Fraud had Aussie worried about commission

March 15, 2018

The financial services royal commission is focusing on CBA's relationship with mortgage brokers.

Changes by the Commonwealth Bank may push mortgage brokers into using Australia's biggest bank when it is not the best option for a consumer, a royal commission has heard.

The financial services royal commission is examining CBA's accreditation of, and relationships with, mortgage brokers.

CBA has revoked the accreditation of numerous mortgage brokers previously approved to submit home loan applications to the bank.

The Home Loan Broker director Mark Harris said he was disappointed and "a little bit shocked" when dropped by CBA with 14 days notice in February last year.

He still has accreditation with 23 lenders including Westpac and National Australia Bank.

Mr Harris said to cancel accreditation without notice represented poor customer service and could put a broker in a difficult position, in terms of putting a client into the best loan for them.

"If I believe over the last couple of years I haven't had a client that is the best fit for the Commonwealth Bank, well it doesn't really matter to the Commonwealth Bank, they require a minimum performance standard," he told the inquiry.

"The concern is that that will push brokers into using the Commonwealth Bank where they should not have done."

CBA told Mr Harris his accreditation was cancelled because he had not been active with the bank for some time.

Mr Harris only submits half a dozen loans a year to all lenders, but works alongside five other brokers.

He wrote no loans for CBA in 2015 or 2016.

A senior CBA executive will give evidence to the royal commission on Thursday before the inquiry shifts its focus to the bank's wholly-owned subsidiary Aussie Home Loans, after four of its former mortgage brokers engaged in fraud in submitting home loan applications.

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