Non-banks are not bottom feeders: Firstmac

Mr Cannon has sought to dismiss claims which suggest that non-bank lenders are expanding market share by using “less rigorous” credit standards.

“Some banks and commentators continue to talk about non-bank lenders as if we are basically competing for the scraps at the lower end of the market using less stringent credit standards, but the truth is that Firstmac is competing with the banks for prime loans and beating them,” Mr Cannon said.

“We wrote more than $3 billion worth of loans in 2017–18 and every one of them was a prime loan.”

Mr Cannon claimed that for every 1,000 mortgages written by Firstmac over the last 15 years, only one has ended in default, which he said was less than half the rate of the major banks, adding that four loans out of 1,000 are in arrears, which he said was also half the bank average.

The managing director also referred to Standard & Poor’s “strong” rating for loan servicing.

Mr Cannon’s remarks follow comments from the CEO of Bank of Queensland, Jon Sutton, who questioned the compliance practices of non-bank lenders, claiming that it is unclear whether such credit providers are fully complying with regulatory standards.

“There is a lot of pent-up demand heading towards non-bank lenders. They have a role to play in the financial community,” Mr Sutton said.

“The last thing you want to see is large parts of the community unbanked. 

“[Whether] they are subject to the same scrutiny, regulation and responsible lending, even though they do hold a credit licence, is an open question.”

However, in response to such claims, Mr Cannon accused some banks of “blaming their slow growth” on the credit practices of non-banks.  

Mr Cannon added that Firstmac has sought to increase its market share by improving its product and service offering.

The managing director made reference to the latest banking statistics from the Australian Prudential Regulation Authority (APRA), which reported 21.8 per cent growth for the Firstmac Group in the 2018 financial year, from $8.018 billion of loans under advice at 30 June 2017 to more than $10 billion at 30 June 2018 — a higher rate of growth than any other Australian bank.

“Better products, better service, agility and consumer trust are the key to expanding market share for non-banks as Firstmac has shown,” Mr Cannon said.

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