Mortgage Professional Australia 19.10

MPAMAGAZINE.COM.AU ISSUE 19.10

BROKERS ON NON-BANKS Another year at the top for Pepper Money

SPECIALIST LENDING Helping customers turned away by the big four

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FIRST HOME BUYERS How brokers can assist the growing numbers

CHRIS THOMAS Supporting commercial brokers at NAB

23/09/2019 4:04:32 PM

The Broker Academy.

PRESENTED BY WESTPAC GROUP.

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Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.

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OCTOBER 2019

CONNECT WITH US

CONTENTS

Got a story or suggestion, or just want to find out some more information? twitter.com/MPA_Australia facebook.com/Mortgage ProfessionalAU

UPFRONT 02 Editorial

Time to celebrate a year of hard work

04 Statistics

16

30 FEATURES

SPECIALIST LENDING

Six lenders discuss the specialist space and how they are working with borrowers and brokers

12

08 News analysis

Can neobanks really take on the big four?

10 Opinion

The inconvenient truth about diversifying

FEATURES 46 SMSF lending

Another way brokers can help their business-owner customers

Take a look at what you had to say about the non-bank lenders, and find out who came out on top in which category

NAB’s general manager, commercial broker, talks about his journey through the industry and reflects on the past 18 months

Broker views on the best interests duty

An aggregator stands up for brokers

BROKERS ON NON-BANKS

CHRIS THOMAS

06 Head to head

44 Broker advocacy

SPECIAL REPORT

BIG INTERVIEW

Borrowers' home loan challenges

38

FEATURES

FIRST HOME BUYERS

How brokers are perfectly placed to help this growing segment of the market

48 Keeping the dream alive

How one brokerage is filling a gap in the housing market

50 Independent and proud

The benefits of being privately owned

54 Leadership

Strengthen relationships with your team

58 Time management

How to avoid mental exhaustion

PEOPLE 60 Brokerage insight

Kanebridge battles the “property coma”

62 Career path

42 FEATURES

REVERSE MORTGAGES

Heartland Seniors Finance on an alternative way to fund retirement

Valiant CEO Alex Molloy is on a mission

64 Other life

Meet the broker penning children’s books

MPAMAGAZINE.COM.AU NOW ONLINE: Our daily newsletter. Keep on top of property market trends, business strategy, and what industry leaders have to say.

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24/09/2019 10:29:46 AM

UPFRONT

EDITOR’S LETTER www.mpamagazine.com.au OCTOBER 2019

Time to celebrate

I

t seems crazy to me that I am writing the 10th magazine of the year; but here we are, in October. The days and nights are getting warmer, my smile is getting wider, and I am already telling myself this is the year I will do all my Christmas shopping before the office closes for the holidays.

The excitement here at Key Media towers is also ramping up for the upcoming Australian Mortgage Awards. I am particularly looking forward to this year’s event to celebrate all the tremendous hard work the industry has put in over the past 12 months.

At the awards last year there was apprehension; while it was still a fantastic night, the conversation floated around the difficult year, the royal commission’s interim report released only a few weeks before, and what might come out in the final recommendations.

This year, we can rest easier and we have a lot to celebrate. There are still some questions being asked and concerns being raised, thanks to the NCCP draft legislation and ASIC’s report released at the end of August, but the industry deserves to take a step back.

In a recent webinar run by Connective, one broker sent in the question on

The excitement here at Key Media towers is ramping up for the upcoming Australian Mortgage Awards everybody’s lips: “When will it end?” It feels like the mortgage broking industry has been held under a microscope for a long time.

Director of Connective Mark Haron pointed out that, with mortgage brokers holding such a high market share, the industry will be under surveillance.

But the worst – we hope – is out the way, and Haron said that although the surveillance will always continue, once the remuneration review is over in 2022 there should be less scrutiny.

Turning to this month’s magazine, we have brought you the results of 2019’s Brokers on Non-Banks survey. After a year of more changes and growing business for the non-banks, it has been interesting to see some of the reactions and feedback.

I hope you enjoy the magazine!

Rebecca Pike, editor, MPA

EDITORIAL

SALES & MARKETING

Editor Rebecca Pike

National Sales Manager Claire Tan

Journalists Mariam Gabaji, Tom Goodwin, Abel Riototar Contributors Chris Slack, John Eades, Carson Tate Production Editor Roslyn Meredith

ART & PRODUCTION Designers Cess Rodriguez, Noel Avendano, Martin Cosme Traffic Coordinator Freya Demegilio

Global Head of Communications Lisa Narroway

CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Justin Kennedy Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil

EDITORIAL ENQUIRIES

tel: +612 8437 4784 rebecca.pike@keymedia.com

SUBSCRIPTION ENQUIRIES

tel: +61 2 8311 5831 • fax: +61 2 8437 4753 subscriptions@keymedia.com.au

ADVERTISING ENQUIRIES claire.tan@keymedia.com

Key Media Regional head office Level 10, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 • fax: +61 2 9439 4599 www.keymedia.com Offices in Sydney, Auckland, Denver, London, Toronto, Manila, Singapore, Seoul

Mortgage Professional Australia is part of an international family of B2B publications and websites for the mortgage industry CANADIAN MORTGAGE PROFESSIONAL neil.sharma@kmimedia.ca T +1 416 644 8740

Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as the magazine can accept no responsibility for loss.

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DON’T JUST TAKE OUR WORD FOR IT...

I’ve been part of the mortgage broking industry for 20+ years I have been affiliated with a number of different aggregators, all with different software platforms, however I have found that Specialist Finance Group offers a superior technology platform with valuable integrations that benefit my broking business immensely.

Throughout 2018 my goal was to grow The Loans Suite and expand the impact of my business beyond Penrith, NSW. We have clients far and wide and so we needed people and systems that could accommodate significant geographical spread whilst still offering an unparalleled service to all of our clients. SFGconnect ensures my business has the capacity to continue growing through its team functionality, advanced administrative and compliance checks, and automatic workflow processes. Additionally, the communication elements and added integrations (such as Bankstatements, MyConnect and MailChimp) within the system allow me the opportunity to provide every client of The Loans Suite with an exceptional experience throughout every loan application, and long after!

SPECIALIST FINANCE GROUP OFFERS A SUPERIOR TECHNOLOGY PLATFORM WITH VALUABLE INTEGRATIONS THAT BENEFIT MY BROKING BUSINESS IMMENSELY. Running a small business takes an enormous amount of time and effort so, I value the all of the support options offered by Specialist Finance Group. However, the advanced training provided by SFG’s dedicated technology support resource and access to the Live Chat team directly through my SFGconnect account results in my business experiencing very minimal downtime and the security of support that means I can focus my energy on other aspects of my business.

As a mentor to brokers in my team and in other businesses, SFGconnect provides me one access point to all of the loan applications that require my review. This feature saves me an enormous amount of time and affords me the ability to offer a superior mentoring service required in the modern age of broking. With direct access to a mentee’s full loan application I can easily assist with providing valuable feedback and brainstorm with the broker to find the best possible outcome for the client.

SFGconnect continues to evolve and improve, just as my business is expanding. I have experienced enormous benefit in my business when utilising comprehensive technological solutions that save my team time, improve internal processes and offer superior services to my clients including, faster loan approval times and superior post-settlement support. I will continue to encourage my team to improve their proficiency in software platforms such as SFGconnect and integrated solutions including Bankstatements, RP Data, etc.

Karlie Scharfenberg Managing Director

1300 303 382 specialistfinancegroup.com.au Australian Credit Licence No. 387025

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UPFRONT

STATISTICS

A way through the maze

In order to navigate through the land of home loan confusion, borrowers need the help of brokers A LANDMARK study commissioned by Aussie Home Loans has revealed that most Australians lack confidence in both the housing market and their chances of securing a home loan.

Lonergan Research surveyed over 2,000 Australians and found that 70% described the home loan process negatively, finding it to be stressful, a waiting game, overwhelming, difficult, confusing, rigid and painstaking.

“Today’s property market has all the right conditions. It is steady, we have got low

2 in 5

interest rates, and national average auction clearance rates are above 75%; however, Aussies could be missing out on this opportunity because they are overwhelmed or confused by the home loan process,” Aussie chairman John Symond said.

Based on the research, 87% of Australians believe it’s vital to have someone who is across all the current regulations, procedures and processes, and four out of five seasoned buyers, such as investors, believe brokers make acquiring a home loan easier.

29%

Australians describe the home loan process as stressful

40%

of women describe the process as confusing

22%

of Gen Zers have experienced challenges with the process

of first home buyers find the loan process exciting Source: Aussie: Cutting Through the Home Loan Crap report

OVERWHELMING PAPERWORK

Almost 29% of Australians have put off plans to buy a home because they find the application process daunting. Two thirds feel overwhelmed by the paperwork required.

If you have never applied for a home loan, do you agree/disagree with the following?

Strongly agree

Agree

Disagree

Strongly disagree

N/A

LOW SELF-CONFIDENCE

Forty-seven per cent of Australians are confident in their ability to get a home loan, while only 34% are confident in the housing market.

To what extent do you agree or disagree with the following statements?

Strongly agree

Agree

Neither agree nor disagree

Disagree

Strongly disagree

Total agree

The amount of paperwork required when buying a property is overwhelming

18%

I know I should review my home loan but the process seems too hard

9%

I’ve put off home buying because the home loan application process is daunting

7%

48%

29%

22%

17%

26%

13% 3%

6%

14%

39%

32%

17%

66%

4

Total agree

I am confident in my ability to get a home loan

38%

I am confident in the Australian housing market

29%

I wpuld only talk to a mortgage broker if I were ever confused about home loans

Source: Aussie: Cutting Through the Home Loan Crap report

N/A

15%

7%

9%

31%

28%

24%

22%

8% 7%

35%

30%

17%

15%

6%

16%

47%

7% 8%

34%

16%

33%

Source: Aussie: Cutting Through the Home Loan Crap report

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MORTGAGE BROKERS TO THE RESCUE Although difficulty and confusion rule the home loan process due to differences in products and policies among lenders and the widespread belief that buying a home in Australia is harder than ever, 68% of Australians believe that seeking the help of a broker makes getting a home loan easier.

For 86% of Aussies, being able to talk to a home loan expert and work with someone who has direct local knowledge are important to a good home loan experience.

Strongly agree

It’s confusing that banks all have different home loan products and policies

Access to home loan experts Working with someone who has direct local knowledge Someone who can just take control and manage it for me

Strongly disagree

22%

57%

18%

3%

79%

50%

21%

3%

76%

5%

68%

27% 12%

57%

Extremely important

Being able to talk to someone early on

Disagree

TOTAL AGREE

Buying a home in Australia is harder than ever A mortgage broker makes getting a home loan easier

Agree

Important

27%

Somewhat important

Not important

Don’t know/not sure

TOTAL IMPORTANT

25%

43%

19%

3% 10%

86%

27%

40%

19%

4% 10%

86%

21%

4% 11%

86%

23% 18%

42% 33%

27%

10%

78%

12%

Source: Aussie: Cutting Through the Home Loan Crap report

STILL A DISTANT DREAM

The great Australian dream of homeownership still seems a long way off for many, with one in five Aussies less confident about buying a home than five years ago.

Compared to five years ago, how confident are you about the following?

A lot more confident

A little more confident

About the same

A little less confident

A lot less confident Total more confident

Buying a home

Getting a home loan

Navigating a home loan process

14%

12%

12%

19%

19%

19%

45%

45%

50%

11%

11%

11%

13%

9% 10%

Total less confident

33% 22% 31% 24% 31% 19%

Source: Aussie: Cutting through the Home Loan Crap report

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LOW SATISFACTION Over half of Australians who have applied for a home loan had low satisfaction or were dissatisfied with having someone who could help simplify the experience.

How would you rate your recent home loan experience?

0–4 Dissatisfied

5–7 Low satisfaction

8–9 Very satisfied

10 Extremely satisfied

Knowing someone is across all the current regulations

17%

36%

32%

15%

Having someone who can simplify the complexity

17%

36%

33%

14%

Consistent help throughout the process

17%

37%

32%

13%

Working with someone who has direct local knowledge

18%

38%

31%

13%

Being able to talk to someone early on

18%

39%

30%

13%

Access to home loan experts

19%

37%

32%

13%

Someone who can just take control and manage it for me

21%

40%

29%

11%

Source: Aussie: Cutting Through the Home Loan Crap report

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UPFRONT

HEAD TO HEAD

What’s your view on the best interests draft legislation?

