A joint statement by five leading non-major banks has called for policy reform around brokers and aggregators which are owned by the major lenders.
In their submission to the Productivity Commission’s Inquiry into Competition in the Australian Financial System, AMP Bank,
Bank of Queensland,
Bendigo and Adelaide Bank, ME, and Suncorp highlighted these bank-owned aggregators as a “fundamental” area which must be addressed “if we are to realise a truly competitive sector”.
They proposed that any aggregators and brokers owned by the major banks publicly report on the proportion of loans directed to their owners.
“While we do not suggest that major banks should be restricted from owning broker networks, we do believe that where this occurs, it should be managed in an open and transparent way to ensure customers are able to make fully informed decisions.”
They pointed to findings in the
Australian Securities & Investments Commission (ASIC) Review of Mortgage Broker Remuneration which said that major bank ownership of broker platforms influenced the proportion of loans the owner received from their brokers.
“This is a regulatory concern because mortgage brokers are obligated to ensure consumers get the most suitable loan product,” the banks wrote.
With smaller physical branch networks and a dependency on unbiased distribution channels, “regional banks support strong regulation in this area, including effective ownership disclosure obligations”.
New heights with vertical integration
In a separate submission to the Productivity Commission, National Australia Bank (
NAB) said that vertical integration (VI) of banks and aggregators provided benefits to both consumers and brokers.
The three NAB-owned aggregators –
PLAN Australia, Choice Aggregation Services and
FAST – represent around 30% of brokers in the market and offer access to approximately 40 lenders and their products, the bank wrote.
“NAB’s continued investment in aggregator systems and processes supports brokers to run their businesses.
“This VI model offers significant benefits to consumers, provided the appropriate remuneration, compliance and governance structures are in place. NAB, and each owned aggregators, has rigorous processes to manage conflicts, including perceived conflicts, to protect the interests of customers and brokers.”
By offering support through technology, professional and business development, and assistance with licensing and compliance, NAB helps brokers deliver good consumer outcomes, the bank wrote.
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