the adviser logo

Major banks grilled over broker pay and ownership

by James Mitchell12 minute read
Major banks grilled over broker pay and ownership

Westpac has defended its ownership of a mortgage broker before a parliamentary committee by pointing to CBA’s ownership of Aussie Home Loans, while ANZ chief Shayne Elliott revealed that changing broker commissions is “complicated”. 

Western Australia Labor MP Matt Keogh asked Westpac CEO Brian Hartzer during a banking inquiry on Wednesday about Westpac’s 90 per cent stake in online mortgage broker uno Home Loans.

“There has been some criticism about this organisation, which Westpac holds over 90 per cent of the shares in, and whether it should be made apparent to people who are coming to that organisation for mortgages that, effectively, they are dealing with a subsidiary of yourself?” Mr Keogh asked.

Mr Hartzer replied: “Uno is a fin-tech start-up that we funded. It's a pretty exciting proposition, and I encourage customers to have a look at it. Essentially, it's a modern mortgage broker. It's all online. It offers pretty much every bank's mortgages, and there is no bias to any Westpac brand mortgages in that.”


Mr Keogh pressed the bank boss on whether he believes it should be made clear to consumers that Westpac owns the online broker business.

“We own a significant portion of it,” Mr Hartzer said.

Mr Keogh replied: “I think everyone would regard 90-odd per cent as you own it. You are clearly the controlling entity.”

Westpac CFO Peter King said Westpac’s ownership is disclosed on the uno. website. Asked by Mr Keogh whether the bank ownership is also disclosed to customers who take out a product from the uno. Platform, Mr King could not provide an answer and instead took the question on notice.

“It is no different than Aussie home loans being owned by the Commonwealth Bank. It is a mortgage broker but it's a modern mortgage broker for the digital age,” Mr Hartzer added.

ANZ: ‘We don’t own a broker’

Also appearing before the committee this week was ANZ chief executive Shayne Elliott. The CEO used his opening address to inform the committee that the major bank was taking the spirit of the Sedgwick review “beyond its focus on branch staff”.

“With the rest of the industry we are working through the Sedgwick and ASIC home loan broker recommendations and we have strengthened the governance of our broker channel,” Mr Elliott said.

Later, the ANZ boss told the committee that while the bank will implement “all that we can” of the Sedgwick recommendations, the “most complicated” one concerned mortgage brokers.

“The only reason for that is that it's hard for us to do it unilaterally. But we're working really hard with the industry, through the ABA, with our peers, and with the broking industry, to get that done. We agree with the intent; we've just got to work that through,” Mr Elliott said.

He was referring to recommendation 16, which states that banks should cease volume-based incentives, soft dollar benefits and stop the practice of increasing incentives payable to brokers when engaging in sales campaign.

“Essentially, I think the industry's done a lot of good work, partly pushed along by this committee, to make sure through our own channels that we're really focused on good customer outcomes and that we're not incentivising poor behaviour,” Mr Elliott said.

“It's only reasonable that we would extend that through another really important channel, which is the broker channel. Australians increasingly choose to go to a broker, particularly when they're looking for a home loan—in fact, it's more than half the market today. It's only reasonable we should make sure that we have the same basic principles in place there to make sure that they are incented to provide good customer outcomes. Large brokers are aligned with that. I don't feel there is resistance. We've just got to work together to get it done.”

Mr Elliott was asked why ANZ couldn’t commit to implementing Sedgwick’s recommendation. His response reflected a significant difference that separates ANZ from its big four peers – it does not own a mortgage broking business.

“ANZ is different from our peer group. We do not own a broker. Most of our peer group do. But I don't see any resistance. It's just that we need to get to the table and work it through,” he explained.

ANZ’s deputy CEO Graham Hodges added that “the devil's in the detail” of how Sedgwick’s 16th recommendation would be implemented.

“Clearly, it's going to affect thousands of brokers in the market too. As Shayne said, the aggregators understand and accept the principle here. It's about working through the detail.”

[Related: 'Yes, we repriced the back book']


James Mitchell


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.


Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more