Login
ISCOVER
After the major lender “made huge profits off the back of mortgage brokers”, they are now “turning their backs on the industry”, the FBAA has claimed.
The Finance Brokers Association of Australia (FBAA) has hit out against major banking group Commonwealth Bank of Australia (CBA) after it stated in its quarterly results that it had shifted its focus to proprietary distribution for its home loans.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
In its results for the first quarter (1Q24) ended 30 September 2023, the banking group, which includes CBA and Bankwest, stated: “We have focused on proprietary distribution with new proprietary home loan fundings in the quarter broadly flat on the prior comparative period at $18 billion, while lower margin new broker fundings declined [by around] $5 billion over the same period.”
The revelation of the group’s focus on its proprietary channels followed Commonwealth Bank chief executive Matt Comyn’s comments in July that brokers remain a “really important part of support” for customers.*
Reacting to the news that Australia’s largest lender was focusing on its proprietary channel, FBAA managing director Peter White AM claimed that the major lender had “turned its back” on the broking industry after “they’ve made huge profits off the back of mortgage brokers”.
He stated: “Now the market starts to swing around it would appear that, from a CBA point of view, they’re going to dump brokers in favour of their proprietary channels ... they’ve used us to get what they want, now they’re going to throw us in the bin on the way through, which I find pretty distasteful, to be honest, given they’re always out there saying how much they support the broker marketplace.
“One of the issues that’s going to come from this is channel conflict. This is going to see a rise in channel conflict with CBA between their branches and brokers, especially if they start creating products that are only available through branch networks.
“There’s a whole host of challenges I see that this will bring, and unfairly so. It’s not like the bank hadn’t benefited from enormous support from the broker industry. And now they’re going to turn their backs on it? I just find that really distasteful.”
Brokers have also reacted to the news with the founder and chief solutions officer at Cinch Loans, Suvidh Arora, telling The Adviser that he hoped large lenders would continue to support the broker channel as it “helps provide the average consumer with more choice and access to the best products”.
He stated: “I believe that, in the grand scheme of things, everyone wins if CBA [would] continue to support and grow their offering through the third-party channel (not just through Bankwest). Once the cost pressures subside, it would ensure a stronger broker channel supporting the lender, if brokers can continue to get the same support for their clients through this tough period.”
Tracey Pye, broker at Mortgage Express, told The Adviser that she believed CBA had undergone a “mood swing” over the last four to six months and that their appetite for new business through the broker channel had “decreased”.
*This story was updated on 16 November following an amendment to the July 2023 story
[Related: Brokers ‘really important’ to Bankwest customer support: CBA CEO]
JOIN THE DISCUSSION