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ISCOVER
Jessica Darnbrough
Brokers that write business with one or two institutions run the risk of becoming an agent to a particular institution rather than an intermediary that represents genuine choice to the borrower.
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Speaking at a luncheon in Sydney last week, Adelaide and Bendigo Bank’s General Manager, third party lending Damian Percy said brokers that submit the vast portion of their business to one particular lender could be considered agents to that institution, rather than a broker.
“The term broker infers that borrowers will get a choice of lender products. However, if you are sending more than 60 per cent of all your business to one particular lender, can you really call yourself a broker?” Mr Percy said.
“At what point do you stop being a broker and start being an agent for one particular lender?”
Mr Percy's comments come at a time segmentation has taken centre stage with Homeside recently abandoning its tiered offering. Mr Percy said while all lenders segment in “one way or another”, regardless if they outwardly admit to doing so, segmentation should be based on quality of applications rather than quantity.
“I think the volume targets are the wrong measure to segment brokers by,” Mr Percy said.
“If brokers are going to be segmented they should be segmented on efficiency and quality of applications, rather than sheer quantity.”
Last week CBA’s executive general manager, third party and mobile banking Kathy Cummings said any lender that does not segment in today’s market is displaying “ignorance and apathy towards their customers’ clients”.
“Customers are increasingly financially savvy and actually demand a point of difference for brokers to compete for their business. This dictates a corresponding need for us as manufacturers and as partners to the brokers.
"Segmentation demonstrates an in depth understanding of a broker’s business goals and aspirations. The CBA segmentation approach through our Diamond program, demonstrates both our deep understanding of our broker partners and our commitment to meeting their business needs,” she said.
And it seems most brokers agree.
Core Brokers principal Peter Wotherspoon said he supported segmentation models that are based around quantity of loans.
“Segmentation definitely has a place in the market. It needs to be there to reward loyal brokers. I think it’s a win/ win for everybody – the bank, the broker, and also the client regarding turnaround times,” he said.
