Refund Release re CBA Threat PAGE 1 OF 1 JULY 14 2009
ACCC REJECTS COMPLAINT AGAINST CBA
BY LEADING MORTGAGE BROKER.
CBA ACCUSED OF ABUSE OF MARKET POWER BY REDUCING HOME LOAN
OPTIONS AND THREATENING JOBS
The Australian Competition and Consumer Commission (ACCC) has advised that it has
investigated a formal complaint by Wayne Ormond, founder and executive chairman of
innovative mortgage broker Refund Home Loans (Refund), against the Commonwealth Bank of
Australia (CBA) alleging abuse by the bank of its market power under the Trade Practices
legislation.
In response the ACCC advised that the act had not been breached and that “it is
unlikely the CBA possesses a substantial degree of power in he market”.
CBA, in a letter to mortgage brokers last week, repeated and escalated a demand first
made in January this year on brokers to terminate their accreditation to write new home loans
for failure to place sufficient loan volumes with the CBA.
Mr Ormond claims CBA’s decree will have two significant and seriously retrograde
effects in that it threatens the freedom of choice of every Australian homebuyer whose options
for a home loan will be severely reduced and that it also creates a conflict for and pressure on
Australia’s 14,000 mortgage brokers who find themselves torn between meeting CBA’s volume
criteria and appropriately servicing the needs of their customers.
“It removes the confidence that consumers have that mortgage brokers provide them
with the most suitable deal from a panel of lenders. Brokers will be forced into ensuring that
they offer a specified number of their clients CBA loans in order to remain accredited,” Mr
Ormond said.
He said the attack on brokers’ integrity and independence forces a bias of a particular
lender regardless of the customer’s needs, the inevitable result of which will be to destroy
competition previously provided by brokers who have serviced the needs of smaller lenders
including banks, building societies, credit unions and international banks which has allowed
these lenders to provide an alternative to the Big 4 banks.
“CBA’s action gives every appearance of a brazen attempt to exercise its market
dominance by reducing market competition and I am surprised and disappointed that the
ACCC disagreed with this proposition
“As we claimed in our complaint to the ACCC, CBA’s action appeared to be a blatant
abuse of market power with the potential to be copied by others of the Big 4 banks, which
would only strengthen the dominance they now hold in the marketplace. Recent takeovers by
and mergers with major banks – of Wizard, Bankwest and Aussie Home Loans by CBA and
Rams by Westpac – have already significantly reduced competition in the home loan market as
confirmed by the recent announcement that CBA and Westpac have a combined share of 70%
of home loan funding.
“Some banks give every appearance of wanting to keep the market to themselves and
to remove the freedom of choice that home buyers have enjoyed from the independence of
brokers who provide an alternative option and competition in the market.
“We do not intend to allow CBA to succeed in this matter and are adamant that the best
interests of homebuyers and independent mortgage brokers must be protected by our
continued action,” said Mr Ormond
___________________________________________________________________________
Issued: July 14t
h
2009 by Sawyer Public Relations On behalf of:
Refund Home Loans
Further information: Wayne Ormond (07) 3872 3070 / 0413 860 944
Or:
Peter Sawyer
(07) 3262 3192 / 0417 626 605
MEDIA RELEASE
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