CBA’s Unloan referral program raises eyebrows after Hayne criticism

Commonwealth Bank is raising eyebrows with the prominent social media promotion of its new commission-based referral program for its online-only home loan, Unloan.

Commonwealth Bank is raising eyebrows with the prominent social media promotion of its new commission-based referral program for its online-only home loan, Unloan.

Referral programs were heavily criticised at the Hayne inquiry, which revealed that the banks’ so-called introducer programs at the time lacked transparency, had the potential to misrepresent financial situations – leading to unsuitable loans – and lacked licencing and oversight.

But this week, Pete Masters, a strategic partnership manager for Unloan, posted a message on LinkedIn “for all accountants, conveyancers, financial planners, lawyers and/or real estate agents to join up” to the CBA subsidiary’s program.

CBA recently finished building the referral capability for Unloan and is now ready to start a “pilot” program, the post says. It was shared several times by various Unloan staff.

“There is no cost to partners. Sign up and, if approved, receive a unique link which you can provide to your clients. Customers apply through our streamlined application … and you get a commission if their Unloan home loan successfully settles,” the post says.

The nation’s latest lender is under pressure to recover from market share losses last year after ANZ – and to a lesser extent Westpac – led a competitive fight for home loan customers.

The lender lost over half a percentage point share of the home loan market in 2023, to finish the year with 25.25 per cent in ­December.

In recent months, the bank has been fighting back by lowering prices, particularly through its own proprietary digital, mobile and branch network.

National Australia Bank in 2019 scrapped its mortgage referral program and was fined $15m because it breached credit laws. ANZ was also fined $10m last year for noncompliance in 2017 and 2018.

Referral programs have kept a low profile since then, even if many lenders still offer them, including Westpac, ANZ and CBA.

The lenders are now much more careful to comply with laws governing them, including limiting introducers to referring potential borrowers to lenders and ensuring they are not involved in the credit application or assessment process.

But market sources including brokers and rivals were nonetheless surprised at CBA’s bold move.

They noted Unloan, which CBA launched in May 2022, had been offering some of the lowest rates to refinance basic home loans, without features like offset accounts. However, they said, approval rates for digital-only loans tend to be much lower than those done through brokers.

For that reason, CBA was probably casting a wider net to capture more potential borrowers for Unloan, and gather more intelligence about clients that could potentially then be referred to other CBA home loans.

Mr Masters also said in the social media post that the program was “fully transparent”. “Your commission is disclosed to your client and as with all great referral programs, it’s up to them to make their own decisions – you need only provide your referrer link.”