Big banks, including ANZ, have come under fire for recent moves and “rhetoric”.
Australia’s big banks have been accused of trying to crush competition and wind back the clock to the pre-Royal Commission era, splurging on campaigns to lure borrowers directly and lock out mortgage brokers.
The Finance Brokers Association of Australia (FBAA) Monday slammed recently announced plans by ANZ Bank to increase its branch lending sales force, arguing the drive was “misguided”.
FBAA managing director Peter White said the move, part of what he described as ANZ’s overall strategy to cut costs and increase revenue, was one of the latest moves in a wider industry push by the big four to claw back market share and stamp 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 referring specifically to ANZ, but let’s just say a few of the majors have been obsessed for a while about trying to increase their direct business and in some cases reducing support for the broker channel, but they are missing the point.
“They somehow believe that slick marketing and sales tactics will persuade borrowers to love and trust them, but customer behaviour changed many years ago, and it was the poor behaviour by the banks that brought about that change.”
He warned that major banks were ignoring the fact that customers overwhelmingly rely on mortgage brokers for personal service and expert guidance.
“Finance and mortgage brokers are not in competition with banks, but are simply providing the personal service, expertise and competition that customers demand,” he said.
FBAA director Peter White said the mortgage broker sector had delivered “better customer outcomes”.
Mr White said he was “continually amazed” that large organisations with “smart people” often couldn’t “see the forest for the trees”.
“Let’s make it real — the major banks hate competition and if they had their way they’d go back to the old days when a few of them controlled the market. But the losers back then were 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 growing risks from high-leverage lending.
Analysis of APRA figures shows loans to home buyers with deposits of less than 5 per cent surged to $14.2 billion over the 12 months to August — up 167 per cent on 2019 levels.
Ultra-high loan-to-value ratio mortgages now make up 2.1 per cent of the total lending market.
Mr White said the banks’ strategy to claw back direct customers while exposing themselves and homeowners to risk “makes you wonder if they have learnt anything at all from the royal commission”.
ANZ CEO Nuno Matos delivered an address on the banks updated strategy last week. Picture: Aaron Francis
“Meanwhile finance brokers are adhering to Best Interests Duty and acting in the best interests of the customer. It would make far more economic sense if the big banks worked with the broking channel instead of against it,” Mr White added.
ANZ CEO Nuno Matos said in a last week investor speech announcing bank strategy that the group was trying to increase capacity, reduce duplication and simplify the organisation.
“We have not put the same level of energy and focus on our own proprietary channels as we have for brokers,” Matos explained.
“We have underinvested in physical proprietary channels and not delivered on time in our digital channels.
“Without compromising our great broker relationships, we will materially invest in and train our own mortgage sales force, aiming to increase the performance and the number of lenders in our branches by up to 50 per cent over the next five years. This is already underway.”
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