While well supported, it may impose more compliance obligations on the broking channel

Mark Stevenson

Kapil Nepal

Managing director Bell Partners Finance

Personal mortgage adviser Smartline Parramatta There is no question that we, as mortgage brokers, need to work in the best interest of our clients. However, it is very hard to quantify the best interest duty as its scope is limitless.

As brokers, we deal with over 20 lenders and each lender has it own specific policies.

Pretty much all clients prefer banks with cheap interest rates, but banks with cheaper and promotional interest rates usually have worse turnaround times. This means we need to justify to clients why we couldn’t go to a specific lender.

In my view, best interest duty comes with another layer of compliance, meaning more paperwork and more time spent on deals.

Besides that, lending panels could become smaller to safeguard brokers. This might lead to less choice for customers.

I strongly support anything that will lead to greater consumer trust and confidence in the excellent work mortgage brokers currently do for their clients.

With around 60% of the home loan market already trusting the broker channel to handle their applications, enshrining the best interest duty in legislation should see this figure grow even higher as brokers gain greater trust from the other 40% of home loan applicants.

What is critical for the legislators – and those charged with upholding the law – is to get it right in ensuring the new legislation fully addresses any potential unintended adverse consequences for consumers, and that sensible application of the new laws is applied.

Kiran Thapa

CEO Capkon Investments I welcome the proposed introduction of the best interest duty. While the definition of the term sounds vague, the draft legislation anticipates certain behaviour from brokers, which includes comparison of loan products before recommendation; putting consumer benefit first if a conflict of interest is perceived; no credit advice without critical information; giving refinance options during annual reviews; and discouraging white label products if everything else is the same.

Most of these duties are anticipated by current responsible lending obligations and are being carried out by brokers anyway.

However, with the introduction of legislation and a civil penalty attached to it, the industry can be expected to be more responsible.

KEEP DOING WHAT YOU’RE DOING In a webinar for brokers, Connective director Mark Haron said that while the NCCP draft legislation around the best interests duty provided some good tips, its final message to the broking community was to “keep doing exactly what you’re doing”. “This is the point we’re trying to make: brokers we believe will already be operating in a customer’s best interest. You don’t have a sustainable business if you don’t put your customer’s interests ahead of your own anyway,” he said. According to Haron, ‘best interest’ does not mean the same thing as ‘best price’ or ‘best product’. The term means providing customers with “what is in their significant interest” and, more crucially, putting their interest ahead of your own.

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UPFRONT

NEWS ANALYSIS

Arrival of the neobanks Digital banks are entering the scene with the aim of disrupting traditional banking, but will they ever be able to take market share from the big four?

A SMARTER way to help brokers with their borrower customers is coming as the Australian neobanking market heats up; but the major banks “won’t go quietly into the night”, says one research analyst.

Last month, digital bank Xinja was granted its banking licence and rival digital bank 86 400 went live after receiving its own licence back in July. Both are aiming to disrupt the banking sector and improve consumers’ understanding of their finances.

Speaking to MPA, 86 400’s home loan lead, Melissa Christy, says staying on top of finances has become “too complex”, which has left people feeling stressed, anxious and frustrated. While the way consumers pay for things has changed dramatically over the last few decades – from physical cash to bank cards to phones and now to watches and even rings – banking has stayed the same.

According to the latest NPS results from Roy Morgan, the smaller banks are leading the way in terms of customer satisfaction.

Westpac, ANZ and NAB all have scores in the negative, although satisfaction has been steadily growing since the release of the royal commission final report in February.

Changing the future of home loans Currently, 86 400 has gone live with two accounts: pay, and save. These accounts will provide a more holistic view of a customer’s spending behaviour and through that will be

8

able to help them with their future spending.

They will provide a useful tool for brokers in helping borrowers track their expenditure.

“We’ve designed and built a bank which works a little differently. We enable our customers to look forward, as well as backwards, and help understand what’s actually going on with their money, surfacing the most relevant information about upcoming bills, subscription payments and direct debits so they feel in control,” Christy says.

“In the coming months, we’ll launch our competitive home loan offering, which takes the same smart approach as our pay

and easier to get a decision from 86 400.

“Brokers currently waste too much time trawling through paperwork. We have the smart technology to do that for them, letting them prioritise the stuff that really matters: more time with their clients.”

Xinja is also hoping to change the way consumers interact with their finances, with

“We will eliminate key pain points for brokers by simplifying the income and expense verification process” Melissa Christy, 86 400 and save accounts. This will be available through brokers.”

Explaining more about 86 400’s home loan product, Christy says that along with the rest of the bank it will be digitally led.

“We’re making it as easy as possible to fulfil a loan and reduce the amount of paperwork for both brokers and their clients,” she says.

“We will eliminate key pain points for brokers by simplifying the income and expense verification process and improving the borrowing experience, making it quicker

its main purpose to help people make more out of their money and get out of debt faster.

Founder and CEO Eric Wilson says if Xinja sticks to that premise, it will succeed.

“We’ll use technology and data to prompt money-mindfulness, nudging people toward better everyday behaviour that can improve their finances,” he adds.

The technology includes hyperpersonalised, data-driven messaging, products and services to help the bank’s customers achieve their financial goals.

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fine with that. Our key performance indicators at Xinja bank include ensuring our customers do better. That’s an important difference between us and our competitors.”

Competition for the big four

WHO ARE THE NEOBANKS? NEOBANK

FULL BANKING LICENCE?

CURRENT PRODUCTS

FEATURES

FUTURE PRODUCTS

86 400

Granted 18 July 2019

Transaction account, Savings account

Max savings rate of 2.50% if you deposit $1k per month

Home loans

Xinja

Granted 9 September 2019

Early offering of transaction account

Judo

Granted 24 April 2019

Term deposits

2.00% for terms of two years and over

Up

Using Bendigo and Adelaide Bank licence

Transaction account, savings account

Max savings rate of 2.50% if you make five transactions

Volt

Granted 22 January 2019

None

Max savings rate of 2.50% if you make five transactions

Deposit accounts and loans

Deposit accounts and loans Source: RateCity.com.au

“If the neobanks start gaining traction, the big four are likely to respond in spades” Sally Tindall, RateCity.com.au US-based banking futurist and adviser to the Xinja board Brett King recently told a banking technology seminar that banks that were using new technology to help their customers would retain those customers.

“We know that if we do the right thing by our customers, they will stick with us and recommend us to their friends,” Wilson said.

“I know we will make less money from our customers than traditional banks. We are

In an age when consumers are looking for “disruptors”, they want an easier way to do things. But can the neobanks compete with the big four banks?

RateCity.com.au research director Sally Tindall says the big banks have deep pockets and do not like losing market share.

“The big banks are already investing heavily in retail banking technology. If the neobanks start gaining traction, the big four are likely to respond in spades to make sure they appeal to tech-savvy Australians,” she says.

While consumers are on the lookout for disruption and technology, they remain extremely loyal to their banks. Tindall says more than three quarters of savings are with the big four and their subsidiaries.

“Neobanks are unlikely to rock this boat any time soon,” she says.

To compete, neobanks like 86 400, Xinja and Up will have to be competitive on both technology and pricing. But Tindall says this is proving to be difficult.

“So far, 86 400 and Up are both offering a maximum savings rate of 2.50%, which is the equal-highest rate on our database, while Judo Bank is offering term deposits of up to 2.00%, which is one of the most competitive rates on the market,” she explains.

“When it comes to transaction accounts, the neobanks will find it near impossible to compete on cost. Up and 86 400 transaction accounts include some international fees and don’t waive all domestic ATM fees, when a growing list of banks do.”

But Tindall says there is “no question” that neobanks will drive innovation in the sector. Neobanks don’t have the cumbersome banking systems that are known to slow the bigger banks down, and they don’t have branches costing them money, she says.

“In order to be successful, neobanks will have to patiently chip away at the market.

But the big banks won’t go quietly into the night.”

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23/09/2019 4:09:05 PM

UPFRONT

OPINION

GOT AN OPINION THAT COUNTS? Email rebecca.pike@keymedia.com

The inconvenient truth about diversifying With the focus on encouraging diversification, and the need for more commercial brokers, there are some key next steps brokers should take, writes Chris Slack FINANCE BROKERS are facing new challenges and headwinds, none of which are ‘royal’ and rhyme with ‘pain’ but can still be seen as collateral damage.

Firstly, some lenders are questioning their ownership of broking groups, while other broking groups are looking to merge and vertically integrate with their own funds.

Secondly, some lenders are starting to see their commercial lending being influenced by more rigorous requirements on the consumer side of what they do; others are jumping on board and hoping they’ll be seen as part of the diversification ride to renewed prosperity.

For years, aggregators have been preaching that diversification is the new black; now it’s mission critical for many to be able to survive and thrive.

Consumers and SMEs still need lending, arguably more than ever.

Banks have been more selective about their business credit and are more comfortable with partnering or staying behind the scenes to offer higher-risk (and higher interest rate) lending.

So the need for more brokers across commercial lending is obvious. Which leads to the how. ‘How’ is a concern that threatens to question the value proposition of every lender, aggregator and association across the country.

The truth is that there are some serious challenges for all parties in upskilling.

• Who is responsible?

• Do we need higher qualifications?

• Can lenders adequately handle the enquiry levels from those new to industry or at least new to commercial lending?

• To what extent will someone be taught?

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• How does this work with the mentoring and training that is already delivered?

• And the big one: who is paying for it?

From any lender’s point of view, there is a genuine need to ensure a minimal level of ability, which has in the past been more about who you know and how long you’ve been around. But the messaging is all about how easy it can be to diversify and increase revenue.

The number one reason a broker doesn’t diversify is that they don’t feel confident and don’t want to jeopardise their relationship with clients while still learning. That won’t change with any piece of paper.

The need for brokers to be commercially educated is tempered by the fact that those presenting are those prepared to pay to speak, regardless of the benefits of their product or

It must be acknowledged that the level of focus, training and development opportunities in the commercial space across all lenders, aggregators and associations is phenomenal compared to what it once was. But from here on, it’s up to brokers to take the next steps: • Do not limit your education or experience to what is free, to one aggregator, one piece of paper or one association. Invest in yourself.

• Partner on a few transactions with someone more experienced. Whether that person writes the transaction for you or not, ensure you are across all elements to put yourself in a better position next time.

• Engage with your BDMs! They are a great source of product knowledge and market intelligence. In particular, in trade and debtor finance you’ll be amazed at how

For years, aggregators have been preaching that diversification is the new black; now it’s missioncritical for many to be able to survive and thrive lack thereof. This is largely the reason for the growth in unsecured cash flow lenders and private lenders among rank-and-file brokers, while their costs and terms are being normalised across the broker community.

The quickest way to an extension of the additional requirements for consumer lending into commercial lending is to get thousands of brokers with limited product knowledge to promote products that have the potential to cripple a small business owner who signs on the dotted line without looking at the fine print.

much work they put in on your behalf.

• A lot of the training touches on the offerings of single lenders, but it’s important to look at the product range (development finance, private lending, trade and debtor finance, equipment finance, etc.) in more detail across multiple lenders.

Chris Slack is director of The Finance Consultancy.

He was previously a national account manager for Platform and managed Count Financial Group’s asset finance business.

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Check out more of our helpful stuff at bankwest.com.au/brokers

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23/09/2019 4:09:45 PM

PEOPLE

BIG INTERVIEW

CHRIS THOMAS: ROLLING UP THE SLEEVES Starting out at NAB as an eager 18-year-old, Chris Thomas, general manager, commercial broker, has now worked at the bank for 32 years

SPENDING THE SUMMER cleaning out containers of wheat is few people’s idea of a good time, but for NAB’s general manager, commercial broker, it was his first experience of the working world. Having quickly realised that it was not what he wanted to do for the rest of his life, Chris Thomas ended up at the local NAB branch in Melbourne.

