Bank retention tactics – how they could undermine the client/broker relationship

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    Brokers have brought an issue to MPA’s attention that they say is undermining the client/broker relationship and threatening their livelihoods. When contacting a client’s bank to see if it will match the interest rate of another financial institution, the broker is being told ‘no’ – only to have the same bank’s retention team match or better the rate once the refinance to a new lender has been approved.

    To make matters worse, lenders are contacting clients directly in an attempt to retain their business after a broker has spent as many as 30-40 hours lining up the refinance. According to Bernard Desmond of Blank Financial, this type of scenario is happening more and more. He said once the discharge form is received by the bank, “the retention team, suddenly, aggressively, comes into action and then they’ll bend backwards to make stuff happen.”

    Some of his clients have even been offered cashbacks usually only reserved for new customers in a bid to keep them on the books.

    But Desmond added that not every customer is given this sort of priority service.

    “They do this on a case-by-case basis,” he said. “They are looking at what is the loan balance, what is the loan to value ratio, what is the customer profile, how has their conduct been with the bank?”

    He added that the customer is given until close of business on the day of the offer to decide whether or not to take it. Often, the offer is not even made in writing.

    Another broker, who asked not to be named, said this sort of behaviour was very common in the current lending environment.

    “I think it’s disgusting what the banks are up to,” he told MPA. “If the broker goes to them in the first instance and says, ‘here’s an opportunity to retain the customer’, and they can’t put their best foot forward, why should they be going to the point where the broker has done all the work?

    “Everyone’s wasted their time, there’s a cost to the other bank for valuations and then they come in at the 11th hour with an offer to try and rescue the business because they couldn’t give a reasonable offer upfront.”

    Read next: "Branches offer cheaper rates to direct clients"

    He said such actions by retention teams had the potential to undermine brokers’ relationships with their clients, because the scenario then casts uncertainty over what the broker had told the client in the first place – that the bank wouldn’t match the new rate.

    “It’s not a good look for the broker,” he said. “If the banks are as squeaky clean as they say they are after the Royal Commission, why don’t they offer the client the 2.5% and the $3,000 cashback when the broker goes to them in the first instance?

    “They’ll turn around and say our pricing division and our retention team are different divisions and they don’t speak to each other, and it’s like, seriously? They all know what they are doing and it’s just wrong.”

    He said out of the six-seven settlements he does each week, he has about two files “where I’ve got to go back and speak to the client and justify my position and show them all the evidence where I went to the other bank.”

    Both he and Desmond keep email evidence to prove to their clients that the bank wouldn’t match the competitor’s rate from the outset. They both said the majority of their clients choose to go ahead with the refinance once they realise how the bank in question had acted – proving that a strong relationship built on honesty and good communication is more important to the customer than a competitive offer made at the eleventh hour.

    Kate McIntyreKate McIntyre is an online writer for Mortgage Professional Australia. She has a wealth of experience as a storyteller and journalist for a range of leading media outlets, particularly in real estate, property investing and finance. She loves uncovering the heart behind every story and aims to inspire others through the artful simplicity of well-written words.
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