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Steven Cross
The Bank of Queensland will have its work cut out if it wants to win broker market share when it resumes third party distribution.
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Last week, BoQ outlined its plans to re-enter the third party distribution space in a bid to combat the $91 million loss it recorded in the six months to March 2012.
Speaking exclusively to The Adviser, a BoQ spokesperson said the broker program would be an “immediate short term action that will remain indefinitely”.
“We’re developing a program right now… It’s in the early stages, and there’s a lot of work before we see anything come of it, but it is a priority,” the spokesperson said.
However, the initial response from brokers and key industry stakeholders to the regional bank’s decision has indicated that BoQ’s re-entry will be no walk in the park.
“I can’t see brokers warming up to them too quickly… I can’t see them being a major competitor in the market, maybe in Queensland where they have more of a presence, but no significant impact nationally,” National Mortgage Brokers general manager Gerald Foley told The Adviser.
“There are already enough lenders at the moment who have supported brokers through the years, especially all the non-majors. I think they deserve more market share and support. They’re the long term players and have stuck by us, so I’d hate to see BoQ take any of their slice.”
Mr Foley’s comments were widely supported by brokers, with many dismissing BoQ’s market re-entry as “cheap trick”.
“Do they deserve the industry's support? Their withdrawal was a monumentally poor decision in the first place, and had deeper repercussions than loss of profit for BoQ,” a broker named Ben commented on the original story.
“Their offer would want to be bloody good!”
His comments resonated with other brokers who believe BoQ’s product suite will have to be “extremely competitive” in order for the bank to win broker support.
“Don’t they realise that in order for brokers to use their products they have to be cheaper and better than the other competitors in order to gain sales, then there is the loyalty and respect issue. We can’t be switched on when you need us, this will take years,” Mike C claimed.
But while BoQ’s has received some harsh comments from brokers and aggregators, not everyone believes the move is a “poor decision”.
“This is of particular importance to our industry as it reinforces the need for lenders to provide a robust third party value proposition to sit in line with their first party strategy to ensure they meet consumer demand on how and who they choose to seek credit assistance from to meet their financial needs,” FAST national sales manager David O’Toole said.
AFG’s general manager sales and operations Mark Hewitt said the addition of another lender will increase competition, which is always welcome.
“We definitely see it as a good thing. The more competition available to borrowers the better,” Mr Hewitt told The Adviser.
“We haven’t sat down and talked [to BoQ] yet, but we can expect them to target certain niche markets.”
While BoQ may come up against some stiff criticism from brokers, they can take solace in the fact that they will not be the first lender to drop out of the third party distribution space and re-enter when the economics are right.
In July 2010, Macquarie Bank re-joined the broker channel to great success.
In addition, in the last six months, both ME Bank and CUA have joined the broker space for the first time – with tremendous success.
