CBA gets green light on Aussie
The Australian Competition and Consumer Competition on Thursday said it would not challenge CBA's plan to increase its stake in Aussie to 80 per cent, with the option to buy the whole company by 2018.
In the 1990s, Aussie promoted itself as a mortgage broker that was fiercely independent of the big four lenders.
Now, however, ACCC chairman Rod Sims said the commission had assumed CBA would increase the number of "white-label" Aussie-branded loan products sold through Aussie's network of 750 brokers. While he said this could decrease competition, it did not meet the ACCC's threshold of a "substantial" lessening.
As brokers depended on offering customers a wide range of products, he said Aussie would still need to offer customers products aside from Commonwealth Bank loans.
There were also many other channels for lenders to reach borrowers, and Aussie only had a market share of about 6 per cent.
"Aussie's not going to cut its own throat by not selling other products, but it would be naive to think the Commonwealth does not have influence," Mr Sims said.
"We accept that this is a lessening of competition. The judgment we have to provide is: is it a substantial lessening of competition and we would say clearly not a substantial lessening."
CBA now writes one in every four home loans in the country and consumer group Choice and some smaller lenders had voiced concerns about the deal.
Aussie's founder, John Symond, has argued the purchase will allow the business to grow and be a bigger competitive force.
A bank spokesman said it was pleased with the decision and would lift its investment in the broker.
Frequently Asked Questions about this Article…
The Australian Competition and Consumer Commission (ACCC) decided not to challenge Commonwealth Bank's plan to increase its stake in Aussie Home Loans to 80%, concluding the deal did not cause a "substantial" lessening of competition.
Commonwealth Bank is increasing its stake in Aussie to 80% and has the option to buy the entire company by 2018, according to the article.
The ACCC acknowledged the deal is a lessening of competition but judged it not to be a substantial lessening. Regulators noted CBA’s influence could grow, but brokers would still need to offer products from other lenders.
The ACCC assumed CBA would increase the number of "white-label" Aussie-branded loan products—CBA-originated loans sold under the Aussie brand—through Aussie’s network of brokers. That matters because selling more white-label loans could influence which lenders’ products brokers push to borrowers.
Aussie has a network of about 750 brokers and held roughly a 6% market share, according to the article.
The article says Commonwealth Bank now writes one in every four home loans in the country, indicating around a 25% share of home loan originations.
Consumer group Choice and some smaller lenders voiced concerns about the deal. Aussie's founder John Symond argued the purchase would allow the business to grow and become a bigger competitive force.
A bank spokesman said Commonwealth Bank was pleased with the ACCC decision and would lift its investment in the broker business.
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