Remembering his days as a new-tobanking 18-year-old, when he started out cleaning the branch and opening the doors for customers, he also recalls that the

Culturally it was a wonderful place to start in the bank,” Thomas says.

He spent about five years at the branch, working his way up through different roles, and then in the first half of the 1990s NAB expanded into business banking, and so started the rest of his career journey.

Describing business banking as “an art”, Thomas says the leaders at that time were the reason NAB is the largest business bank today. He learnt a lot about understanding the customer’s story and facing challenges alongside customers.

“It’s really exciting to see that the value of commercial brokers is being well acknowledged by customers in the market” branch manager would join him on the floor to serve customers when it got busy.

“You’d have me who started five minutes ago, standing side by side with a veteran who would see no problem in rolling the sleeves up and serving customers.

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“In their DNA and in their culture, they were just so business-customer orientated.

They were always looking for ways to find solutions, and because they had that background of retail customer service, it was always about the customer,” he says.

Thomas worked his way up through leadership roles at the business bank, moving between metropolitan and regional areas as he did so, and then in 2012 he was asked to lead NAB into the third party commercial broking market.

A vibrant broker channel After seven years working with brokers in the commercial space, Thomas says it is “always exciting”. He adds that his role as a leader at NAB is energised by the vibrancy of brokers forging relationships with customers and impacting their customers’ lives.

Thomas says some of the greatest lessons he has learned in business are from the customers and brokers he has dealt with.

“There’s a richness of ideas and creativity, and that really excites me. So that’s why I’ve kept doing it for 32 years.”

The commercial industry is also continuing to grow and develop, presenting more oppor­ tunities for brokers. Thomas says he has been seeing growth in infrastructure and the sectors that support that, and in turn the commercial broker space is also growing.

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PROFILE Name: Chris Thomas Company: NAB Title: General manager, commercial broker Years in the industry: 32 Career highlight: “Setting up the third party commercial channel for NAB has been enormously rewarding. I have been so proud of our team who have been building relationships and connecting our terrific brokers with all the very best of NAB” Career lowlight: “Regretfully, the royal commission. As a career banker it has been a painful reflection of instances where our industry has not treated customers well. Sadly this has overshadowed all the good things bankers and brokers do every day”

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24/09/2019 10:30:30 AM

PEOPLE

BIG INTERVIEW

“It’s really exciting to see that the value of commercial brokers is being well acknowledged by customers in the market. We are excited by that, because our partnership with those brokers is really bringing great opportunity for us to collectively bring great solutions to those customers,” he says.

For those brokers who have not yet explored commercial lending or who are new to the industry, Thomas says it’s important to have a clearly defined strategy. The commercial space is a big one, and brokers need to be clear on what their value proposition is for their chosen target market.

The next piece of advice he gives is that brokers should not just be “transactional”; instead they should endeavour to understand customers and their strategies, and take the time to walk in their shoes.

NAB INNOVATION Last year, NAB introduced new digital platforms to help brokers with lending to small businesses. NAB’s QuickBiz for Broker enables brokers to apply digitally on behalf of their small business clients for unsecured business finance of up to $100,000.

“NAB’s always been willing to innovate,” says Chris Thomas. “It’s always been willing to find new ways. I think about when we moved into the commercial broker channel; that was quite an innovative move.

“Equally, bringing things like digitalisation to our business bank offering, like QuickBiz, shows that, as the fintechs have moved to provide digital financing solutions for small businesses, NAB can see the opportunity to support that and do that as well. So there’s an innovative element to NAB in its business bank culture that’s so exciting.”

Reflections and expectations Looking back, Thomas says the last 18 months have been a really important time. While he knows how much the industry loves focusing on numbers, he says for him the customer experience is the only compass that matters.

NAB has spent the last year and a half conducting NPS surveys of customers to

“What it says to me as a banker is that our partnership in the eyes of the customer is an extremely compelling one. We need to continue to do more to make that customer’s experience even better,” Thomas says. “If we’re doing that, then we know we’re helping them meet their goals and objectives and

“Our partnership [with brokers] in the eyes of the customer is an extremely compelling one. We need to continue to do more to make that customer’s experience even better” gauge their level of satisfaction with their experiences with the bank as well as brokers.

On top of that it has also surveyed how brokers feel about NAB and looked at the figures together, which form, in Thomas’s words, “a triangle of satisfaction”.

Customers who were introduced to NAB through a broker rated the bank at a +27 Net Promoter Score and their broker at +60, while brokers rated NAB at +42.

14

helping them accomplish what they’re trying to achieve.

“We’re super excited about partnering with brokers to continue to deliver that sort of value proposition, because we know that will continue to lead to more referrals.”

Looking ahead to the next year, Thomas is confident that the commercial broker market will continue to grow and see changes as business customers look for trusted advisers,

and aggregators put a greater focus on the commercial segment.

However, on the regulatory side of things there is much to work on, because, as he points out, many commercial brokers are writing home loans as well as equipment finance and business loans for their customers.

The focus of the royal commission, along with the work of the Combined Industry Forum and ASIC and all the changes to the residential mortgage market, may also have an effect on the commercial landscape.

Thomas says it is important for these groups to work together.

“I think lenders and brokers working together for a better and stronger industry is what we all need to commit to,” he says.

“We’ve proven we can do that when we’re working with customers and supporting customers. I think there’s a great opportunity to continue to work really closely on building the best industry we can possibly deliver. It’s all about the customer, and it only matters how the customers have been treated. We need to provide that best customer experience.”

www.mpamagazine.com.au

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23/09/2019 4:03:19 PM

SPECIAL REPORT

BROKERS ON NON-BANKS AGGREGATORS

BROKERS ON NON-BANKS 2019 After another year of tightening credit policies and campaigning for the future of mortgage brokers, non-banks have really stepped up their game and taken back some of the home loan market share. MPA asked brokers what these lenders have done particularly well and where they still need to improve

AS CREDIT POLICIES have shifted, the non-banks have moved in where the larger banks are now unable to service the borrowers they used to. No longer are non-banks the alternative lenders; they are offering the service, turnaround times and products that brokers are choosing to go to first.

According to figures from the MFAA, duiring the period April to September 2018 the share of broker-originated loans grew to 9.6%. This coincided with a drop in the proportion of loans going to the major banks. Looking at the results of MPA’s Brokers on Non-Banks survey, it’s no wonder why. Brokers are reporting that non-banks are offering easier access to credit assessors, faster turnaround times and more suitable products for a wider range of borrowers.

As time moves forward and even more

16

lenders step in where the banks are moving back, we may find that one day this survey will have to expand what the industry terms as ‘non-banks’.

When asked which non-banks brokers would like added to their aggregators’ panels, a few listed fintechs, and as these lenders take on more mainstream clients, perhaps this will happen in the future.

The MPA survey asked brokers to rank each bank from 1 (very poor) to 5 (very good) in 10 different categories of service. The non-bank with the highest average rating won the title of Non-Bank of the Year.

In certain categories we asked brokers to tell us a little more, such as their thoughts on turnaround times, products and support.

We also asked them to tell us their favourite non-bank product, and the results are revealed later in this report.

For the third year in a row we included seven additional awards for the preferred lender in different borrowing categories: specialist lending, first home buyers, property investors, commercial, alt-doc, SMSF and foreign non-residents.

This survey is an important resource not just for MPA and its readers to discover how the non-banks are doing, but for the non-banks themselves. Brokers are their main distribution source, and the nonbanks are therefore keen to know how they are performing and how they can continue to improve, particularly as they are growing and expanding in the current environment.

Read on to see the full results and which lender fared best in each category. Thanks to everyone who took the time to take part in the survey; it would not be possible to run these reports without you.

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OUR TYPICAL RESPONDENT $60m+ $40,000,001–$60m

12.24%

$0–$10m

13.29%

9.09% Aged between 46 and 55

Based in NSW (39%), Vic (25%) or Qld (18%)

Has been in the industry for 15 years or more

Writes in a year

$20,000,001–$40m

29.02%

36.36% $10,000,001–$20m

WHAT DO BROKERS WANT FROM NON-BANKS? 1 = not important; 5 = very important Turnaround times

4.74

Interest rates

4.65

Product diversification opportunities

4.50

Product range

4.19

Communications, training & development

4.17

Brand recognition

4.15

Online platform & services

3.94

Credit policy

3.86

Commission structure

3.84

BDM support

3.50

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SPECIAL REPORT

BROKERS ON NON-BANKS

WHY USE A NON-BANK? The number of broker-originated loans going to non-banks is growing as the banks’ credit policies become too tight for comfort

TOP 5 REASONS YOU WOULD PICK A NON-BANK LENDER OVER A BANK Banks have tightened their credit policies

26%

Non-banks take a wider view of the customer’s credit score

19%

Regulatory changes have prevented clients from going to the banks

15%

More personalised services

10%

Clients lack standard documentation (payslips)

8%

THE COMPLAINT has been the same all year: the banks are pulling back from some borrower segments and making it harder to get deals through.

Since the royal commission in which the banks were called out for bad practices, lending to households has continued to fall.

According to the ABS data for June 2019, the value of lending for dwellings, excluding refinancing, dropped by 18% year-on-year in trend terms.

With concerns raised about banks relying too heavily on the Household Expenditure Measure benchmark, the banks are now running a much closer eye over borrowers’ living expenses. In a report by UBS last year, the group said that if banks were to do this it could reduce mortgage borrowing limits by 35%, which is possibly a reason behind the drop in lending values.

Note: Total does not equal 100 as respondents had multiple options to choose from

BROKERS’ LOAN FLOWS TO NON-BANKS: ACTUAL VS FORECAST Percentage of loans put through non-banks in the last 12 months

37.89%

Actual Forecast

18

22.81%

0–20

21–40

20.35%

26.67%

41–60

21.75%

23.86%

61–80

10.18%

16.14%

81–100

9.82%

10.53%

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Banks were also criticised for their treatment of business borrowers, and brokers have seen a decline in the number of banks offering their business customers finance.

The changes to banks’ credit policies seen in the last year are reflected in this year’s survey, with 26% of brokers saying they have turned to non-bank lenders as a result.

“Non-banks see the deal for what it is rather than what appears on the client’s credit file,” said a broker from Victoria.

It was therefore no surprise to see that the number of brokers sending more loans to nonbanks in the past year had risen to 76%, up from 69% last year.

The proportion of brokers who put less than 40% of loans through to non-banks dropped by roughly 10% over the last 12 months, as more brokers turned to these lenders. One in five brokers sent more than 60% of loans to nonbanks in the past year.

As one broker from NSW said in this year’s survey, “The banks tightened their appetites this year, forcing more business to the nonbank market. The non-banks have expanded quickly to cope with the new volume.”

It’s good news for the non-banks that brokers also seem to be keen to send more business their way in the year ahead. Around 50% of brokers expect to put more than 40% of loans through to non-banks in the future.

HAVE YOU SENT MORE LOANS TO NON-BANKS IN THE LAST 12 MONTHS THAN IN THE PREVIOUS YEAR?

HIGHLIGHTS: BENEFITS OF USING A NON-BANK BDM support

Pepper Money

La Trobe Financial

Liberty

Pepper Money

Liberty

Commission structure

Bluestone

Credit policy

23.51% NO 76.49% YES

Pepper Money

Liberty

Firstmac

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24/09/2019 10:28:19 AM

SPECIAL REPORT

BROKERS ON NON-BANKS

PRODUCT AND PRICING Brokers’ biggest barrier to sending loans to non-banks is their higher rates and fees, while brand awareness has become less of a concern for customers over the last year

ARE CLIENTS TYPICALLY OPEN TO CONSIDERING NON-BANK PRODUCTS?

26.67% NO

YES NO

73.33% YES

ALTHOUGH BROKERS have submitted more loans to non-bank lenders over the past 12 months, their customers are not as convinced as they were a year ago. Twentysix per cent of brokers said their clients were typically not open to considering non-bank products, a considerable increase from just 10% last year.

According to the survey, the biggest barrier to putting more business through the non-banks was their higher fees and rates, which 43% of brokers said was a problem.

