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Major banks ‘tighten grip’ on broking

by Staff Reporter6 minute read

The growing strength of the major banks may pose a threat to the mortgage broking industry, according to a new study.

A new report from the Customer Owned Banking Association found that the majors are “tightening their grip” on mortgage broking as well as financial planning and advice, funds management and life insurance.

According to the study, the Commonwealth Bank controls 13 per cent of the revenue earned by brokerages, while NAB controls five per cent.

The association’s chief executive, Louise Petschler, said that by “rapidly expanding” out of their core banking areas, the four banks now pose a threat to competition and to consumer choice.

The strongest growth was reported in financial planning and advice, where the majors account for 26 per cent of industry revenue, up from 15 per cent in 2008.

The big four also account for 34 per cent of funds management revenue and 27 per cent in life insurance.

The report said that these figures could rise to 70-80 per cent share in at least two of these areas.

The study will be delivered to the Financial System Inquiry and the Competition Policy Review for further consideration.

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