We’ve Seen This Before — Major Banks Are Back to Undermining Brokers

It feels like déjà vu.

In recent months, we’ve seen the banks dust off an old playbook — one that many of us hoped had been shelved for good.

Once again, they’re trying to chip away at the mortgage and finance broking industry, despite the overwhelming success brokers have delivered for Australian consumers over the last two decades.

This time it’s subtle, but it’s happening.

Banks are undercutting brokers with selective pricing, quietly giving their retail branches and mobile lenders delegated sign-off authority while paying their mobile lenders salary packages that don’t break even. The regulators are asleep at the wheel as banks give delegated credit authorities to these mobile lenders, without adequate controls and capital being applied.

On the surface, it looks like normal competition. It’s an old-fashioned power play.

And for those of us who have been around long enough — we’ve seen this all before.

The Real Agenda

Let’s be honest. Banks aren’t doing this because it’s good for borrowers.

They’re doing it to protect the last piece of market share they still hold — and they’re doing it because brokers have become too effective.

Brokers now write more than 75% of all home loans in Australia. Clients trust them, and rightfully so. Brokers provide choice, personalised service, and competitive outcomes.

The banks know they can’t compete on service, so instead, they look for ways to make the playing field uneven.

It’s happening right now!

We Know How This Ends

History tells us this short-termism rarely works.

Every time banks attempt to claw back control through aggressive pricing, they eventually reverse course when the Banking Analysts start to see reductions in mortgage margins and question the profitability of the current pricing strategy to win business. 

But the risk is, in the meantime, is to smaller broker businesses, especially newer entrants, who feel the squeeze.

This is why it’s so important that as an industry, we stay alert, we stay unified, and we speak up when we see these tactics emerge.

The Role of Non-Banks Has Never Been More Important

Another consequence of these old tricks is that it further highlights the vital role non-bank lenders play — and will continue to play — in the future of mortgage and finance broking.

Non-banks have stepped up consistently over the past decade, bringing innovation, competition, and client-first thinking to the market.

As banks revert to internal protectionism, non-banks will become even more critical in maintaining a healthy, competitive lending environment.

But they can’t do it alone.

It’s time for policymakers and regulators to recognise the value they provide, with greater support required for non-banks through mechanisms like expanded access to the Australian Office of Financial Management (AOFM) funding.

If we are serious about ensuring choice, competition, and a healthy credit market for Australian borrowers — non-banks must have a fair and sustainable operating environment.

A Call to Government, and the Industry

Right now, as an industry, we should be calling on the Federal Government to back non-bank lenders more visibly — through AOFM funding support, balanced regulation, and recognition of the value they bring to real competition in the mortgage industry. And let’s be honest, the whole digital bank was a joke, none of the participants were ever going to be viable businesses with the hurdles APRA applied for new entrants.

If the banks continue down this well-worn path, we need strong, competitive alternatives more than ever.

The broker channel is resilient — we’ve weathered this before, and I have no doubt we will again.

But let’s not stand by quietly.