The shifting sands of lender panels

The beauty of the broker channel is its ability to offer choice and convenience to borrowers, offering a wide range of lenders and a wide range of credit appetites to borrowers

Consumer research, such as Deloitte’s Value of Mortgage and Finance Broking 2025 Report (commissioned by the MFAA) and Agile Market Intelligence’s Consumer Access to Mortgages Report (commissioned by the FBAA), showed that the convenience that the third-party channel provides in traversing the lending landscape (and coming up with recommendations that are in the best interests of the borrower) are key factors to the growing popularity of the broker channel.

Fundamentally, a broker is only able to provide choice to borrowers thanks to their access to lenders. For the majority of brokers, the array of lenders at their disposal comes down to the size and breadth of their aggregator’s lender panel. And it’s taken as read that any aggregator will have a broad range of lenders on offer, from the big four banks through to smaller, regional lenders and private lenders.

But a new trend of aggregators dropping lenders has some worried that panels may be shrinking and for new reasons.

What do brokers think?

According to the Value of Mortgage and Finance Broking 2025 Report, the average aggregator has 45 lenders on its panel, including 18 non-major banks and 23 non-bank lenders.

Surveyed mortgage brokers reported that, on average, they are accredited with 23 different lenders through their aggregator. But some brokers can access up to 80 lenders through their aggregator panels (both Australian Finance Group [AFG] and Loan Market Group have over 80 lenders on their panels).

While the size of an aggregator’s lender panel has historically been a low priority for brokers when it comes to choosing a group to partner with, it’s growing in importance.

According to the April edition of the Broker Pulse survey, the majority (89 per cent) of brokers are satisfied with the size and range of their aggregator’s lender panel. However, even a third of these believe their panel is “missing some important [lenders]”.

Speaking to The Adviser, Matt Turner of GSC Finance Solutions says: “With more and more competition coming to the broker market, it has never been more important to have a diverse lender panel. Clients are constantly being bombarded with choice, so – as a broker – I am looking for the edge that might be the difference between winning a new client or losing them to a competitor that has that choice.

“Diversity isn’t just having asset finance or commercial offerings, it is offering them utility connections, quoting directly for insurances and offering other products like deposit bonds etc, so that we can be the centre of influence for their financial decision making.”

But having a panel that is very large can also make it harder for brokers.

Speaking to The Adviser, Kieran Jefferies from Olleh Lending, says that a larger panel may mean “more choice and more options”, but the downside is that the broker need to do more research to keep up to date with all the lender changes.

“Sometimes, the best thing to brokers is knowing the path of least resistance… I suppose that is why brokers will always favour one lender over the other,” Jefferies says.

More worryingly, nearly 10 per cent of brokers said their aggregator’s lender panel had “none of the options [they] need to meet client expectations” with 1.5 per cent noting they have to go off panel to meet client needs.

Turner says: “There are always lenders available that we would love on our panel as our competitors have access, however we would also like the option to have access to niche lenders that might then give us that advantage. Whether it be a mutual lender or a new neo-lender, if we have it and our competitors don’t then we can serve a large client base.

“There is also a heap on non-bank lenders in the market now that seem to offer similar products and policies that seem to give the illusion of choice; however, we tend to stick to one or two main lenders in that space.”

Jefferies says, however, that “most brokers do have a say on breadth of the panel” and he will pass on feedback to his aggregator if he sees a lender that is doing well, or if other brokers or referrers tell him about them.

“I’m acutely aware that the cost to upkeep a lot of lenders on the panel and platform is not cheap for aggregators, and… I want an aggregator that is financially viable as they hold the agreement to our trail income!” Jefferies says.

“So, I can see that the panels will need to be reduced over time, but I also believe people power is the answer if enough brokers are unhappy with the choices an aggregator has made with the panel; there is nothing stopping them reaching out to their aggregator.”

What does it take to join an aggregator panel?

With more than 170 banks in Australia and hundreds more non-banks, mortgage managers, and private funders, choosing which lenders to accredit is a constant job for aggregators.

