Australian Loan Company (ALCo) has warned mortgage brokers to be wary of what it sees as a fear campaign by major aggregators looking to sign up new members.
ALCo, a joint venture of Professional Investment Services (PIS) and MTS Finance, said making the leap to a major aggregator would mean a step backwards, because the relationships between large aggregators and financial advisers are not as strong as those with some of the smaller players.
"While major aggregators are talking of building relationships with financial advisers and accountants, we have been working with these groups for the past five years through our relationship with PIS," ALCo general manager Lesley Wood said.
Aggregators purchase mortgages from financial institutions and securitize them into mortgage-backed securities in order to sell them at a premium.
But the recent slump in mortgage sales, combined with signs that households are struggling with repayments, have made financial institutions more critical of who they use as aggregators.
Wood said major aggregators are making use of the uncertainty in the market and highlights Australian Finance Group (AFG) as particularly aggressive towards the smaller aggregators.
However, AFG said their campaign wasn't aimed at any competitor in particular.
"The message is a bit hard-hitting, but we don't want to see people in a situation where they become an unsecured creditor. Unfortunately, a lot of brokers don't understand that is a possibility if an aggregator goes under," AFG general manager of sales and operations Mark Hewitt said.
But he does admit the campaign could be seen as controversial.
"There is a certain shock to it," he said. "When you pick up a broker magazine, there is a stack of generic ads, so you need to add something in there that makes impact and grab people's attention."
