The big four bank has highlighted the contribution of the broker channel in fostering loan quality and strengthening competition in the marketplace.
Appearing before the Australian Securities and Investments Commission (ASIC) in its second round of public hearings regarding a proposed update to its responsible lending guidance (RG 209), NAB’s executive general manager of broker partnerships, Anthony Waldron, was asked to assess the value of the broker channel in the mortgage application process.
Mr Waldron noted that brokers play a pivotal role in initiating the credit process for consumers that depend on the third-party channel for access to lenders.
“[Some consumers] wouldn’t be able to access [credit] if it wasn’t for the broker community that’s out there,” he said.
“[I] think [one] of the key drivers of competition in the mortgage market today has been access to distribution, which brokers provide.”
Mr Waldron went on to add that brokers provide an added layer of assurance regarding the quality of a home loan by assessing a customer’s suitability for a product before lodging an application.
“[As] they’re going through that preliminary assessment [and] getting to that decision on which lender the customer should be using with the customer’s input, it’s really that the value that is being added is that they are doing a review from their [experience],” he added.
“There’s almost [a] second check on that even though we then need to review everything ourselves.”
This follows on from remarks by Westpac’s general manager of home ownership, Will Ranken, who was asked to provide an assessment of the quality of mortgages originated through the broker channel.
Mr Ranken stated that the bank has not observed substantive differences in the quality and characteristics of home loans originated by the third-party channel.
The Westpac representative stated that there was “no meaningful difference” in delinquency rates, loan sizes and loan tenures across the two channels.
Mr Ranken was then asked if Westpac would support a move by ASIC to prescribe different responsible lending obligations depending on how a loan is originated.
In response, Mr Ranken warned that ASIC should consider the effect of such changes on the value proposition of the broker channel, adding that Westpac is “comfortable” with current policies and practices.
ASIC’s second round of public hearings have now concluded, with the corporate regulator expected to publish its new guidance before the end of the calendar year.