Add CategoryThe Commonwealth Bank of Australia (CBA) is cutting ties with mortgage brokers who’ve failed to sign up customers over the last 12 months.
In a letter dated 20 February, CBA told “inactive” mortgage brokers that their accreditation with the lender had expired, effective in 14 days, as they had “not been active with Commonwealth Bank for some time.”
“This means you will no longer be able to submit home loan applications to the Commonwealth Bank,” the letter said.
CBA clarified that the move was part of a monitoring program to ensure that brokers complied with their accreditation requirements and that they remained active as CBA brokers.
However, the Sydney-based bank’s latest crackdown has drawn some sharp criticisms from prudential bodies who said the cull raised ethical questions about the bank’s relationship with brokers.
“Our regulator needs to look very closely at these sort of things,” said Peter White, executive director of the Finance Brokers Association of Australia. “The best interest of the borrower is the only thing that counts and they are restricting that.”
CBA in turn has defended these changes, saying they weren’t pressuring mortgage brokers to write more loans with the bank.
“We trust that brokers will work for their customers and choose the right loan for them each time,” a spokesperson told The Sydney Morning Herald.
Kelly O’Dwyer, the federal minster for revenue and financial services, recently ordered the Australian Securities and Investments Commission (ASIC) to investigate the risks surrounding mortgage broker remuneration as part of the government’s response to the Financial System Inquiry.
The report is expected to be handed to O’Dwyer in the coming weeks.
ASIC’s broader investigation into broker commissions and remuneration structures covers payments made by banks to brokers, accountants, real estate agents, and lawyers, and involves the regulator “shadow shopping” and reviewing brokers’ files.
Some brokers who’ve been affected by CBA’s clampdown haven’t taken it too well.
Mark Harris, a Queensland-based broker who received CBA’s letter, accused the bank of incentivising brokers to sign up more customers to home loans against their best interests.
“What CBA …is saying [is], if you’re not using us enough, you can't use us at all,” he said. “That is a huge issue. Basically they’re saying we don’t care if this loan is the most appropriate for the client, we just want you to use it.”
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