Broker associations tentatively welcome ANZ-Suncorp merger decision

On Tuesday morning (20 February), the decision was handed down in the Federal Court of Australia in Sydney and determined that the merger would not lessen – or be likely to lessen – competition in mortgage lending, SME finance, or agri lending in Queensland.

In the reasons for the determination, the three members of the tribunal (Justice Halley, Dr J Walker, and Ms D Eilert) also noted the competitive effect that brokers provide the lending market in improving access and distribution.

The broking associations have welcomed the recognition that mortgage brokers play a valuable role in improving competition by enabling borrowers to switch lenders while reducing consumer choice frictions and amplifying lender brands that may not have a strong branch presence.

The Mortgage & Finance Association of Australia (MFAA) – which had been asked by the ACCC to assist in its review of the proposed acquisition in 2023 – noted that it had flagged to the watchdog the value that brokers bring to the market and the critical role that brokers play in meeting customer needs.

In its original ACCC submission, the MFAA reinforced that consumers and business owners who choose to use their broker should be afforded service levels, support, and pricing that are on par with that provided through a lender’s branch network.

It called out the importance of the investment that lenders are making in technology for brokers, support, and processes, which are key to the overall industry’s continued support for the end customers.

Speaking to The Adviser following the tribunal decision on Tuesday, MFAA chief executive Anja Pannek commented: “The Tribunal’s decision findings on the ANZ-Suncorp merger has reinforced what we have said all along – brokers bring competition to the lending market – this is through reducing friction for home loan borrowers and facilitating greater switching.

“There continue to be a number of further approvals for both Suncorp and ANZ, we continue to monitor with interest the progress of the proposed merger as well as broader competition in the lending market.”

Peter White AM, managing director of the Finance Brokers Association of Australasia (FBAA), told The Adviser: “The fact that this decision has been overturned and that brokers have been flagged as part of the reason (due to the fact they deliver market competition and consumer opportunity), is a great acknowledgement of the incredible work that brokers do.”

However, Mr White added that many questions remained on whether the merger of Suncorp Bank and ANZ would be net positive or net negative.

“Our main concern with the merger, however, is that it may exacerbate borrower challenges,” he told The Adviser.

“For example, we’ve heard that both ANZ and Suncorp face issues with processing and credit procedures. Combining processing capabilities to cut costs could backfire if they both already have existing problems. It would be a nightmare for borrowers. Plus, as most mergers result in one of the primary brands winning out over the other, would the merger mean a reduced lender offering/panel to brokers and borrowers if one of the brands is no longer in being?

“As long as these brands are allowed to continue in their own right and the two do not become one, then it could be a great outcome for everyone. Let’s hope so.”

Individual brokers have also reacted to the news, with senior mortgage broker Jonathan Preston from Home Loan Experts stating that he believed the decision was "bad news for homeowners".

"Both of these lenders are already of significant size and scale; seems unlikely that customers will benefit in any way from them being connected," he said.

“There will be a slight reduction in competition; however, Suncorp was not a major player in the home loan market anyway, so the effect will be largely muted.”

“Suncorp is known for conservative credit appetite, whereas ANZ is more liberal. As such, some brokers may be concerned that Suncorp may influence ANZ policy going forward.”

The ACCC has also released a response to the news that the tribunal has overturned its decision, with the chair of the competition watchdog stating it will “reflect” on the decision.

“The Tribunal’s decision demonstrates the checks and balances of an administrative merger approval process,” chair Gina Cass-Gottlieb said.

“The Tribunal made findings on fundamental matters that informed our concerns, including that the national market for home loans is currently conducive to coordination and that material barriers to entry and expansion remain.

“However, the Tribunal didn’t consider that the proposed acquisition would meaningfully impact on the likelihood of coordination.

“Banking markets are critical for many home owners, businesses, and farmers. The ACCC will continue to apply scrutiny to these markets across the breadth of our functions including merger assessments and enforcement investigations.”

What do you think about the decision to allow the ANZ-Suncorp Bank merger? Let us know in the comments below!

[Related: ANZ granted unconditional merger authorisation to buy Suncorp Bank]