Commonwealth Bank Tightens Grip on Brokers

Submitted by Jim Thesiger on 14 July, 2009 - 05:20

Recently the largest home loan provider of Australia- Commonwealth Bank (CBA) has taken major initiatives to tighten its grip over the brokers who deal with its home loans. According to a home loan broking firm, CBA have recently moved forward with a new rule which makes it mandatory for the brokers to submit a minimum of four home loans in every three months. The brokers who will not be able to write off enough home loans for the bank within the specific time period will no longer hold the right to market the CBA home loans.

The new regulation imposed by the Commonwealth Bank on the broking firms came under heavy criticism as analysts consider this as a harsh step taken by CBA to eliminate its competitors. According to the mortgage brokers, it will create enormous pressure on them to hold their position in the market. At the same time they might lose their credibility to the consumers as many of the home loan seekers might consider the broker’s approach to them for the CBA loans may not be for their best interest but for the protection for the broker’s accreditation.

According to Wayne Ormond, the executive chairman of the Mortgage Brokers Refund Loans (Queensland based), the new regulation imposed by the Commonwealth Bank will push the brokers to go in favour of a particular lender which will be discriminating for other lending institutions. This will clearly destroy the competition in the home loan business, he added.

However, the CBA authority denied the allegation claiming that the company’s recent initiative to tighten its grip on the brokers is only to ensure better service for the customers regarding the bank loans. According to a CBA spokesman, the biggest home lender of the country is determined to make sure that the brokers who are writing the CBA home loans have a clear idea about their products so that the customers won’t have to go through any confusion or difficulties while they approach for the loan. The CBA authority also mentioned that according to the new regulation, the brokers will have to submit at least four home loans in a time period of six months among which three home loans are required to be settled within that time frame.