The Commonwealth Bank of Australia (CBA) has sent out a note giving certain brokers two weeks’ notice for the revocation of their accreditation.
The note was sent out to a segment of accredited brokers which CBA had identified as being “inactive” with the bank for quite some time, a bank spokesperson told Australian Broker. This was part of an ongoing review of CBA products and services.
“To ensure we uphold the highest level of professional standards, and continue to meet the needs and expectations of our customers, those mortgage brokers who have been inactive will no longer be accredited with us,” they said.
Brokers were deemed inactive if they had not written a CBA home loan in the past year or if they had only written a single mortgage. Once identified, brokers are notified that their CBA accreditation will be resigned following the bank’s agreement with the broker’s head group.
The letter provided recipients with 14 days’ notice, starting from the date the letter was sent, in which the bank would revoke the broker’s authority to act.
“This means you will no longer be able to submit home loan applications to the Commonwealth Bank. Please be advised that effective immediately, we will not accept any new home loan applications from you,” the note said.
By freezing loan applications, this stops new loans from being written by brokers about to lose their accreditation which could cause issues for the customer.
Brokers who want to appeal this decision can contact their relationship manager or head group representative.
The note brings into question how independent brokers are from the banks, Mark Harris, director and owner of THE Home Loan Broker, told Australian Broker.
“What does this say? If I don’t believe that CBA is the best fit for my client, are they essentially trying to force me into making them a choice?”
“This is a very big heavy stick to say, ‘Well, you’ll use us anyhow’. I really wonder how interested ASIC would be in this. It sends a very bad message about the industry by taking our entire independence away.”
The note also shows “absolute disrespect” to brokers and potential clients, Harris said. While he understands that CBA has every right to make a decision like this under their business, he would not be encouraging the six brokers under him to use the bank.
“The main reason for this is what if a broker was talking to someone today and decided to do an application with Commonwealth Bank tomorrow and then tomorrow night before they got to lodge that application, the bank cancelled their accreditation?”
“I think it’s appalling. They’re not giving any notice. The note states that you can’t lodge any more loans as of now and you’ve got two weeks to settle anything that’s in the system.”
The decision was “kind of odd” given that brokers use different lenders at different frequencies, Harris said.
“The email was obviously alluding to their belief that if you aren’t actively giving them business that the customers aren’t going to get best practice customer service.”
“I find that very hard to believe. No other lender believes that because no other lender does this sort of thing.”
Over the past two years, Harris acknowledged that he had only used CBA once when he sent through a $900,000 loan last October. The application “flew through with no problems,” he said.