JP Morgan’s Brian Johnson said banks that had closed branches in the past decade and handed their distribution business to mortgage brokers were now finding those brokers an “unpleasant distraction.”
Johnson said: “There has been a drawing away from brokers with the ANZ, Bank of Queensland, Bendigo Bank, Suncorp, St George Bank, Bank West and General Electric all opening branches with the aim to recapture that distribution business they used to dominate.”
The forecast has come amid Australian national press reports that banks are too cavalier in their approach to home lending, in some cases failing to check customer data or complete independent valuations.
Financial services watchdog the Australian Prudential Regulation Authority (APRA) has warned the Senate’s economics references committee that banks are relying increasingly on mortgage brokers to do their legwork and are not always verifying the information.
APRA said: “We have found slippages in basic lending practices in areas such as verification of customer data and valuation processes. APRA also sees increasing reliance on the information collected by third-parties such as mortgage brokers and mortgage managers without independent verification processes.”
Dean Cutbill, general manager of third-party distribution for National Australia Bank (NAB), said: “The industry is somewhat behind the UK in terms of service and regulation is expected but is still a few years down the line.
“Regulation will aid confidence in the broker market as, unlike in the UK, the majority of people go to banks directly for their lending needs. Brokers are still an important factor and won’t be pushed out of the market.”