Mark Hewitt, AFG’s general manager, industry & partnerships, tells The Adviser: “Brokers are our eyes and ears when it comes to lenders on the panel and AFG has one of, if not the largest, lender panel in the industry. There are currently over 80 lenders on our panel, so there’s an extensive amount of choice.“We currently have a watch list of over 40 lenders and complementary service providers to be considered for inclusion on our panel.”

Typically, there are several common factors that determine whether a lender will be added to the panel. The country’s three largest aggregators – LMG, AFG, and Connective – all tell The Adviser how they choose the lenders they will accredit.

Firstly, there needs to be broker and customer demand or a unique offering that fills a gap in the existing panel and provides brokers with more solutions for their clients, particularly in niche or underserved segments.

Secondly, a rigorous due diligence process is undertaken by the aggregator, focusing on the lender’s financial stability, compliance with regulations and laws, customer management history, broker service model, and risk profile.

Other considerations may include how they handle complaints and arrears; their commissions and accreditation systems; and an alignment in lender values and operating style, for example, by demonstrating transparency, integrity, and a genuine commitment to supporting the broker channel and delivering good customer outcomes.

Most aggregators will have a compliance or panel committee that oversees this process and negotiates an agreement that protects the brokers’ rights.

While there isn’t a direct fee to join a panel, there’s a general expectation that the lender will also support the aggregator’s education programs and professional development days as a form of partnership.

Mark Haron, executive director at Connective, says the group typically asks two core questions when considering a new lender:

1. Does the lender offer something that’s currently missing from the existing suite of products?

2. How will its addition support its brokers and the aggregator (as a business)?

However, Haron says: “We also assess the market segment the lender operates in and consider factors like whether it is a space that would be beneficial for our brokers to participate in. Regulatory and compliance standards are also a critical part of our evaluation, along with the lender’s broader reputation and the potential impact on Connective’s own quality standards and brand.”

Similarly, Ewen Stafford, the executive director and CEO of wholesale aggregator LMG, says lenders have to go through a rigorous due diligence process, governed by an internal lender panel framework and committee, to get onto the panel.

“If they don’t meet our risk appetite, they don’t make it on,” he says.

“Given the breadth of our panel, to be considered to be added, a lender must bring something genuinely different to the table, not just sharp rates. We prioritise niche offerings or unique credit policies that broaden broker choice and help brokers solve for more customers, especially in complex or underserved segments.

“We also take broker feedback seriously, we listen to our brokers, and their clients. If there’s no demand or the offering doesn’t solve a real customer need, we won’t move forward.

“We won’t onboard a lender if there’s behaviour that clearly undermines the broker channel, and we monitor existing partners closely to ensure their practices continue to meet the standards our brokers expect.”

Why would an aggregator drop a lender?

But even once a lender makes it onto the panel, there’s no guarantee they will stay there.

Aggregators will typically have a formal review process in place to assess lender usage and performance, including tracking lodgement and identifying underperformance, and may also consult with their broker members before removing lenders from the panel.

While most groups do not explicitly set volume targets to stay on panel, if brokers aren’t actively using the lender, they may be dropped.

Haron says: “Given the time and resources dedicated to each partnership, a reasonable level of business volume is needed to justify that investment.”

AFG’s Hewitt says that outside of broker demand, there are “a variety of reasons” that could lead to a lender leaving the panel, including “contractual breakdown, product duplication, funding issues, service levels and regulatory issues.”

Indeed, aggregators may move to suspend lenders from panel if they’re being actively investigated by the regulators (as several did after ASIC began its case against Oak Capital recently).

LMG’s CEO says: “This isn’t about punishing lenders, it’s about ensuring brokers can rely on the panel to deliver the quality outcomes their clients expect. If a lender becomes hard to work with or puts client outcomes at risk, they don’t stay on the LMG panel.

“We don’t take these decisions lightly. But we won’t compromise on quality, transparency or trust.

