding that it believes that “brokers should and will continue to play an important role in the mortgage market”.


Its submission elaborated: “Commonwealth Bank has welcomed initiatives to enhance industry transparency, including in the mortgage broker channel. To date, Commonwealth Bank has been and will continue to introduce recommendations from ASIC and Sedgwick reviews in consultation with the industry and related industry bodies.

“ASIC’s review of mortgage broker remuneration has led to ASIC making recommendations around improving the standard broker commission model; moving away from bonus commissions, bonus payments and soft dollar benefits; clearer disclosure of ownership structures; a new public reporting regime; and improved oversight and governance of brokers and broker businesses.

“Commonwealth Bank welcomes this review and remains committed to making changes that deliver better customer outcomes and promotes competition in the home lending market.”


The bank went on to support the competition and reforms outlined by the commission to ensure that “customers are protected, financial system stability is upheld, and regulation is uniformly applied to all participants”.

In its submission, the bank concluded: “Commonwealth Bank supports the Australian Government’s intention to introduce a regime of open data and comprehensive credit reporting in banking and recommends appropriate measures be put in place to protect customers’ privacy and security and uphold the stability of the financial system.”

Suggesting that the rise of “the shadow banking sector”, which it called “an outcome of non-uniform regulation in the financial system”, puts the stability of the system and protection of customers “at risk”, the big four bank recommended that legislation and regulatory policy be updated to ensure that they apply uniformly to all competitors participating in the financial system.

CBA also recommended that the anticipated impact of the breadth of statutory and regulatory changes currently being planned or implemented be “carefully assessed” when considering any further regulatory interventions, and that any regulation designed to stimulate competition “should give consideration to ‘through the cycle’ implications, in particular the potential risks to customer protection and/or financial system stability in the event of an economic downturn or period of economic volatility”.

A draft report from government on competition in the Australian financial system is expected in “early 2018”.

[Related: CBA CEO apologises to brokers]