Some politicians are voicing concern over the recent wave of consolidation
The former broker described by a judge as "the most hated man in Australia" is in more hot water over an alleged incident involving his partner
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Much has been said recently about the differential in turnaround times between the broker and propriety channels, but, according to Shore Financial CEO Theo Chambers, there is one major bank in particular that is “going head-to-head with brokers.”
“Not only are they deliberately delaying applications via the broker channel, but they’re hiring lenders and targeting the same referral channels brokers get their business, such as accountants, solicitors and real estate agents,” Chambers told MPA. “They are even offering referral fees of 0.40-0.50% to these referral channels.”
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Chambers said the issue had been brought to his attention by multiple real estate agent referrers, who claimed they had been contacted by lending representatives from the bank in question “offering them 0.44% of the loan amount as a commission.” According to Chambers, there are even real estate franchise groups looking to partner up with the bank and integrate its technology into their CRMs.
This arrangement doesn’t make sense commercially when you consider the cost of a lending representative’s salary and bonuses, in addition to the cost of paying a referrer a commission, he said.
“To fund loans via their own lending staff wages and bonuses when also paying a 0.40%-0.50% referral fee on top can’t be less than just paying brokers 0.65% upfront and 0.15% trail,” he said. “There is also a training and management cost.”
For Chambers, this arrangement is reason enough to make him believe that the bank “is undeniably going head-to-head with broker distribution and trying to take back market share.”
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“But the consumer is the one who will decide who they prefer to deal with and, personally, I believe choice and professionalism will lead the consumer back to the broker channel,” he said. “Consumers clearly prefer choice with speaking to a lending expert who offers countless products and policies of various lenders, not a bank rep who only offers one.
“The consistent growth in market share of broker distributed loans rising over the past decade from 15-20% to circa 60% clearly shows what the consumer prefers.”
Kate 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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