Australia’s number one broker calls out the differential in pricing between broker and branch
There has been much talk recently about the differential between lender turnaround times in the broker and proprietary channels, but, according to Australia’s top broker, Mark Davis, this is only the icing on the cake. He told MPA that the playing field between broker and branch is far from being even – an issue that he has experienced across both product and process.
“There shouldn’t be any channel conflict on rates if we’re going to the same institution, but it can be a regular issue that comes up,” he said. “The rates can be different, and a broker has to go and fight for that rate to match it.”
Some branches offer interest rates to direct customers that are as much as 10 to 20 basis points below what is offered through the broker channel, he added. When contacting the bank to see if they will match the rate, Davis said some will, but others won’t.
When added to the blow-out in assessment turnarounds through the broker channel, in which some banks are taking as long as 18 business days to deliver first assessment, this situation has added an additional layer of stress to brokers who should be able to act in their customers’ best interests.
“It’s clearly two different playing fields,” he said about blown-out SLAs. “We might have a customer who comes to us on a Monday and wants to buy at auction on Saturday. The majority of institutions can’t fulfil that transaction by the Friday so we have no option but to tell the customer we can’t continue any further because we won’t meet their required timeframes.
“If the customer does some research and we’re honest with the customer about what they should be doing we basically have to send them back to the branch for their urgent requirements to be met and work through the proprietary channel.”
In addition to this, the application process through the broker channel is very lengthy, he said.
“Very few institutions are really working on minimising the red tape and making it a much more seamless process like that of a branch network,” he said. “I understand there are reasons why they are quicker than us but there are many process changes they could be making to make it easier for our channel to be able to delight the customer.”
Davis said these factors create an uneven playing field between the branches and the broker network – an imbalance which ultimately affects the consumer and their ability to choose the most appropriate financer for their needs.
“The playing field needs to be stabilised so that all clients can have access to what they need and use who they want, not to be forced down a certain path because of the system and policy issues within the bank’s system,” he said.
Davis said it was important to be honest and transparent with clients around the ETAs and SLAs of different lenders – even though sometimes this could be to the detriment of the broker, to ensure brokers’ reputations are protected over the long term.
“This can sometimes actually discourage a client to go with us which can affect us - and which is not what the industry needs due to the client not having the true choice that they deserve,” he said.