As CBA focuses on its proprietary channel, brokers have revealed how they view potential channel conflict when recommending a lender to their clients.
Following the Commonwealth Bank of Australia (CBA) revealing in its quarterly results that it has shifted its focus to proprietary distribution for its lending, brokers have responded to the potential channel conflict.
In reaction to The Adviser’s article yesterday (15 November), which saw the Finance Brokers Association of Australia (FBAA) managing director Peter White claim the major lender had “turned its back” on the broking industry, several brokers have suggested that channel conflict plays a large role in determining which lenders they use.
Chief executive of Ez Finance, Philip Rice, commented that brokers needed to be aware of lending partners that are “not loyal to you”.
He stated: “Ever since the royal commission and CBA threw Aussie Home Loans (and brokers) under the bus, their intent was clear, but many brokers for whatever reason stuck with them!
“I have said it before, they are not your friend! They want market share and now with this huge balance sheet they can go it alone and monopolise from lending from their own balance sheet.”
Dane Heinrich, mortgage broker at Mortgage Choice in Sale, agreed with Mr Rice’s sentiment, adding that CBA was hurting brokers, staff and customers.
Mr Heinrich commented: “Don’t forget [they said that they are] ensuring they increased the revenue on each loan (at the expense of the consumer).
“It was the middle finger to brokers, CBA customers [and] CBA staff working in their broker distribution channel.”
Meanwhile, Gary Eckel, director and broker at Commrural Lending Services, called for brokers to look to other lenders that better service the market.
“This is not the first time that the CBA has turned their back on brokers. Plenty of other lenders, cheaper and better in the market,” Mr Eckel commented.
Speaking to The Adviser, mortgage broker and founder of Atelier Wealth, Aaron Christie-David, stated: “Channel conflict will never disappear and yes, there are times when it’s frustrating and disappointing to lose a client to a branch.
“All this has done is make us hungrier to win on service and support – the two pillars we can control and take pride in. I have accepted that channel conflict is part of this industry and as brokers, I’m sure we’ve all won deals over from a proprietary channel, so it’s a two-way street.
“Each lender naturally wants their internal network to be effective and this is good for competition; however, when lenders sell products exclusively through their proprietary channel or special rates only available via their network, it’s not a level playing field.”
He added: “I feel as brokers, all we want is a level playing field – turnaround times, policy, rates and service, then it’s a matter of who can attract, serve and retain their client the best is the measure of success.”
The 14th annual Third-Party Lending survey, undertaken by Agile Market Intelligence earlier this year (1 March and 30 April 2023 for the period covering 12 months to June 2023), revealed that product pricing was the most important attribute brokers consider when choosing a lender, at 92 per cent, while channel conflict was listed as the top priority by only 79 per cent of respondents.
The survey also revealed that CBA was listed as the worst for channel conflict, ranking 23rd out of 23 lenders.
Agile Market Intelligence’s Broker Pulse survey in September also found that broker usage of CBA dropped to 30 per cent in the month, falling behind ANZ and Macquarie Bank.
CBA one of the top lenders for broker tech
However, despite the falling number of brokers using CBA and the poor result regarding channel conflict, the survey revealed brokers view CBA as one of the top lenders for technology and broker portal.
Some of the comments from the September Broker Pulse survey showed that brokers thought CBA was “always consistently great to deal with”, “extremely fast from submission to settlement”, had “amazing products and systems” and “have got it all right when it comes to assisting brokers and offering a seamless experience”.
[Related: CBA has ‘turned its back’ on brokers: FBAA]
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