WHAT IS THE MAIN BARRIER TO PUTTING MORE BUSINESS THROUGH THE NON-BANK LENDERS? Higher rates/fees

43%

Lack of brand awareness

25%

Customers want a branch network

20

10%

They are not on my aggregator’s panel

5%

Poor turnaround times

4%

Research by Canstar shows that the nonbanks’ average variable rate on a $400,000 home loan was 3.37% as of September 2019, whereas the average variable rate on the same loan offered by banks was 4.01%.

The average three-year fixed rate on a nonbank loan was 3.39%, compared to the banks’ 3.46%.

While a lack of brand awareness topped the list of barriers to using non-banks last

“The introduction of Pepper into the commercial space has provided overdue and much-needed competition to the market” NSW broker year at 38%, only 25% said it was an issue this year, which demonstrates either a greater public perception of the role played by non-banks, or that the views of the consumer are changing.

Pepper Money won three gold medals for product-related categories and was voted by 27% of brokers as having the best product. Many of the specific products

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highlighted in the survey fell into the specialist lending category, such as alt-doc loans or near prime products, but with Pepper joining the commercial space earlier this year, the lender was top of mind for many brokers.

One broker from NSW said, “The introduction of Pepper into the commercial space has provided overdue and much-needed competition to the market.”

Pepper Money also took the gold medal

“The biggest barrier to putting more business through the non-banks was their higher fees and rates” Victoria broker for its interest rates, which was an important win considering that higher rates and fees were one of the top barriers for sending loans to non-banks.

Interest rates was also the second-mostimportant feature that brokers considered when choosing a lender, behind turnaround times, for which Pepper Money also claimed the top medal.

Only 5% of brokers said they had problems accessing non-banks because these lenders were not on their aggregators’ panels. Many survey respondents said they were very happy with the number of non-banks they had on their panels.

For those who wanted more choice, Liberty was the most sought-after non-bank.

The proportion of brokers saying that customers wanted a branch network has dropped consistently for the last two years, from 16% in 2017 to 11% in 2018, and now to 10% in 2019.

HIGHLIGHTS: PRODUCTS AND BRANDING Brand recognition

Pepper Money

Better Mortgage Management

La Trobe Financial

Interest rates

Pepper Money

La Trobe Financial

Firstmac

Resimac

Firstmac

Firstmac

Liberty

Product range

Advantedge Product diversification opportunities

Pepper Money

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SPECIAL REPORT

BROKERS ON NON-BANKS

TECHNOLOGY, TURNAROUND AND SERVICE With more work required to get deals through, one of brokers’ top priorities this year is faster turnaround times, and non-banks are keeping up with the demand BROKERS RANKED turnaround times

HOW HAVE TURNAROUND TIMES AND COMMISSION STRUCTURES CHANGED OVER THE PAST YEAR? Commission structures

Turnaround times

75.09%

36.01%

30.07%

24.13%

11.58%

8.77%

5.24%

3.16% 4.55%

1.40% Improved

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Improved significantly

No difference

Worsened

Worsened significantly

as their most important criteria this year with a score of 4.74 out of 5, showing just how crucial this factor has become in the past 12 months as home loan applications and processes are taking longer.

With the non-banks receiving more business from brokers – and having to comply with many of the same regulations as the banks – these lenders are at risk of seeing their turnaround times increase. However, brokers this year have actually reported seeing improved turnaround times, and this is painting a much better picture than in both 2017 and 2018.

Thirty-five per cent of brokers this year said turnaround times had improved or improved significantly, compared to just 24% last year. Only 28% of brokers this year said turnaround times were worse, whereas last year the proportion was 40%.

“Non-banks are keen to grow their market share and are investing in the appropriate areas in order to cater for the increase in business,” said one broker from NSW. Those who did report seeing worse turnaround times said they had experienced this across the board, at banks as well as

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non-banks, thanks to extra checks and increased workloads.

Pepper Money, which took out the gold medal for turnaround times, was specifically praised by brokers for sticking to great times. Last year the lender did not appear in the top three in this category, but as one broker from South Australia said, “There was a time when Pepper would take ages to answer phones; this has now drastically improved for brokers.”

Another broker, from Western Australia,

“Non-banks are keen to grow their markets share and are investing in the appropriate areas” NSW broker described the challenges experienced by banks and non-banks in greater detail, commenting that it was not just the royal commission that had led to an impact on service levels.

“Many of the [non-banks] seem to have held their nerve particularly well, both in terms of lending appetite and credit policy, and whilst service levels have dropped due to difficulties keeping staffing levels in check, with increased demand and additional compliance, they have helped prop up the banking system as far as possible,” they said.

Commission structures have seen less of a change, with 75% of brokers saying there had been no difference in the last year.

Around 14% of brokers said commission structures were worse, which was the same as last year, but the proportion of respondents who said they had improved was up from 6% to 9%.

HIGHLIGHTS: TURNAROUND, TECHNOLOGY, COMMUNICATION Turnaround times

Pepper Money

Firstmac

Bluestone

Communications, training and development

Pepper Money

Better Mortgage Management

Bluestone

La Trobe Financial

Better Mortgage Management

Online platform and services

Pepper Money

HOW COULD NON-BANKS IMPROVE THEIR SERVICE LEVELS?

5.96%

21.05%

21.05%

22.11%

15.44%

14.39%

Better communication

Better technology

Better-trained BDMs/credit assessors

More BDMs/ credit assessors

Simpler income verification process

Other

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24/09/2019 10:28:51 AM

SPECIAL REPORT

BROKERS ON NON-BANKS

WHAT YOU’RE SAYING In light of the royal commission and tightening credit, have the non-banks done enough to support and stand by the broker channel?

YES

NO

“Yes, they have all been actively trying to stand by us

“No, they could have been on the front foot more to

brokers; however, some of them just promise the world but

protect the industry, considering the majority of business

do not deliver.”

comes from the broker channel.”

“The non-bank lenders have done a fantastic job of

“I have not seen any lobbying on TV or radio or online

complying with responsible lending obligations while offering

(and I don't mean advertising) by any of the non-banks.

superior service, products and pricing.”

I have not seen any panel discussions or advice or opinion pieces to consumers, etc., by non-banks. I cannot say

“Non-banks have certainly stepped up in the last

that I have witnessed any non-bank attempt to provide a

12 months. CCR will drive even more away from the big four

dialogue or engage in a conversation outside of the industry.

once it is fully implemented; however, the non-bank lenders

There seems to be a lot of support within the industry,

will need to start thinking about how CCR will change the

for example opinion pieces by non-majors within industry

way they currently do business, because there will come a

publications and speeches in support at industry events but

time when they have to put more focus on the reporting.”

nothing externally.”

“Yes, that's precisely why more brokers should support

“The only defence of brokers was mounted by ourselves.

second-tier lenders and non-bank lenders, because the big

The recommendations of the royal commission were

four have proved they can throw us under the bus!”

designed to reduce broker income. Although the smaller lenders need brokers, they were happy to see our income

“Yes! The non-banks have supported the broker channel

(their overheads) reduced.”

before, during and since the royal commission, and they are always considered in our choice of options for clients because they work with us, they want to get loans approved,

“I am not sure, as most communication on this has come via the media, the MFAA/FBAA and aggregators.”

and they see common sense!”

“In some respects I feel they have made it harder. They “Non-bank lenders have excelled in supporting the

have tightened their serviceability benchmarks and took profit

broker channel. They have remained focused on finding

margin by jacking up rates where they could have chosen to

solutions for clients and providing excellent value for money

support clients better.”

loan options.”

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FINAL RESULTS While last year’s winner has retained its top spot, 2019 saw some big changes in the top 10, including last year’s seventh place medallist taking the silver this year OVERALL RESULTS

BROKERS’ PREFERRED LENDERS We asked brokers to pick a preferred lender for each key category of borrower. The lender with the most mentions per category won.

Specialist lending

First-time home buyers

Pepper Money

Commercial

Alt-doc

SMSF

La Trobe Financial

Pepper Money

La Trobe Financial

Foreign non-residents

Overall score

1st

Pepper Money

3.93

2nd

La Trobe Financial

3.54

3rd

Liberty

3.53

4th

Firstmac

3.51

5th

Better Mortgage Management

3.49

6th

Bluestone

3.43

7th

Resimac

3.34

8th

Advantedge

3.30

9th

Better Choice

3.01

10th

Thinktank

2.98

Property investors

Pepper Money

Advantedge

La Trobe Financial

Non-bank

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SPECIAL REPORT

BROKERS ON NON-BANKS

LA TROBE FINANCIAL MPA: La Trobe Financial has jumped to second place from seventh last year. It was also listed as the preferred lender in three out of seven borrower groups (commercial, SMSF, foreign non-residents).

What is behind the improvement?

2nd

Cory Bannister, senior vice president, chief of lending officer, La Trobe Financial: We’re delighted and honoured to receive such positive feedback. Recognition such as this is indicative of the great work performed by the whole team at La Trobe Financial, who all play a role in ensuring we provide financial solutions to underserved markets, making a tangible difference to people along the way.

Whilst we can’t be sure of why brokers voted for us, we can say we worked incredibly hard on the following three areas and are hopeful they made an impact: 1. Increased broker footprint (+27%). In response to the strong demand from brokers to learn more about niche products, we expanded our Partnerships Team nationally to 30 people, in order to maintain our responsiveness and educational approach for brokers.

2. Delivering a broad product suite. We strive to offer the broadest product set, allowing brokers a one-stop experience for mortgage credit, which means that we are relevant to brokers for scenarios on a daily basis.

3. Providing stable product, price and policy settings in a complex and confusing market. We are often told by brokers that one of our greatest strengths is our stability. We have maintained product availability, a consistent credit policy and, above all else, a boutique personal service proposition that has been scaled with business growth, in a time when others have scaled back or withdrawn from market segments completely.

28

LIBERTY

3rd

MPA: Liberty jumped from seventh place to third place this year.

What has the non-bank been doing to work with brokers?

John Mohnacheff, group sales manager, Liberty: It’s our unrelenting focus on helping brokers and our broker partners build their businesses and help more customers get financial. The one thing we know is brokers value high-touch, personalised support. We have more BDMs than any other non-bank and non-major lender. We work with our brokers from scenario to settlement, and we continually do more sessions to equip and train brokers. Our customers are our brokers and, if you couple this with the relentless pursuit of having satisfied brokers, the situation becomes self-evident. Have we changed anything we have done? The answer is no.

We have just increased our connectivity with our brokers. It’s not about the cheapest rate – it’s got to be a competitive rate. What the customer wants is a quick turnaround and to be satisfied in knowing they have a secure lender behind them that ticks all the boxes and provides them their home loan.

FIRSTMAC

4th

MPA: Firstmac was particularly praised for its turnaround times. How have you worked to ensure brokers and borrowers are not waiting for decisions?

Kim Cannon, managing director, Firstmac: Firstmac has worked hard to build a culture of personal service that is focused on helping brokers get their deals across the line. We are a friendly, close-knit team where everyone works together, and the answer to any question takes moments, not days. We have no bureaucracy to get lost in.

If brokers choose us they can expect: • A common-sense approach – At every stage, we work with brokers to make their deals succeed. Our aim is always to come up with a solution for the client.

• Consistency – We are consistent in all aspects of our service, credit and sales so the broker won’t have a deal fail unexpectedly.

• A real alternative – We give brokers an excellent option for customers who are not keen to borrow from a big bank.

We are careful to maintain a balanced number of office-based BDMs and on-the-road BDMs, which improves turnaround times because someone is always accessible to you. We also have a dedicated Sales Support Team. That means a dedicated person is committed to driving deals, from application to settlement.

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1st

PEPPER’S BACK ON TOP

Going a step ahead of last year, Pepper Money has won eight out of 10 categories. Pepper’s Australia CEO, Mario Rehayem, explains the non-bank’s success MPA: Why do you think brokers were so pleased with Pepper’s service over the last 12 months?

Mario Rehayem: There isn’t a day that goes by that I don’t receive an email, text or call from satisfied brokers on how grateful they are about our grade of service.

That’s because Pepper has invested a significant amount of time and money over the years to ensure its processes are aligned to broker and borrower expectations. This investment ensures a higher grade of service across the entire origination chain. Brokers are not measuring our service purely on our same-day turnaround times for fully assessed applications; service has a much larger remit than that. Brokers measure you on the entire experience, from the quality of your BDMs to the way you treat customers post-settlement.