“Where performance or conduct issues arise, we follow a structured process: an initial discussion, followed by a formal request for response, and if needed, a notice period. In more serious cases, such as a potential breach, we may suspend access while we investigate.

“If we see consistent issues or systemic complaints, we review the agreement and explore what action we can take. Many lenders act on that feedback, including updating internal policies to reduce channel conflict or improve broker experience.”

Both LMG and Connective tell The Adviser that cultural values also play a factor.

Stafford says: “Where we see signs of channel conflict or misaligned incentives, particularly if it puts brokers or their clients at a disadvantage, we raise it directly with the lender. It doesn’t always mean removal, but it does trigger a deeper conversation.”

Similarly, Haron says: “We look for partners who are as committed as we are to supporting our brokers and driving their success… We also consider the lender’s reputation in the broader market, how it aligns with Connective’s values, and any potential impact it might have on us.”

A changing focus as aggregators focus on white label and securitisation?

But with aggregators increasingly looking to increase their margins (particularly in the face of confluence of pressures on margins – including a growing payroll tax bill) more are now looking to build their own funding lines – whether through white label arrangements or securitisation lines. It is this move that has raised concerns that this may come at a cost to other lenders.

Taking a look at the marketplace and nearly all the major aggregators have been actively building and expanding their white label partnerships.

For example, major brokerage Mortgage Choice recently revealed that it had achieved $2 billion in setttlements via its white label product funded by Athena Home Loans (Mortgage Choice Freedom) and Aussie, Finsure, and Connective have been expanding out their white label offerings with new partnerships.

Others, such as AFG and YBR, have been building out their own funding arms through residential mortgage-backed securities (RMBS) warehouse facilities.

Indeed, ASX-listed aggregator AFG recently released statistics showing that AFG brokers were sending more volumes to non-major banks and non-banks, including AFG’s own loan manufacturing line.

AFG Securities’ lodgements were up 20 per cent on 3Q24 and represented more than half (56 per cent) of flows going to its lending arm AFG Home Loans (which also includes a suite of white label loans and which were also up 5 per cent on 3Q24).

The aggregator’s securitised lending arm has grown rapidly in recent years, with the AFG Securities loan book having grown 23 per cent in the first half of the financial year (1H25) to a record $5.1 billion, while gross profit was up $1 million.

Over the six months to December, AFG Securities settled $1.44 million in loans, up 147 per cent on 1H24.

Its decision to remove a range of lenders, including Bluestone Home Loans, has raised eyebrows, particularly given the lender has been growing volumes and does not appear to have breached its contract arrangements.

Speaking to The Adviser, Bluestone’s chief commercial officer Tony MacRae says: “We were told it was a cost decision, which is curious, given that we, in the preceding 18 months, quadrupled our volumes in the specialist space with this aggregator…

“So that doesn’t make sense to us… there might be a little bit of system cost, but I expect that to be marginal.

“We did say that we’d be more than happy to look at any out of pocket expenses, and we wouldn’t want an aggregator to be disadvantaged by having Bluestone on their panel…

“I think [because] we’ve quadrupled our volume of settlements in the last 18 months, that’s taken business away from their white label and proprietary brands. And that would impact their bottom line.”

MacRae says that he would not be surprised if more lenders were to be removed from panels moving forward due to them competing with margins on aggregator’s distribution products.

He tells The Adviser that brokers should be sitting up and taking notice, as it may impact their ability to provide solutions for all scenarios if panels are to shrink too rapidly.

I think it’s a big issue because – as a broking industry – lenders, aggregators and brokers exist to provide customers with options and choice and solutions,” MacRae says.

“I’ve been told by brokers that Bluestone has some unique solutions that – without access – means they wouldn’t be able to help all their customers.

“So, as an industry, continuing to provide broad range of choices and solutions is absolutely critical.”

As the industry navigates these shifting sands, brokers may need to brush up on which lenders are available to them and whether they believe they have adequate solutions available to them to offer all the solutions they need for their clients.