Big bank’s ‘slippery’ move sparks fierce reaction – realestate.com.au

Australia’s big banks have been accused of trying to crush competition and turn back the clock to the pre-Royal Commission era, by waging campaigns to lure borrowers directly and lock out mortgage brokers.

The Finance Brokers Association of Australia (FBAA) on Monday condemned recently announced plans by ANZ Bank to expand its branch loan sales force, arguing the push was “misplaced”.

FBAA chief executive Peter White said the move, part of what he described as ANZ’s overall strategy to cut costs and increase revenues, was one of the latest in a wider industry push by the big four to regain market share and root out perceived rivals.

Mr White claimed these moves reflected a focus on profits rather than customer service – and showed banks may not have learned the lessons of the Hayne Royal Banking Commission.

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“I’m not talking about ANZ specifically, but let’s just say that some of the majors have been obsessed for some time with trying to increase their direct sales and in some cases reduce support for the broker channel, but they are missing the point.

“They somehow believe that slick marketing and sales tactics will convince borrowers to love and trust them, but customer behavior changed many years ago, and it was the banks’ bad behavior that brought about that change.”

He warned that major banks were ignoring the fact that customers overwhelmingly rely on mortgage brokers for personalized service and expert guidance.

“Financial and mortgage brokers do not compete with banks, but simply provide the personal service, expertise and competition that customers demand,” he said.

FBAA director Peter White said the mortgage broker industry had delivered “better customer outcomes”.

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Mr White said he was “constantly amazed” that large organizations with “smart people” often “couldn’t see the forest for the trees”.

“Let’s make it real: the big banks hate competition and if they had their way they would go back to the old days when a few of them controlled the market. But the losers then were the consumers, and this was highlighted not so long ago at the Hayne royal commission,” he said.

The warnings come as Australia’s housing market faces increasing risks from high-leverage lending.

Analysis of APRA figures shows that loans to homebuyers with deposits of less than 5 per cent rose to $14.2 billion in the 12 months to August – a 167 per cent increase on 2019 levels.

Mortgages with an ultra-high loan-to-value ratio now make up 2.1 percent of the total lending market.

Mr White said the banks’ strategy of winning back direct customers and exposing themselves and homeowners to risk “makes you wonder whether they have learned anything from the royal commission at all”.

ANZ CEO Nuno Matos gave a speech last week on the banks’ updated strategy. Photo: Aaron Francis

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“Meanwhile, financial brokers are adhering to the Best Interests Duty and acting in the best interests of the customer. It would make much more economic sense if the big banks worked with the broker channel rather than against it,” Mr White added.

ANZ CEO Nuno Matos said in an investor speech announcing the bank’s strategy last week that the group was seeking to increase capacity, reduce duplication and simplify the organisation.

“We haven’t put the same level of energy and focus on our own channels as we do for brokers,” Matos explains.

“We have invested too little in our own physical channels and have not delivered on time in our digital channels.

“Without jeopardizing our strong relationships with brokers, we will make substantial investments in and training of our own mortgage sales team, with the aim of increasing performance and the number of lenders in our branches by up to 50 percent over the next five years. This is already underway.”