CBA broker usage dropped in January: Broker Pulse

According to the Broker Pulse survey – which was conducted between 1 and 15 February 2024 – 32 per cent of the 267 broker respondents said they had submitted applications to the Commonwealth Bank of Australia (CBA) for their clients in January 2024.

While CBA was the third-most commonly used lender in January by brokers (behind ANZ (40 per cent) and Macquarie Bank (34 per cent)), the figure marked one of the lowest proportions on record for Australia’s largest lender.

The 32 per cent broker usage figure was down from 34 per cent in December and 39 per cent in October 2023

In fact, CBA’s broker usage has remained below 40 per cent since March 2023, according to Broker Pulse, when it was at 45 per cent.

Since then, around a third of broker respondents have been using the major bank (although it inched up to 39 per cent in June and October 2023).

The decline in the proportion of brokers using CBA for their clients has confirmed an ongoing trend.

According to CBA’s financial results for 1H 2024, its broker-originated loans declined to 33 per cent as of 31 December 2023, down from 42 per cent in December 2022 and 39 per cent in the first six months to June 2023.

This marked the bank’s lowest level of broker-originated loans in recent years.

When asked about the drop in broker flows, chief executive Matt Comyn told a CBA market briefing webcast that the major bank had made “very deliberate choices about where to compete”.

Last year, the bank had also said that it was focusing on proprietary distribution.

Speaking to The Adviser about the drop in CBA broker flows, Brenton Moyle, lending manager at FinSec Finance, commented: "I feel there are a number of reasons that have caused CBA broker flows to drop. The bank continues to make public comments around their strategy to focus on their proprietary channels; they’ve introduced their own direct-to-customer (and lower cost) online loan, which is not available to brokers; and I still see channel conflict, just to name a few!

"Current interest rates on broker-available products don’t generate any excitement either," he said.

Mr Moyle added that he had also experienced channel conflict from the lender when trying to refinance one of his to another lender. "Their retention team undercut the “best rate” that was advised to me after escalation via their pricing tool, so it’s difficult to trust that CBA will always “do the right thing” once they have a broker-introduced loan on their books," he said.

Similarly, Andrew Strachan J.P, broker at Blue Ribbon Home Loans, told The Adviser that he believed there were three main issues impacting CBA broker flows: channel conflict (and its candid preference for direct channel loans), "only offering discounted rates after you approach them"; and because fewer brokers are former bank employees/have prior loyalty to the lender.

He added: "I hardly ever use any of the big four banks. The pricing and channel conflict are not acceptable. There would only be specific policy reasons for me to use them."

Mr Strachan said if CBA could reduce channel conflict and "redefine" clawback to include a 'no fault' clause, then he believed its broker flows would reverse.

Satisfaction remains high

Despite the drop in usage, broker satisfaction with the major has remained steady, with 85 per cent of those who used the major bank telling Broker Pulse they were satisfied with their experience.

Feedback from brokers indicated that they were satisfied with the bank, with two brokers praising it for good service, strong BDM support, and consistent communication throughout the loan process.

One broker was pleased with CBA’s credit policy being clearly enunciated and credit assessors being of high standard and experience, while another was pleased with its service level agreement (SLA).

However, many brokers demanded better pricing, reflected in the fact that only 20 per cent of brokers surveyed said they used CBA for its product pricing, compared to 66 per cent who used it for client circumstances.

One broker stated that CBA has “integrity issues”, adding that they only use the major bank due to better policies or if there are no alternatives.

CBA recently incurred the wrath of the broking industry for other reasons, which expressed shock and outrage over its decision to launch paid introducer referrals for non-brokers.

Unloan – the direct-to-consumer home loan division of CBA – soft-launched a referral scheme that pays introducers a referral fee for every loan settled. However, the referral program is not open to mortgage brokers.

Instead, under the program, accountants, conveyancers, financial planners, lawyers, and real estate agents who have an active ABN and are registered for GST can receive 0.33 per cent (inclusive of GST) of the value of every settled loan they send to the bank.

Turnaround times remain low

Brokers said they were pleased with CBA’s turnaround times, which, according to Broker Pulse, was down from five days in December 2023 to four days in January 2024.

As reported on The Adviser’s sister brand, Mortgage Business, turnaround times shrunk to a record low of 3.8 days in January 2024 across large authorised deposit-taking institutions (ADI) (those used by more than 20 per cent of the Broker Pulse survey respondents).

All four major banks (ANZ, CBA, NAB, and Westpac) took four business days to reach an initial credit decision in January, the survey revealed.

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