Broking industry divided on CBA's Aussie buy
Senior figures in the mortgage broking industry hold divided views regarding the Commonwealth Bank's move to increase its holdings in Aussie Home Loans and how this will impact on competition.Commonwealth Bank announced on Tuesday that it would increase its holdings in Aussie from 33 per cent to 80 per cent, with a view to eventual full ownership.Brett McKeon, chief executive of the Australian Finance Group, said the CBA "will use Aussie to write a lot more CBA product", despite Aussie's claim that it will continue as an independent broker.McKeon also claimed that National Australia Bank, though its Advantedge business, was "pushing broker flows though the NAB product."CBA's move was "just a continuation of the trend of diminished competition in this sector and in the banking sector", he said. "Aussie was more than able to compete."AFG is the single largest player in the broking sector.McKeon said the CBA's move on Aussie may be good for AFG, however. Many second-tier banks do not have the same easy access to customers that major banks do, he said.The chief executive of the Mortgage and Finance Association of Australia, Phil Naylor, said concerns were raised in 2009 when NAB bought the core of its Advantedge operation - the aggregators PLAN, FAST and Choice. But these concerns proved to be groundless, he said."NAB has allowed those businesses to operate as proper brokerages," he told Banking Day.He said the NAB and CBA investments were a vote of confidence in the industry and would help its development.The chief executive of Mortgage Choice, Michael Russell, said CBA's announcement was no surprise, given that the bank was always expected to increase its ownership of Aussie. CBA bought a 17 per cent stake in Mortgage Choice when it acquired Count Financial in 2011.Russell said: "It sends a very positive message when the country's biggest home lender is investing in the broking industry. Aussie has a strong brand and CBA will be doing everything it can to sharpen that brand."He said he was not concerned about the impact on competition. "If, as a consequence of this deal, CBA gives Aussie more competitive products, we would see that as part of the competitive environment and we would respond."What we have seen since CBA first invested in Aussie is that its dealings with other brokers have remained consistent. I'm confident that won't change."