MPA: You took out the gold medal for turnaround times, after not receiving a medal at all in this category last year. What have you done to improve in this area?

MR: We focused on refining our underwriting processes to maximise

productivity. To do this we engaged with brokers from every state and held multiple focus groups to better understand the areas we needed to improve.

To consistently deliver quick turnaround times, you need to have an efficient decision engine that assists your credit team.

With the introduction of Pepper Product Selector and Pepper Resolve we continue to increase the number of customers we have helped, and have done so in a more efficient manner. More specifically, we’ve increased our application-to-settlement conversion ratios by 14%.

We also have a number of technology enhancements coming out towards the end of the year which will significantly improve our turnaround times and overall grade of service to brokers and borrowers.

a larger cohort of borrowers. But most importantly, we promise to never be complacent. We will continue to challenge the accepted and push every boundary to maximise our overall experience in the most responsible way.

MPA: What are you going to do over the next year to continue to work with brokers?

MR: Brokers and borrowers are at the heart of everything we do.

This is why we will continue to invest heavily in broker education, invest in the Pepper brand to build awareness, and release more products that will cater to

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24/09/2019 10:29:12 AM

FEATURES

SPECIALIST LENDING

A specialist solution for all As banks have tightened credit policies and even prime customers need help from elsewhere, five non-banks look at what the specialist lenders can offer

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AS BANKS have pulled back in certain areas and brokers are finding it increasingly difficult to source finance for their customers, nonbanks have stepped up to the plate and seen an uplift in demand.

Resimac’s general manager third party distribution, Daniel Carde, says he also puts this down to better-educated brokers: “Brokers are better aware than ever before of the ways we can help under our specialist product suite.”

Agreeing that brokers have helped the market share of non-banks grow, Pepper Money’s director, sales and distribution, Aaron Milburn, says, “Alternative finance is growing at a rapid pace as brokers and their clients have really come to embrace and understand the specialist lending category.

“As more borrowers and brokers look outside the traditional banking system, specialist lenders like Pepper are becoming an increasingly crucial part of the modern mortgage marketplace.”

As well as the rise in more borrowers deemed ‘specialist’, the non-banks have seen a growth in prime borrowers who would once have been approved by the bigger banks.

Bluestone has seen its settled volume of near prime loans grow by 269% in FY19.

Clear-credit borrowers now make up more than 84% of its business.

“This is partially due to the continued conservative approach to credit assessment

classified as prime loans by the major banks 12 months ago.

“It is this dynamic that has been misreported in the mainstream media, who have missed the notion that the rise of nonbank market share is fuelled by ‘bank-prime’

“When for whatever reason the banks narrow their lending spectrum as we’ve seen recently, we are ready to assist” Cory Bannister, La Trobe Financial displayed by the mainstream lenders, which is pushing previously vanilla borrowers towards non-banks that were once reserved for borrowers with severe credit impairments,” says Bluestone head of sales Royden D’Vaz. La Trobe Financial’s Cory Bannister, senior vice president, chief of lending officer, says the lender’s entire product suite has seen increased demand following the major banks’ “simplification strategies”, but it is most notable that the majority of loans it is approving today would have been

credit, serving customers that the banks are unable to serve at this time,” says Bannister.

What are you as a lender doing to help these borrowers?

While brokers are more aware of the products non-banks can offer their specialist borrowers, they still have a way to go in embracing this area. Some brokers still have a fear of helping borrowers who might be selfemployed or working casually.

Liberty’s group sales manager, John Mohnacheff, says he is working to encourage

VALUE OF LENDING TO HOUSEHOLDS AND BUSINESSES Value of loan commitments

Value ($m)

Month per cent change

Year per cent change

$66,404

-0.4%

-5.2%

$31,319

0.5%

-11.7%

Lending to households for dwellings, excluding refinancing

$17,221

0.6%

-14.2%

Lending to households for personal finance, excluding refinancing

$4,868

0.3%

-13.1%

$35,085

-1.3%

1.5%

Trend (seasonally adjusted) Total lending Lending to households

Lending to businesses

Source: ABS Lending to Households and Businesses, July 2019

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FEATURES

SPECIALIST LENDING

RISING BROKER LOANS TO NON-BANKS 2.5%

2.4%

2.4%

3.1%

3.3%

1.8%

2.3%

3.0%

3.6%

3.6%

3.5%

3.2%

4.6%

4.9%

4.7%

5.7%

6.9%

7.5%

7.7%

8.0%

5.2%

4.7%

5.2%

8.9%

9.6%

9.2%

9.4%

5.5%

5.5%

5.1%

5.0%

6.3%

6.6%

6.6%

5.7%

7.1%

6.5%

7.4%

7.3%

7.7%

6.4%

6.7%

8.4%

6.1%

5.2%

5.9%

7.5%

7.3%

6.4%

6.7%

6.1%

7.7%

7.0%

7.4%

8.8%

6.7%

13.0%

13.5%

6.9%

6.4%

14.1%

13.1%

11.8%

4.2%

5.0%

7.4%

5.7%

14.8%

14.8%

6.4% 5.9%

13.6%

14.1%

7.2%

6.7%

6.1%

7.3%

7.5%

12.7%

14.2%

6.7% 9.2% 6.3% 11.8%

54.9%

55.9%

55.2%

53.0%

52.1%

50.7%

50.6%

48.3%

45.7%

45.6%

47.2%

45.0%

APR MAY JUN 2016

JUL AUG SEPT 2016

OCT NOV DEC 2016

JAN FEB MAR 2017

APR MAY JUN 2017

JUL AUG SEPT 2017

OCT NOV DEC 2017

JAN FEB MAR 2018

APR MAY JUN 2018

JUL AUG SEPT 2018

OCT NOV DEC 2018

JAN FEB MAR 2019

Credit unions, building societies and mutuals Non-bank lenders Any other type of lender

White label lenders International banks (eg ING Direct, Citi, etc.)

Independent regional banks (Suncorp, Bendigo)

Regional banks owned or aligned to major lenders (ie Bankwest, St. George, etc.)

Major banks (ANZ, CBA, NAB, Westpac) Source: MFAA Intelligence Service Report 8th edition

32

brokers to not be afraid and to engage with their customers so they can understand their situations and find a solution.

“We always understand that lending has never been one size fits all. We live in a world of grey. The more we help and train and promote grey solutions the better it will be for brokers to embrace it and not be afraid of it. We’re really stressing the importance of the broker being there for all customers,” Mohnacheff says.

The kinds of borrowers who need specialist loans could include those who are selfemployed or casual workers, or those who have had credit problems in the past. This is why it is important for brokers to have that conversation with their customer so they know the best option for them.

Resimac’s Carde says it may even be that the nature of the loan requires a specialist lender, for example a larger loan at a higher loan-to-value ratio or when a shorter-term solution is needed for a customer on their path back to prime lending.

“For those borrowers who may have experienced one of life’s speed bumps, we have updated our policy to cater for credit events, rather than counting individual credit bureau listings, and we now accept recently discharged bankrupts on our Resimac Specialist Clear product, the lowest-rate product within our specialist suite,” Carde says.

“This change has resulted in eligible borrowers paying a lower interest rate than they would have previously, making the transition back to prime lending that little bit easier financially.”

At La Trobe Financial, Bannister says it is the lender’s “core purpose” to serve the underserved consumers, and therefore it works hard to fill the growing gaps.

“When for whatever reason the banks narrow their lending spectrum as we’ve seen recently, we are ready to assist,” he says.

“One of our greatest strengths is stability.

We have maintained product availability, a

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SPECIALIST LENDING

consistent credit policy and, above all else, a bespoke personal service proposition that has been scaled with business growth, in a time when others have scaled back or withdrawn from market segments completely.”

How are you ensuring that service and turnaround times are not affected by any changes in lending?

With the increased business going to these non-banks, they are working to meet

“We also significantly expanded our head count over the past 18 months. As a result, even as application volumes increased, we managed to actually decrease our average time to settlement by a full business day between FY18 and FY19.”

Technology is also playing a big part in helping lenders maintain their service levels. Liberty has a platform, Liberty IQ, which allows brokers to log on at any time of the day or night so they can access the loan file and check progress. And Resimac has teamed up with Salesforce to automate

“Brokers are better aware than ever before of the ways we can help under our specialist product suite” Daniel Carde, Resimac the same standards brokers have always expected of them.

As there is more work and increased compliance, it would be no surprise to find that turnaround times were suffering.

However, according to this year’s Brokers on Non-Banks survey, brokers are mostly positive about turnaround times. Pepper Money won the top spot in this category for its consistent and impressive service.

“We forward-plan our credit team’s capacity so that we can always provide brokers and, importantly, their clients, a streamlined service level,” Milburn says.

“This way we ensure that the broker’s brand is maintained in front of their client, and the borrower can enjoy an undisrupted process where they don’t have to anxiously wait for delayed answers and outcomes.”

D’Vaz says Bluestone’s key priority for this financial year was to maintain service levels and turnaround times throughout the significant growth it has seen.

“To achieve this, we continuously seek to improve internal processes and levels of staff training,” he explains.

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its onboarding and internal loan tracking capability.

“In turn, this has allowed us to streamline the overall process from application to settlement. Any changes in lending can be easily be integrated into our processes, and we’ve consistently managed to process specialist applications within one day,” Carde says.

How are you ensuring you remain compliant when it comes to specialist lending?

The increased business puts pressure not only on service levels and turnaround times but also on credit managers – especially at this time – to check applications with a particular focus on compliance.

Mohnacheff says Liberty has always been a conservative underwriter and will never cut corners to speed things up.

“Our job is to get a yes, but never to the detriment of our principles, which is to do the right thing by the customer,” he says.

“It doesn’t mean we’re not courageous, but we’re very conservative in the way we assess

deals. Everything is done in-house; every loan is assessed on its own merits.”

At La Trobe Financial, the level of compliance remains consistent across the lending spectrum. Bannister says it is the same whether the loan application is for prime or for specialist customers.

“The same responsible lending guidelines apply to both credit providers and credit assistance providers, requiring each to make reasonable enquiries as to the borrower’s financial situation, objectives and require­ ments. Having said that, the depth of analysis required may change depending on the individual circumstances of each applicant,” Bannister says.

Rather than relying on automated processes for credit decisions, Pepper individually assesses each loan, and its use of risk-based pricing means that it can be more flexible with its credit policy than other lenders.

“This flexibility does not make us non-compliant. We simply have an appetite and flexibility to cater for a broader range of clients,” Milburn says.

Following the draft NCCP Amendment (Mortgage Brokers) Bill, what does ‘best interests’ mean to you?

Treasury released its reforms for the mortgage broker best interests duty and remuneration at the end of August. When in effect, the legislation will provide an obligation for mortgage brokers to act in the best interests of their customer, but what does the term ‘best interests’ mean?

First and foremost, says Bluestone’s D’Vaz, a thriving broker industry is in the best interest of the consumer, and thus, moving forward, any legislation must be carefully considered to support rather than hinder the market.

In terms of individual transactions, he says it is not just about interest rates.

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“We believe that it’s in the best interest of a borrower to be offered those loans that best suit their needs and objectives given their individual circumstances, which is not always a rate-driven decision,” he says.

“Factors like whether a lender can settle the loan in a given time frame, or accept all available income sources, or allow for flexibility when verifying income, all play an important part, among many others.”

It is up to the broker to have the right conversations with the borrower in order to determine which of those factors might be best for their situation. And when a conflict arises, the needs of the client should always

be put first, says Pepper’s Milburn.

“To me, it means offering your client a loan that is affordable to them, meets their

always suggested, if a broker is properly documenting their client’s circumstances and the reasons for the recommendation

“The need for more diverse solutions than the big banks can provide is nothing new and will always exist” Royden D’Vaz, Bluestone specific goals, and is done in a compliant manner,” he says.

“For most brokers, the legislation should not make too much of a difference to their day-to-day work. As Pepper has

they are making, then they have nothing to fear.”

La Trobe Financial agrees that the cheapest price does not always mean the best product for the customer, and work

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SPECIALIST LENDING

needs to be done on what ‘best’ will mean.

