Powered by MOMENTUM MEDIA
subscribe to our newsletter

LMI competition is unreasonable: ANZ

ANZ CEO Shayne Elliott has dismissed calls from the Productivity Commission to offer consumers greater choice when taking up lenders mortgage insurance on their home loan.

Mr Elliott told the Productivity Commission (PC) on Tuesday, 6 March, that lenders mortgage insurance (LMI) is part of a broader package offered by lenders, claiming that it would be unreasonable to “slice and dice” a loan in the name of competition.

In draft finding 11.1 of its draft report into competition in the financial services sector, the PC claimed that the LMI market is “highly concentrated”.

Commissioners questioned ANZ over the lack of “competitive tendering” in the LMI space.

Mr Elliott noted that pricing of LMI isn’t “simple”. He drew an analogy between the issuing of LMI as part of a loan product and the purchasing of a car.

Advertisement
Advertisement

“It’s a little bit like buying a car. I don’t go through and say, ‘I’d like to understand who all the possible providers of the air bags are [and] I’d like to know who are the possible providers of the steering wheel, and the seats and all those bits and prices’ — it’s a package,” Mr Elliott said.

“[LMI] is part of [the] package, and if you don’t want the LMI, you can’t have the loan. It goes together.

“The idea that we should slice and dice all the features and functions and compete on them individually - I don't think it’s reasonable for us to provide that.”

Market competitiveness

Meanwhile, ANZ’s CEO also insisted that the “fluid and competitive” market has provided customers with greater access to low interest rates.

PROMOTED CONTENT


“The market is fluid and competitive,” the CEO said.

“In this market, consumers have won with increased discounts delivering lower rates. Consumers are refinancing both within and between banks to capture lower rates driven by competition.”

The major bank chief acknowledged that while there are “some barriers to entry” in the lending space, new players have been deterred from engaging in the competitive market.

“It’s not that difficult to get a license, set up a bank in Australia and compete, but many have chosen not to, not because of the regulatory barriers, but because it’s hard, because it’s competitive, because returns are low, because there are scaling requirements in terms of being an effective competitor in the market,” Mr Elliott said.

“That may change with fintech and open data, but we’ll have to wait and see.”

[Related: Scrapping LMI would lift rates ‘materially higher’]

LMI competition is unreasonable: ANZ
mortgagebusiness

Are you a new-to-industry broker in the process of growing your business? Then there’s some great news: The Adviser’s New Broker Academy is back in 2021 and will provide you with essential insights into cutting-edge tools, strategies and processes to fast-track to success. Don’t miss your chance to attend. To secure your FREE place, visit newbroker.com.au now!

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

The chief of Australia’s largest bank has said lenders should act pre-emptively and shift their floor rates for mortgage serviceability am...

Total household wealth reached a high of $13.4 trillion in the June quarter, primarily due to rising property prices, according to the Aust...

The property exchange settlement platform has been granted approval to establish an Electronic Lodgement Network in the ACT.  ...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.