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Commonwealth Bank of Australia (CBA) has denied asking mortgage customers to close their Buy Now Pay Later (BNPL) accounts to improve their applications.
At a public hearing held by the Parliamentary Joint Committee on Corporations and Financial Service, Peter Gray, co-founder and chief operating officer of BNPL firm Zip, said that banks had been instructing customers to close their BNPL accounts to have their mortgage settled as a way to stifle competition.
“I can confirm to the committee that the number one reason for customers closing their Zip account is that the bank has told them they need to in order to proceed with the mortgage,” Gray told the committee. “We’re clearly a competitive threat in the way we’ve provided clearer, transparent and more fair solutions to what’s traditionally been their target market. It’s a concern to them.”
On the second day of the hearing, however, Mathew Comyn, chief executive of CBA, denied that the bank was making the closure of BNPL accounts a condition for a successful application.
“I have not heard or seen anything like that in the industry,” Comyn told the committee, adding that customers with BNPL accounts are not treated any different from any other customer.
“From a bank’s perspective, when a customer wants to take out a new loan we have to understand the totality of their financial position,” said Comyn. “Let’s say a customer has a credit card with another bank that they haven’t used in years but just have there. That’s impacting their borrowing capacity. I should also say that the vast majority of borrowers are not borrowing anywhere near their maximum borrowing capacity.”
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