“We believe successful brokers are placing customers’ best interests ahead of their own already and therefore see little or no disruption as a result of this change,” Bannister says.

“The definition and understanding of what constitutes ‘best’ will be integral to the successful adoption of this initiative so as not to associate ‘best’ solely with price, considering that ‘best’ can relate to a multitude of factors. Working with and educating brokers on this point is where we will be focused in the lead-up to July 2020.”

As a member of the Combined Industry Forum, Carde says Resimac is already “ahead of the game”.

“The reality is most brokers already work to this principle, and provided the amendment in its final form does not make the loan application process more complex or onerous for either the consumer or the broker then this can only be seen as a positive thing,” he says.

Industry parties have presented submissions to Treasury ahead of the 4 October deadline as a more defined structure is worked towards.

Mohnacheff says it needs to be clear that a decision is in the best interests of the customer at the time of assessment, because “no one can predict the future”.

“At the time of the assessment, were we doing everything right to make sure we didn’t put that individual into hardship?”

Sometimes it is necessary to have unpleasant conversations, Mohnacheff says, but everything possible needs to be done to stay across the regulatory changes.

“We have standard operating procedures, and we just don’t divert from them because we know if, God forbid, something happens, we can say in front of the judiciary: this is our process, this is how we do it every time and this is how we apply it,” he says.

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What do brokers need to know about dealing with specialist borrowers?

Not all borrowers have a perfectly clean credit or repayment history, and not all borrowers have their financials completed, says Carde, but this doesn’t mean they are not worthy of assistance.

“When talking to a borrower who may not qualify for a traditional prime loan, it is important that the broker keeps an open mind and remains empathetic towards the borrower’s needs,” he says.

“For brokers not familiar with specialist lending, the best place to start would be to

full truth about the customer’s financial objectives and position, complete reasonable­ ness tests on income and expenses, and speak to the lender early on to run scenarios by the team.

“The key is to understand the borrower’s situation in detail and be able to communicate that clearly to us as the lender. The more information we have upfront, the quicker and easier we can provide a solution,” Bannister says.

Mohnacheff adds that it’s important to get rid of the label ‘specialist’ and the mindset that goes with it.

“We have a specialist way we assess the

“We always understand that lending has never been one size fits all. We live in a world of grey” John Mohnacheff, Liberty make some time to sit down with one of our experienced BDMs who can educate them on the various solutions that we offer.”

Milburn adds that it is not just borrowers who have had a credit event who might need a specialist loan. Specialist lenders aim to help borrowers who fall outside of the traditional lenders’ prime parameters – and this is an “ever-expanding cohort”.

“With traditional banks becoming more difficult to deal with, clients are looking for someone who understands them and is willing to take a look at their unique situation,” Milburn says.

“A self-employed borrower may not have a consistent income, but when provided with a workable solution they often become a broker’s biggest advocate. They are much ‘stickier’ clients with more regular finance needs.”

The first thing brokers should do with their specialist borrowers is “listen carefully and have an open mind”, says Bannister.

He adds that they should ask for the

loan, but that borrower is a home loan borrower or a car loan borrower or a loan borrower. It doesn’t matter where they sit on the credit spectrum,” he says.

What role do non-banks play, considering that the lending landscape has changed over the last 18 months?

With the share of loans going to non-banks increasing and more borrowers needing alternative solutions, the non-bank sector looks set to grow.

“The need for more diverse solutions than the big banks can provide is nothing new and will always exist. Non-banks like Bluestone exist to provide solutions for a broader set of borrowers and offer choice to consumers who may otherwise be left with no way forward,” says D’Vaz. The volume of loans has been consistently dropping in parallel with banks’ changing credit policies, but the Australian economy needs the flow of credit to continue.

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“With this in mind, we have a job to do,” says Bannister.

“Non-banks must continue to scale and rise to the challenge, committed to the

never been a better time to be a broker.

“It’s never been a better time to be the champion of the consumer. It’s never been a better time to get out there and help more

“Flexibility does not make us non-compliant.

We simply have an appetite and flexibility to cater for a broader range of clients” Aaron Milburn, Pepper purpose of providing financial solutions to underserved markets – it is a case of ‘your country needs you’.”

Despite the challenges and the changes seen in recent times, Mohnacheff says it has

customers,” he says.

Echoing that sentiment, Milburn points out that the appeal of specialist lenders is far greater than many brokers realise.

“As long as the banks’ appetite to lend

more broadly continues to diminish, the opportunity exists for alternative lenders to fill that gap,” he says.

“Regardless of market conditions, there are always willing buyers, sellers and refinancers in the market.”

Carde agrees, saying the market has become “significantly” more favourable towards non-traditional brands.

“This has led to brokers and borrowers further embracing the non-bank proposition.

Whilst we have been saying this for a long time, non-bank lenders really do provide a genuine alternative to the more well-known brands, and that has never been more true than in recent times,” Carde says.

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FIRST HOME BUYERS

Lighting the way to homeownership As first home buyers continue their steady growth, brokers are well positioned to help them understand the complexities of lending and prepare for all scenarios

THE DIFFICULTY of saving for a deposit, coupled with the complexity of home loans, makes buying your first home a challenge.

Nevertheless, the market is seeing an influx of first home buyers. According to the ABS, loans to first home buyers made up 29.4% of all lending to owner-occupiers, excluding refinancing, in July 2019 – the highest share since 2012.

These first home buyers have a diverse range of financial situations and needs, related to loan-to-value ratios (LVRs), the types of properties they’re looking to purchase, and whether or not they will require a guarantor.

Lenders also have different appetites, and brokers can be “a beacon of light” in helping the customer navigate the home loan process, says Bankwest’s general manager of third party banking, Ian Rakhit.

Along with much of the rest of the industry, Bankwest has seen a growth in first home buyer activity this year.

“I believe there are a few factors contributing to this, such as better housing affordability in some regions, declining interest rates, and first home buyer schemes like the First Home Super Saver Scheme,” Rakhit says.

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“These changes, coupled with the recent regulatory guidance on serviceability rates, may have made first home ownership more affordable.”

Due to the growth of this segment, Bankwest is prioritising investment in its

a person is encountering new financial terms and making significant financial decisions and a long-term commitment. As a result, first home buyers generally require more attention from their broker or lender to ensure they’re making the best financial

“We want to see that dream [of buying a home] stay alive. There’s discussion out there that the dream is becoming increasingly unaffordable” Huy Truong, ALI Group digital and broker offering and working to support brokers in making every customer’s first home buying experience as seamless as possible.

Rakhit says buying your first house is an important step, and for most people it’s the biggest financial commitment they will make.

“Buying a new home and getting a home loan can be quite stressful and emotional, particularly if you’ve not experienced it before,” he says. “This is often the first time

commitment that suits them.”

Even without the growth of the first home buyer market, brokers cannot ignore how important it is to help these inexperienced borrowers, he says.

Rakhit points to the emerging generation of millennials who may be looking to take the first step into homeownership and says it is vital that the industry helps them secure their financial future.

To assist brokers with their first home

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buyer customers and ensure those borrowers understand the financial commitment they are making, Bankwest has launched a number of tools. These include a suite of content covering everything from saving for a deposit and finding the right property to getting a home loan and making an offer.

The bank is also going beyond this and changing some of its loan requirements for borrowers.

“We know how important homeownership is to customers. We also know it can be a lengthy process to demonstrate genuine savings for customers who are borrowing above 90% LVR,” Rakhit says.

“From September, where the base LVR is above 90% we will accept a customer’s rental

history for the past six months instead of genuine savings.”

Understanding how stressful the application process can be, particularly for first home buyers, Bankwest also launched its Bankwest Application Tracker in 2016.

“The app tracker is a simple way for retail customers and brokers to be regularly and consistently updated about their home loan application. We let brokers know when their customer’s home loan is approved before [telling] the customer, so that they can tell their customer the great news,” Rakhit says.

Assuming that first home buyers are saving a huge portion of their income for a deposit, they are more vulnerable to life’s risks than most. ALI Group provides loan and mortgage

protection to Australian home and property buyers. CEO Huy Truong notes that many first home buyers spend the first five to 10 years of their mortgage living pay cheque to pay cheque to service the loan.

This is where they are different to those who have bought property before.

“I would argue their need is far more acute than someone who’s 45–50, who may have been servicing their mortgage for 10 years and have enough equity in their mortgage they can rely upon, or something in their offset account,” he says.

ALI Group has therefore geared its business towards first home buyers, who traditionally do not seek out the help of a financial adviser to guide them towards the

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FEATURES

FIRST HOME BUYERS

right insurance. The alternative would be that they take out insurance online, but life insurance is not something people wake up in the morning and decide to do some research on, says Truong.

According to the ASIC report Looking for a Mortgage: Consumer Experiences and Expectations in Getting a Home Loan, first home buyers are more likely to use a mortgage broker when applying for a loan.

This puts the mortgage broker in the best position to help.

“First home buyers need someone to be putting a mirror in front of their face, saying you’re about to embark on a major life event, and it’s really the broker that is well placed to do that,” Truong says.

Like Bankwest and the wider industry, ALI Group has also noticed the growth in the number of first home buyers. He says around 60% of the company’s business is in this segment of the market, whereas it was sitting at around 45% five years ago.

Truong puts this down to both the increase in buyers and the growing number of mortgage brokers who are recognising their moral obligations.

“If they have a 29-year-old sitting in front of them and they’re about to take all their savings, put it into a deposit, and all of their discretionary income now is going to service their loan, it’d be negligent for the broker not to highlight this risk,” he says.

With the broker’s guidance, these borrowers could be saved from the potentially very difficult situation of not being able to make their loan repayments.

Recognising that brokers need first home buyers to grow their businesses, ALI Group has put together first home buyer packages providing brokers with content to run seminars for this buyer group.

This is part of the group’s overall offering of communication and training to demystify

40

GROWTH IN FIRST HOME BUYER SEGMENT 2019 First home buyers have increased their share of new owner-occupier lending to its highest proportion since January 2012

26.6%

26.9%

27.2%

27.6%

28.4%

29.3%

29.4%

January 2019

February 2019

March 2019

April 2019

May 2019

June 2019

July 2019 Source: Australian Bureau of Statistics

“First home buyers generally require more attention from their broker or lender to ensure they’re making the best financial commitment” Ian Rakhit, Bankwest insurance for brokers and first home buyers and enable brokers to feel like they are in a continual partnership.

The importance of the first home buyer market extends beyond the broker channel and ALI Group’s success, however. Truong says the mortgage market needs first home buyers because it cannot survive simply on refinancing; furthermore, owning a home is a one of the great Australian dreams.

“Maybe it’s no longer that quarter-acre block, but it’s having something that’s yours.

There’s a lot of emotional benefit that comes from owning your own home,” he says.

“We want to see that dream stay alive.

There’s discussion out there that the dream is becoming increasingly unaffordable, so we want to see financial innovation, government policy and brokers really helping first home buyers come into the market.”

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FEATURES

REVERSE MORTGAGES

Securing a more comfortable retirement Given the country’s ageing population, more Australians are looking for alternative ways to fund their retirement. MPA magazine talks to Jeff Murray of Heartland Seniors Finance to discover more

THERE’S NO two ways about it – Australia has an ageing population. Given the changing norms around the retirement age, and the legislation affecting pensions, many Australians are understandably wondering how they will be able to effectively finance their retirement. Additionally, the number of retirees who have existing debt when they retire or have accumulated debt since entering retirement is continuing to grow.

As a result of these and other factors, reverse mortgages are emerging as a popular choice for retirees to more effectively fund their golden years.

“A reverse mortgage can be used for any worthwhile purpose,” explains Jeff Murray, head of distribution at Heartland Seniors Finance. “Many of our customers use the loan

42

to fund home repairs or improvements, repay debt, travel to visit family, pay for medical procedures, upgrade to a more reliable car, assist with in-home care, or for other uses that will make life easier and more comfortable.”

Fundamentally, says Murray, a Heartland reverse mortgage is designed to help clients live a better retirement. In practical terms, it’s just like a normal home loan, except that it has been designed to accommodate the particular needs of seniors.

Heartland provides three flexible options for clients to access the equity in their homes when required, which can be used in combination:

addition, the client may also have a Regular Advance or Cash Reserve facility made available on settlement.

