subscribe to our newsletter
subscribe to our newsletter

Banks put pressure on Murray at eleventh hour

Australian lenders have come out swinging in a series of endorsements of the third-party channel, slamming vertical integration and warning against commission reform.

Seventeen lenders have responded to a last-minute submission by mortgage aggregator AFG, obtained by Mortgage Business on Friday, which denounces the introduction of a fee-for-service model in broking and highlights the issue of vertical integration in the sector.

In its submission, AFG said the consolidation of the mortgage sector around the large ‘too big to fail’ banks has resulted in a situation where products from these organisations now account for 88 per cent of Australia’s mortgage volume.


“The presence of the mortgage broking industry is one of the few factors preventing the further entrenchment of the vertically integrated banking sector in the mortgage sector,” AFG said.

The aggregator approached its lender panel seeking public endorsement of the broker channel.

So far, AFG has received written responses from seventeen lenders including AMP, Suncorp Bank, Adelaide Bank, ANZ, Pepper, NAB, ME Bank, La Trobe Financial, Heritage Bank, Bluestone, ING Direct, Wide Bay Australia, MyState, P&N Bank, Liberty, Bank of Queensland and Macquarie.

Acknowledgement was received but no endorsement provided by Westpac and Bankwest.

AFG is yet to receive any response from CBA, Citi or St George.

Suncorp Bank chief executive John Nesbitt commended AFG on calling out an increase in vertical integration.

“In recent years the broker network is increasingly being owned by financial institutions, particularly large banks,” Mr Nesbitt said.

“We commend you on calling this out in your FSI submission, and agree that the broker industry has an incredibly important role in maintaining real choice and independence in the mortgage market,” he said.

“From our perspective, the increasing entrenchment of major banks via vertical integration poses long-term risks to the reputation of the broking community.”

“As seen in relation to financial planning, ownership by large banks can be perceived as compromising independence.”

ANZ noted that the references in the FSI interim report to brokers appear quite limited.

“On page 2-21, the report seeks further information on vertical integration in banking,” ANZ said in its response to the AFG submission.

“On page 2-68, there are positive references to developing the broker market and SME lending to increase competition,” the lender said.

“Industry stakeholders may be raising the concerns you note, but it is not clear that these are reflected in the FSI interim report.”

ANZ added that if issues of concern to brokers arise in the FSI final report, due this month, the major bank will work with AFG to support sensible policy options.

ME Bank chief executive Jamie McPhee said that it is particularly important that brokers promote competition at a time when the major banks account for more than 80 per cent of the home loan market and are seeking to grow their dominance through further vertical integration.

All lender responses can now be viewed here.

Banks put pressure on Murray at eleventh hour

Latest News

The big four bank has announced the appointment of a group chief executive officer to permanently replace Brian Hartzer. ...

The regulator has announced a range of changes to the reporting obligations of ADIs and RFCs, including the extension of BEAR compliance dea...

The Reserve Bank has “no appetite” for negative interest rates, with the current cash rate locked in for an “extended period”, the c...


LATEST PODCAST: Further relief for SMEs and borrowers

Do you think Australia will move to quantitative easing this year?

Why we’ll keep delivering for our communities in the face of COVID-19


As Australia tries to keep pace with a rapidly changing business and social landscape in the wake of COVID-19, Momentum Media is leading the way delivering essential content to our communities, writes Alex Whitlock, director of Mortgage Business.

Read more

Website Notifications

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