Banks ‘close the umbrella’ on mortgage customers

“No bank has ever brought a unique product to the broker space ever,” he told The Adviser.

Mr Mohnacheff said non-banks are uniquely positioned to bring about innovation in the broker channel in a way that banks are not able to.

“They will always follow and match, but they will never be a market leader in the third-party space.”

Mr Mohnacheff said non-banks tend to focus on their broker customers and offer products they can pass on to the consumer, adding that non-banks are better equipped to help people.

“Most people who have a credit issue, it’s not their choosing... it’s because of a divorce, there’s been a death in the family, it’s been the loss of a job or a disability from an accident.”

“Bloody tough [stuff] happens to people and that’s when brokers need to stand up,” Mr Mohnacheff said.

“When people have a real issue in their lives, that’s when the banks close the umbrella and the non-banks put up the umbrella. It doesn’t make one right or wrong but it’s what we specialise in.”

According to the latest AFG Competition Index, the major banks continue to dominate the third-party channel, with the market share of the non-majors dropping from 35.8 per cent to 22.1 per cent as the March quarter drew to a close.

The Index showed that the major lenders lifted their share to 77.9 per cent by the end of May.

AFG general manager of sales and operations Mark Hewitt pointed out that the significant drop in non-majors’ market share is most likely the result of service levels “blowing out”.

“We have always said that a broker’s decision on where to place the client is driven by pricing, policy and service,” Mr Hewitt said.

“All three of these components must line up for the recommendation to go a lender’s way.”

[Related: Nation's best non-banks revealed]