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On the heels of a raft of redundancies at Bank of Queensland Limited (BOQ) and after informing brokers that it will “pause” new home loan acquisitions via the broker channel from 31 August, the bank once again looks set to depart the third-party channel.
As the brokers start to digest the news, the first reactions to the bank’s announcement are starting to emerge.
Speaking to Broker Daily, managing partner of FirstPoint Mortgage Brokers, Troy Phillips, said he was “not surprised.”
“They’ve bought ME Bank, and ME Bank has a big brand in the broker space. I don’t think there’s any point in replicating it,” Phillips said.
“BOQ’s strengths were probably in business banking in any case, and it’s probably got a strong retail footprint in Queensland. And BOQ has bought a lot of brands … they’ve got Virgin Money [too].
“Running brands is really hard, and banks don’t particularly run more than one brand really well. So economically, it’s probably a bottom-line focus. It’s probably a smart move, I don’t see the reason they need to be there.”
Echoing Phillips’ sentiments, head of broker at Finni Mortgages, Eva Loisance, said the announcement from BOQ was “sudden”; however, it made sense “after their recent job cuts and their broader digital strategy”.
“We saw Virgin Money doing the same last year,” Loisance said.
“They will definitely lose clients and revenue, but it will ultimately increase profits and reduce costs.”
Loisance, however, was unimpressed with the way the bank had communicated its decision to the market, telling Broker Daily it “wasn’t as you would expect”.
She said that there was “no warning” from the bank to finalise applications with clients looking to go with BOQ.
“This has created a bit of animosity between BOQ and brokers,” she said.
BOQ has struggled to gain traction with brokers since re-entering the market in 2012 after the bank first severed brokers in 2004 when then CEO David Liddy, announced that the bank would withdraw from the mortgage broker market.
At the time Liddy said that the “strategic decision” to withdraw from the mortgage broker market would “improve profitability for the Bank in 2005 and beyond”.
BOQ reversed the decision eight years later in an effort to combat the $91 million loss it recorded in the six months to March 2012.
Broker Daily approached BOQ to set the record straight for brokers, giving some clarity around the pause and when the bank plans to resume third-party lending.
The initial announcement gave brokers no visibility on the bank’s plans and had little substance to assure brokers that BOQ remained committed to third-party distribution.
Yesterday (27 August), a statement from BOQ’s general manager, broker and strategic partnerships Johnny Lockwood has done nothing to shore up the bank’s position in the third-party channel.
The bank refused to provide Broker Daily any guarantee that the bank remains committed to the broker channel or provide any details of a planned resumption of its third-party operations.
Lockwood did however double down on BOQ’s subsidiary – ME Bank – as the preferred channel for broker distribution.
He told Broker Daily: “Our ME Brand … will remain active in the broker market,” while saying that the bank is “dedicated to maintaining the brand’s quick turnaround times and are exploring ways to incorporate lending compositions previously offered by the BOQ brand.”
Lockwood also confirmed that it’s “BOQ’s policy to not proactively engage existing broker-originated customers with home loan offers via another channel.”
Despite the lack of confirmation on this supposed pause, Loisance remained optimistic that the shift is temporary: “I am hoping for a pause, I don’t see how cutting off the broker channel completely can be a good long-term strategy knowing over 70 per cent of people use a broker?
“Just like CBA and Unloan, [a] digital offering is only ever good for very simple transactions.
“In the short term, it will affect brokers and clients with reduced choices (even though ME Bank is available).
“In the mid to long-term I see a better experience for the clients when they return their offer to the broker channel and ultimately be a signal for other lenders to reconsider their broker channel strategies.
“In the mid to long-term I see a better experience for the clients when they return their offer to the broker channel and ultimately be a signal for other lenders to reconsider their broker channel strategies.”
Phillips, however, believes that while BOQ may have left the door open for a return, it will be a challenge to break back into broking for a third time.
“Broker distribution is expensive to replicate … you don’t want to be mediocre at three things when you’re a listed company,” Phillips said.
“I think it’s probably an exit at the moment, but you never know, as boards and CEOs change in three years-time, they could come back in.”
Phillips said that a departure from BOQ would have little impact on brokers.
“There’s so many lenders out there like Resimac, Pepper Money, there’s small lenders that are a lot more nimble that they’ve [BOQ] got to compete with, so I don’t think there’s going to be anyone who’s going to be too upset by it,” Phillips said.
[RELATED: BOQ dumps over 12k brokers]
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