• Regular Advances: Heartland’s Regular Advance option enables clients to supplement their retirement income with regular instalments. This can be done monthly, quarterly or annually over five or 10 years and helps many customers live a better retirement.

• Cash Reserve: Heartland’s Cash Reserve facility enables clients to put aside some funds for future needs, whether for renovations, travel or healthcare, or to take the stress out of bills or unexpected expenses.

• Lump Sum: This is the initial advance made to the client on settlement. In

“The options allow people aged 60 and over to release equity in their home to fund a more

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“A Heartland reverse mortgage is designed to help clients live a better retirement – it’s just like a normal home loan but for the unique needs of seniors” Jeff Murray, head of distribution, Heartland Seniors Finance

comfortable and independent retirement,” says Murray. “No regular repayments are required, though voluntary repayments can be made at any time. Interest is added monthly, which is repaid from the future sale of the property.”

Importantly, Murray stresses, clients continue to own 100% of their own home.

Reverse mortgages are arguably the most heavily regulated consumer finance product in Australia. By default, reverse mortgages offer considerable protection to customers (provided you meet your obligations under the loan), including: • Lifetime occupancy – the client’s home will remain the place they live for as long as they choose.

• No negative equity guarantee – the amount required to repay the loan will never exceed the net sale proceeds of the property.

• Loan repayment – there is no requirement to make any loan repayment until the end of the loan (with the flexibility to pay in part or in full at any time).

Independent legal advice is required before undergoing the process of taking out a reverse mortgage. Additionally, Heartland is aware that people’s circumstances can change

rapidly, so it offers a 30-day cooling off after settlement, allowing clients to cancel their reverse mortgage and repay their loan with no additional cost except a small valuation fee.

“Heartland will refund the Settlement Fee and interest. You will only need to pay the $350 valuation fee,” says Murray.

“The only other costs you may incur are any government charges, and your independent legal advice on the loan agreement.”

Murray is also keen to point out that brokers should be discussing these factors with clients before referring them to a provider like Heartland.

“The questions brokers should discuss with potential clients really fall into three categories – loan considerations, loan obligations and future needs,” explains Murray. “The main loan consideration is the personal impact of taking out a reverse mortgage, both now and in the future. Loan obligations are centred around the borrower’s awareness of their responsibilities associated with the loan.”

Last but not least, notes Murray, discussions about future requirements should cover the potential funding needs the customer might have looking ahead.

“Do they think they’ll need other loans or further finance into the future, and how might taking out a reverse mortgage affect those goals?”

BROKER EDUCATION “Heartland’s broker education and engagement strategies have undergone a number of significant changes in the past 12 months, largely driven by the requirements of our broadening broker base,” says Heartland Seniors Finance head of distribution Jeff Murray.

“A number of new initiatives have been implemented to ensure that our broker network remains up to date with the product framework and regulatory changes.”

These new initiatives include: a formal accreditation program when brokers are onboarded a series of webinars covering the application process, topical issues and regulatory changes a monthly broker newsletter presentations at professional development days hosted by industry bodies, aggregators or Heartland team members regular contact via Heartland’s distribution team

Murray says Heartland has put in place a variety of other features and protections to help ensure customers are comfortable with their decision.

“Heartland understands that each and every customer places their trust in us when we provide them with finance, and we take this duty of care seriously,” says Murray. “We also ensure that customers are making informed decisions and are encouraged to speak to family and advisers about finances.”

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FEATURES

ADVOCACY

Standing up for brokers With all the scrutiny of mortgage brokers and talk of regulation, one aggregator is determined to show that it will continue to support and back the industry

CONNECTIVE has been a huge advocate of the broker channel throughout the royal commission as well as in the months following the final report when it joined other industry players to campaign behind closed doors and in the public eye.

Since Treasury’s release of its draft NCCP legislation at the end of August, the aggregator has been working closely with its brokers and other industry partners to determine what the proposed best interests duty would mean for brokers and how it might work.

The duty follows the recommendations made by Commissioner Kenneth Hayne in the royal commission’s final report in February and will create an obligation for mortgage brokers to act in the best interests of the consumer. Of course, most would argue they do so already.

Connective executive director Mark Haron says the fact that brokers already do this puts the industry in good stead.

“We are in a good position to adopt a best interest duty. Brokers already put their

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customers’ interests ahead of their own, so we’re most of the way there,” he says.

As part of the aggregator’s advocacy of the broker channel, Haron says he is continuing to work through a number of things with Treasury and the rest of the industry ahead of the best interests duty coming into play.

argue that the date needs to be pushed back.

The industry should have at least six months or longer to ensure we get everything in place from a compliance perspective to start operating under the new legislation. That’s crucial,” he says.

One of the things brokers can do to improve is to demonstrate exactly how they act in customers’ best interests.

“Show customers the range of products considered, explain why and work with the customer to determine which product is appropriate,” he says.

The other areas Haron and Connective continue to focus on are remuneration and clawbacks.

“Brokers are so focused on clawbacks as it has the potential to impact their business and livelihood significantly. I’m doing everything I can to work with the banks on a fair arrangement,” Haron says.

He explains that clawback is nothing to do with poor behaviour, but “more than likely it’s a set of circumstances beyond the broker’s control”.

While Haron says brokers can take some responsibility and have conversations with

“Brokers do focus on putting customers’ interests ahead of their own, so we’re most of the way there” Mark Haron, Connective Connective has submitted its response to the draft legislation in advance of the 4 October deadline with feedback and input from its brokers.

Treasurer Josh Frydenberg has said he expects the duty to be adopted on 1 July 2020, but Haron says that time frame depends on legislation getting through Parliament and the Senate this year.

“If it doesn’t get through this year, we’ll

their customers about their plans for their properties within the next two years, in circumstances where no one could have predicted what was going to happen, the bank should offset the costs.

“In the background, myself and many others are looking at how we make clawbacks more feasible and fairer for brokers. The harsh reality is if we were to get rid of clawbacks lenders would reduce

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WHAT WILL THE BEST INTERESTS DUTY LOOK LIKE?

the upfront payments,” he says.

Between now and the end of the year, Connective will remain focused on the best interests duty and conflicted remuneration. Haron says he believes some lobbying will be required “to ensure the

government understand why trail is so important. Haron says it will also be imperative to demonstrate what mortgage brokers do for the economy, what they do on a day-to-day basis, and the diversity of transaction types they deal with.

“We are committed to advocating on behalf of our brokers and continually updating them on the changes that will impact the industry” Mark Haron, Connective legislation that gets through is better than the current format”.

“We are committed to advocating on behalf of our brokers and continually updating them on the changes that will impact the industry and their business,” he says.

Next year, the focus will turn to the review of upfront and trail commission, and ensuring that regulators and the

The best interests duty is a principlesbased approach. One of the key factors up for discussion is how prescriptive the guidance needs to be.

A principles-based approach is fairly broad, outlining that the broker must act in the borrower’s best interests. A prescriptive approach would have more defined steps, enabling mortgage brokers to know whether or not they are meeting their legal requirements.

Connective director Mark Haron says what the aggregator is looking for is a blend of the two.

“A balance between principle and prescriptive will be the best outcome for brokers. No two loans are the same, they all have nuances,” he says.

“If each loan follows the same prescriptive structure, brokers won’t be able to provide good outcomes for every customer. If there is a rigid process that customers don’t fit into, or it’s overly compliant, this will limit a broker’s ability to help some customers.

“A principles-based duty helps overcome this as it enables flexibility and is more scalable.”

As in the aftermath of the royal commission, a united industry is vital. “ There’s nothing politicians and regulators hate more than a dozen selfinterested parties from the same industry coming at them with their own agenda, instead of a single perspective,” Haron says.

“As an industry we need to continue to demonstrate that we are united and professional.”

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FEATURES

SMSF LENDING

An alternative option for SMEs With the bigger lenders seemingly stepping back from both business lending and niches like SMSF, this paves the way for alternatives to provide an offering.

While brokers are well placed to help their SME borrowers with SMSF loans, they may need to work with other finance experts WHILE THINKING about an SMSF loan typically brings to mind investment properties, small business owners are also relying on this type of lending to acquire their business premises. By using an SMSF loan, a business owner can pay rent to themselves while saving for retirement and then enjoy the benefit of zero taxation once they retire and move into the pension phase.

borrowers. The great thing about this type of lending, says Thinktank head of research Per Amundsen, is that it has the potential to suit a very large number of borrowers.

Though the banks have pulled back, Thinktank has seen its own volume of SMSF loans match the growth of its wider business.

On a monthly basis Thinktank sees up to 30% of its business represented by SMSF lending.

“Paying rent to yourself has obvious benefits, and the security of tenure that you will enjoy can be very important�

Per Amundsen, head of research, Thinktank However, over the past year there have been a number of new developments in both SME and SMSF lending as banks have pulled back on their commitments in these spaces. Small businesses looking to use SMSF loans have been most heavily affected, which has inhibited their chances of obtaining effective financing.

This change represents a significant opportunity for brokers to advocate on behalf of

46

Amundsen says brokers may find that many of the customers they are already dealing with might be considering these types of arrangements. But there are misconceptions that need to be addressed and overcome, he adds.

Ahead of the federal election, the Opposition argued for banning borrowing under limited recourse borrowing arrangements (LRBAs).

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SELF-MANAGED SUPER FUNDS

597,009 Number of SMSFs in Australia

1,127,304

Amundsen notes that it wasn’t just borrowers who were concerned about the potential for change in this area either; the impression has been that banks have pulled back somewhat in commercial in the same way as they have in residential.

But with the Liberal Party retaining government at the last election, borrowers and lenders alike are beginning to realise that this hasn’t actually happened. Their interest has been piqued, and accordingly Thinktank has found that applications and settlements are rising.

“This may not be intentional, but it certainly seems to have been the case,” says Amundsen. “In SMSF lending a number of lenders withdrew altogether in anticipation of a federal election outcome that might have seen the end of LRBAs.” Discussing the benefits of helping business-owner borrowers with SMSF loans, Amundsen points to tax considerations as the obvious advantage for the customer. But, more importantly, he highlights that the security which comes with the borrower being able to own their own business premises is a major selling point of this type of loan.

“Because purchases and rents need to be at market prices, there won’t be a great difference in the cash flow impact to the business itself, but paying rent to yourself has obvious benefits, and the security of tenure that you will enjoy can be very important,” he says.

One of the issues most often raised when it comes to SMSF lending is asset

Number of SMSF members

$726bn

Total estimated value of assets held by SMSFs

concentration, which is often present when SMSFs invest in real estate. This is no more significant for business owners, except that the level of investment held directly in the business is magnified. However, this is no different to the business premises being owned outside of superannuation savings, and asset allocation needs to be considered.

Brokers who want to offer SMSF loans to their business customers need to be separately accredited for SMSF lending.

To help brokers entering the space, Thinktank frequently runs workshops with broker groups and associations.

$23bn

Total borrowings

by SMSFs

and financial planners, says Amundsen.

Frequently, these professionals are where borrowers go for the initial advice they need for retirement planning or to look after their superannuation savings.

“Getting expert advice all of the way along the process is really important,” he adds.

While a broker is in a fantastic position to help their SMSF borrowers, Amundsen reiterates the importance of teaming up with other finance professionals who can provide upfront information, because there is “a lot to know”. Thinktank itself might not provide advice directly to borrowers, but

“Brokers can acquire a lot of information over a period of time, and as with most things they will become increasingly experienced” Per Amundsen, head of research, Thinktank “We will spend time with them in reviewing the various regulatory requirements as well as our own policies so they can successfully complete a questionnaire on the subject,” Amundsen says.

Once the broker is accredited, they will have a direct link to one of Thinktank’s representatives who have been extensively trained in SMSF lending. The lender also has in-house specialists who can provide guidance on specific points as necessary.

Brokers looking to reach out to these kinds of customers should talk to accountants

its representatives can suggest the types of questions they need to ask their advisers.

“Brokers can acquire a lot of information over a period of time, and as with most things they will become increasingly experienced with time,” says Amundsen.

“Borrowers need that expert advice upfront before they embark on this sort of investment, and making sure they have the support of good financial, accounting and legal advisers is in most cases the biggest first step, though it remains important throughout the life of the SMSF.”

