Sub standard loan submissions are continuing to hold back the third party distribution channel according to CBA.
Speaking at a media luncheon in Sydney this week, CBA’s executive general manager, third party and mobile banking Kathy Cummings said there had been little overall improvement in the quality of broker submissions in recent years.
“If you want sustainability in this industry then the economics have to work,” Ms Cummings said.
According to CBA, the level of rework required on broker originated loans remains unacceptably high, with more than 60 per cent of all applications having to be re-worked up to 10 times.
Ms Cummings said just 34 per cent of all CBA funded loans go through to settlement without being touched or re-worked.
Poor quality submissions have a direct impact on the bank’s operating costs, placing greater pressure on lending via the broker channel.
But while there is a need for improved quality, there are clear divides between some groups when it comes to loan submissions.
Ms Cummings said submission quality had a strong correlation with the resources and the culture of the aggregation group or brokerage.
Ms Cummings highlighted some of the industry’s franchise operations as brokerages that are hitting the quality levels expected by the bank.
“There are certain groups that consistently deliver high quality submissions and always hit their conversion rates,” she said.
Despite Ms Cummings concerns about the slow progress the industry has made in increasing quality, she was quick to stress the importance that CBA places on brokers.
“Commonwealth Bank is the largest home lender in the country and the leader in the third party distribution space. We are determined to retain and, where possible, grow, our share of the broker market, which currently sits around 30 per cent,” Ms Cummings said.
“We will continue to lend strongly and continue to lend responsibly.”