Blog: Who Owns Your Mortgage Broker?
29 August 2017
News is arriving this week that CBA are finalising the purchase of the remaining 20% of Aussie Home Loans, meaning the bank will now have complete ownership of the franchise.
CBA’s purchase of Aussie Home Loans means that one of Australia’s largest mortgage broker groups is subject to the interests of Australia’s largest lender.
This may sound like business as usual to many, yet as a recent review from ASIC shows, broking channels owned by a bank tend to send more loans to their parent company than independent channels”
“Taking into account both CBA-branded and CBA-funded home loans provided through brokers who are part of Aussie Home Loans, CBA’s market share through Aussie Home Loans was 37.3%, compared to its overall market share of 20.9%.”
Another example of the influence of the major banks in the mortgage broking industry is the National Australia Bank’s ownership of mortgage broking networks in Plan Australia, FAST, and Choice Home Loans. These three account for around 30% of all brokers in Australia. Together they have directed 22 per cent of home loans to NAB-branded or white-labelled loans, yet NAB’s overall home loan market share is only 13.2 per cent.
Likewise, Westpac now owns 91.2 per cent of ordinary shares (or about 79 per cent on a fully diluted basis) in online mortgage broking platform Uno.
When the bank controls the mortgage group and the mortgage products, they can then manipulate the commissions. This makes way for potential conflicts of interest to arise.
Examples of Banks ownership of Brokers in Australia:
- Plan Australia, FAST, and Choice Home Loans – 100% owned by NAB
- Aussie Home Loans – 100% owned by CBA
- Mortgage Choice – 21% owned by CBA
- RAMS – 100% owned by Westpac
- Yellow Brick Road, Connective, Vow – Macquarie holds varying ownership stakes
A broker may say they are independent, however it may be worth your while to read their Credit Guide to see if they are representatives of a third party.
There are strict rules where any potential conflict of interest may be present when a mortgage broker makes recommendations to their client… and rightfully so. The National Consumer Credit Protection Act 2001 (NCCP Act) governs the entire mortgage broking industry and states that a broker cannot recommend a product that is “unsuitable” for your financial needs and goals.
At the end of the day, doing your own due diligence is recommended when choosing a broker to ensure that they have your best interests at heart.
Axies holds their own Australian Credit Licence and is wholly owned by its two Directors. We can promise you complete independence and transparency.
Call us to review or email us at email@example.com.
About the Author
Tim has an in-depth knowledge of the Australian mortgage sector makes the loan process simple and stress-free. It pays to have him on your side, whether for the purchase of a new home or seeking a better deal on your existing loan.
Known for his accessible style and warm approach, Tim believes that educating people about their mortgage will help them to achieve their financial goals sooner. By sharing his expertise openly, some of the people he educates will likely become his clients. It’s a win-win approach. Valuable information, no obligation.