By Jill Fraser
Are big banks abusing their market power?
On Monday night the ABC’s 7.30 Report put this question to amongst others, the Australian Institute of Professional Brokers’ (AIPB) Maria Rigoni, Yellow Brick Road’s Mark Bouris and Brand Management’s Andrew Inwood.
Prompted by Treasurer Wayne Swan’s announcement that the Government’s guarantee scheme would end on 31 March the 7.30 Report debate examined the consolidation of the banking sector and the control of the Big Four banks.
Inwood noted that the CBA and Westpac are holding between them about 50 per cent market share. He added “we’re facing a system where we have two banks dominating the market to such an extent that they’re now starting to reject deals which aren’t perfect for them”.
Bouris claimed that consolidation is dangerous because with competition disappearing and “the four big banks, can do what they want”.
Rigoni championed the broker. Expressing her long-held view that the independent finance broker is in danger of extinction, she argued, “the cost to the consumer is that credit products will become more expensive”.
7.30 Report business editor, Greg Hoy said, “independent mortgage brokers like Maria Rigoni say big banks have begun to make life increasingly difficult for those who shop around to find the best deal for each borrower”.
He quoted Rigoni’s who, raising the issue of volume-based accreditation, said. “You want to deal with us, deal with it our way. We’re not listening to you, you know. We are big enough to be able to command you to give us so many deals, because we have so much of the market.”
Hoy noted that the Bankers’ Association would not comment on this so the 7.30 Report wrote to each of the big four banks. He said, each denied they’ve been making life harder for brokers, though they say they are lifting standards, which is like waving a red rag at the bulls of broking.
Speaking to Lending Central this morning Rigoni said while she was satisfied with the overall thrust of the segment, she was disappointed that a number of her comments regarding the volume requirement for accreditation were left on the cutting room floor.
“I find it (volume-based accreditation) morally and ethically wrong,” she said.
“Technically I believe it’s against the Trade Practices Act because it’s trying to eliminate a class of efficient competitor and that’s a really serious issue.”
Rigoni said that the AIPB plans to use the mainstream media more in 2010 to get their message across.
“We are the voice of brokers. While we may be small we’re loud,” she chuckles adding that other industry bodies are failing to get out there reminding consumers what a valuable commodity finance brokers are and alerting them to the fact that if lenders don’t engage in fair play they’re likely to lose brokers.