The Australian Competition and Consumer Commisssion (ACCC) chair Rod Sims says, “Combining AFG and Connective would create the largest mortgage aggregator in Australia by a significant margin, accounting for almost 40 per cent of all mortgage brokers operating in Australia”.
The Australian-listed AFG (ASX:AFG) and Connective are mortgage aggregators that act as intermediaries between lenders and their affiliated brokers, and the ACCC has raised preliminary competition concerns about the proposed acquisition.
The ACCC says that more than half of all home loans written each year are initiated through the broker channel, and brokers play an important role for consumers when seeking a home loan and for lenders in reaching those consumers.
“AFG and Connective operate in an already concentrated market, and not many other mortgage aggregators offer a similar level or type of service. Additionally, potential entrants or small players may be deterred from expanding by various barriers, including compliance costs,” Sims said.
“The ACCC is concerned there will be limited similar alternatives for brokers to switch to. This may negatively impact the services offered to brokers.”
The ACCC has published a statement of issues and is seeking further information about the supply of mortgage aggregation and distribution services, and the supply of home loans in Australia.
Sims said a final decision on the proposed acquisitions will be announced on 7 May.