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FEATURES

MORTGAGE EZY

Keeping the Australian dream alive Joanna James of Mortgage Ezy discusses the company’s commitment to filling gaps in the Australian housing market FINDING HOME loan solutions for a diverse group of people – regardless of race, religion or style of living – is at the heart of Mortgage Ezy’s business mantra. Unwilling to pursue a cookie-cutter approach to loans, the company instead strives to embrace a variety of brokers and potential mortgagors who may not meet a bank’s preferred profile.

According to Joanna James, general manager at Mortgage Ezy, the egalitarian nature of Australian society has created a long-standing goal for most Australians to be able to buy and eventually own their own home outright.

“If we move to a situation where all borrowers are not able to access finance and it is simply provided to the elite, the Australian dream will be shattered,” says James. “This will create a class of renters for life, which I don’t think anyone wants to aspire to.”

James believes that renting up until retirement age would be a major disadvantage for the individual, as rents tend to increase

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year-on-year. By contrast, mortgage rates are comparatively stable and should only reflect interest rates of the day.

It’s an approach to homeownership that’s reflected in the company’s loaning philosophy, for both existing citizens and new Australians.

Though there has been a broader trend of

“Australia’s greatness has been based on its immigrants,” says James. “Contrary to some people’s beliefs, immigrants support the general overall economy and often start up small businesses that create more job opportunities for Australians.”

James is quick to point out that non-

“The biggest gap in the market comes when borrowers whose first language isn’t English are unable to communicate their needs and wants” Joanna James, Mortgage Ezy banks avoiding issuing loans to non-residents, alt-doc borrowers and self-managed super clients, Mortgage Ezy has continued lending to this class of borrowers. So much so, James notes, that those who are self-employed can also qualify for low-prime rates, putting down as little as a 20% deposit on a home loan.

residents frequently buy property prior to moving to Australia, or to provide their children with a home when they attend university. Others who purchase investment properties offer much-needed stock for permanent rentals.

“As the Foreign Investment Review Board

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is a huge advantage for borrowers seeking security for the actual cost of finance.”

According to James, the key to helping a diverse range of borrowers is to be under­ standing and open to differences that are important to them. It’s not just a diverse customer base that is at the heart of Mortgage

and Vietnamese, among other languages. It’s something she sees as vital for the present and future success of the organisation.

“The biggest gap in the market comes when borrowers whose first language isn’t English are unable to communicate their needs and wants,” says James.

“Australia’s greatness has been based on its immigrants. Contrary to some people’s beliefs, immigrants support the general overall economy” Joanna James, Mortgage Ezy

prevents non-residents from buying established properties, the impact on the current housing market is minimal,” says James. “Non-residents provide valuable stimulus to the construction industry instead.”

Mortgage Ezy has also taken great strides towards providing discounted rates to all clientele regardless of their situation.

“People don’t need to request a large loan or be in the top income bracket to receive a rate cut.”

As an added bonus, borrowers are also excused from paying a monthly or annual fee on the life of their loan. Loan fees, James notes, are a major bugbear for modern borrowers. When they were first implemented just over 20 years ago, they averaged around $2/month. By contrast, today many sit at around $30/month, amounting to hundreds of dollars a year.

“The longer the loan runs, the greater the percentage of the loan cost the fees end up accounting for,” says James. “So a fee-free loan

Ezy’s operations; the company also promotes inclusion within its workforce in order to elevate its services when catering to people from different backgrounds.

“As far as possible, one’s workforce should reflect cultural differences and the tolerance needed to respectfully deal with each and every Australian,” she says. “We have several programs that cater to different communities – these range from sharia loans right through to non-resident loans.”

James notes that a number of Mortgage Ezy staff can speak Mandarin, Indonesian

While Mortgage Ezy’s credentials in the Asian community have long been established among customers and brokers alike, James hopes to attract brokers who are exploring other niches that the banks do not cater to.

“We must remember especially as we move further into the age of technological innovation that we are in the business of serving people,” says James. “At Mortgage Ezy, we strive to promote a culture that embodies the very essence of this, creating diverse and inclusive solutions for all of our team and the people that we serve.”

ABOUT MORTGAGE EZY Mortgage Ezy is an innovative national non-bank lender with a true understanding of individuality. Mortgage Ezy achieves its goals as a company by helping other people achieve theirs. Flexible enough to adapt quickly to external market shifts, Mortgage Ezy is a resilient organisation that remains steadfastly focused on and aligned to a coherent business strategy.

When a challenge arises, Mortgage Ezy distinguishes itself in its response, which is immediate, thorough and constructive. Complementing Mortgage Ezy’s demonstrated ability to turn on a dime is the underlying understanding that everyone knows their role and implements it diligently, creating the overall effect of fluid and consistent execution.

For more information, visit www.mezy.com.au.

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FEATURES

VENDOR Q&A

William Lockett: Finding true north For Specialist Finance Group, being independently owned is the direction it wants to go in. Founder and managing director William Lockett explains why

MPA: Why is it so important to you that Specialist Finance Group remains an independent aggregator?

William Lockett: I have identified as our true north business direction that it is important for us to be an aggregator that is individually owned. Our ownership as an aggregator is not compromised by having ownership structures with other major parties within the financial services sector.

You have very clear and defined lines, and for me, being independent and privately owned and being the sole owner of my company, when I make a decision I base it upon my beliefs and my true values.

For argument’s sake, if Specialist Finance Group was 10% owned or even 5% owned by a bank, the perception would be that that part-owner would have an input into not only the running of the company but also the direction and decision-making of the company. Whether the influence is there or not, the perception is there. So we could not blame the industry or brokers for not believing we were truly independent purely because of that ownership structure.

MPA: You offer various arrangements for your brokers to join. What are

50

they and why do you offer these flexible options?

WL: We have four business models for our members to consider. Those four business

We recognise that all finance brokers have different businesses and business directions and different business models.

Because a large part of our business ethos

“Being the sole owner of my company, when I make a decision I base it upon my beliefs and my true values” models are a monthly fee agreement, an annual fee agreement, a percentage fee agreement, and we also have a transaction fee agreement.

is to be flexible, we wanted to provide any member that joins us or is currently with us the option of the four different aggregated options. We also wanted to provide not

BROKERS’ TOP 5 REASONS FOR LEAVING AGGREGATOR

16%

Poor accuracy and timeliness of commission payments

12%

12%

Poor BDM support

Poor compliance support

13%

Poor IT and CRM support

12% Poor quality of lending panel

Source: MPA Brokers on Aggregators survey 2019

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business structure. Brokers deal with banks all day every day in the submitting of loans, getting the loans approved, working with them on behalf of their clients – and a lot of them find in their relationship with the aggregator that they would like to have a relationship with them that’s free of any bank ownership.

We’re probably the largest independent privately owned aggregator in Australia.

Part of our growth and success is because we are independent. I’m not saying their model is wrong and ours is right; we have just identified that we want to be truly independent for our own reasons.

It’s up to brokers to decide which particular model they want to be. Brokers have a clear choice: they can aggregate through an aggregator that is either partly owned or fully owned by a bank, or they can choose an aggregator such as SFG which is completely 100% independent of ownership.

MPA: How are you continuing to work with brokers through changing regulations?

WL: It never changes. Just because there

only the option up front but also, as finance brokers and their businesses change, it also gives them an avenue to move from one business model to another that better suits their requirements.

MPA: From feedback with brokers, are you seeing that they are keen to join an independent aggregator over one that is bank owned? Why?

WL: That has always been reasonably steady. Finance brokers have enough dealings with banks in their normal routine, and so because of the involvement that their business will normally have in dealing with third party banks, they like to have a business set-up that’s devoid of any sort of bank structure.

This is not denouncing bank ownership or bank influence; it’s clearly defining our

have been more changes in the last six or 12 months doesn’t mean the aggregator stops doing what they’re doing.

The only thing that’s changed in the course of the last 12 months has probably been a greater change in landscape in terms of compliance and regulations. But good compliance is good business; you can never be too compliant. In terms of regulations, good regulations are great; they’re great for the brokers, they’re great for the banks, they’re great for governing bodies, they’re great for aggregators and, more importantly, they’re great for the consumer that engages the brokers.

We have constant communication, which is generally by way of direct meetings with our brokers, whether they be individual

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FEATURES

VENDOR Q&A

WHAT DO BROKERS WANT FROM AN AGGREGATOR? 1 = not important; 5 = very important

– but I also take it upon myself to hear it directly from our member base.

No member would be able to say they’ve left a message or emailed me and haven’t been responded to.

MPA: You launched SFGConnect two years ago. Tell me about this platform and how it is helping brokers.

WL: What we thought would be one of our

Accurate and on-time commission payments

4.65

Compliance support

4.48

Quality of lending panel

4.47

Communication with brokers

4.43

or bank owned, both business models have the ability to communicate and communicate well. There are a lot of

Training and education

4.35

BDM support

4.35

“I have a very direct and personal business approach to a large proportion of my member base”

IT and CRM support

4.28

Additional income streams

3.99

Marketing support

3.74

White label offering

3.67

Lead generation

2.71

Source: MPA Brokers on Aggregators survey 2019

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or in groups, as well as constant weekly communication from me, right through to my director’s comments which I give out to our member base on a weekly basis.

We do a lot of EDM announcements, a lot of webinar training, etc., so all of those things combined, the communication and the direct touch of our brokers, keeps them fully abreast of changing regulations.

MPA: In our Brokers on Aggregators survey, brokers rated communication with brokers as their fourth most important priority. How does being an independent aggregator help you communicate with brokers?

WL: Whether we are privately owned

big businesses and big corporations that communicate very well.

We say we communicate very well with our brokers. I get great feedback from our members that, with respect to our availability and our response times in terms of any communication, they feel as though their matters are attended to in a very efficient matter.

I have a very direct and personal business approach to a large proportion of my member base. I ensure that I at least ring one of my members who I haven’t spoken to for at least 30 days.

I don’t only rely upon what I hear from my management team – and I could hear great things from my management team

biggest and most difficult decisions ended up being our easiest and best decision that we’ve made. We knew when we made the decision that it was the right decision. We had done a lot of research in the area; we had got together a team of individuals to consult on the matter.

When it came together we compared it and point-scored it against other

software proprietar y channels out there in the market­­­­place. We wanted to release something we thought was pretty spectacular, and since we’ve released it and rolled it out to in excess of 500 members and growing, the response across the board has been fantastic.

It’s very much a software for brokers.

Its ease of use is great; its functionality, the integrations involved have made their lives so much better.

It has made our brokers and their businesses more efficient; it has certainly made them more compliant with the requirements, and it has helped give them more control and helped them grow their businesses.

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It’s also reported the average overall cost of cancer to a household is an estimated2

ALI Ad_MPA FP 20190918_BCNA_Outlined.indd 1 50-53_Vendor_QA_SUBBED.indd 53

$48K.

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FEATURES

TEAMWORK

How to strengthen relationships with your team If your relationships with team members are suffering, you might be approaching them the wrong way. John Eades outlines seven things managers can do to turn things around

NO ONE wants to go to work every day dreading the amount of time they’re going to spend with their boss. At the same time, I don’t know any sane leader who looks forward to having bad relationships with their team members. So the question then becomes, why are so many relationships between team members and their leaders a major part of the reason people are unhappy at work?

The answer: Most leaders have the equation wrong. The majority of leaders believe team members are responsible for the relationship with their leader. This belief puts the ownership of worthiness, trust, ability, respect and work ethic on the shoulders of others.

The correct equation is: Leaders are responsible for their relationship with each individual team member.

In this drastically different approach, leaders know they are ultimately the ones

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responsible for building relationships based on trust, respect, work ethic, forgiveness and accountability. These leaders model the behaviours they want to see, communicate well with their team and allow their team members to choose to meet or exceed the standards set. This doesn’t mean the relationship isn’t a two-way street, but it means the leader takes ownership and responsibility for it.

Knowing that ownership and responsibility for work relationships starts with leaders, here are seven wise habits you can leverage to strengthen those relationships.

1

Remove your ego

Ryan Holiday, the author of Ego Is the Enemy, defines ego as “an unhealthy belief in our own importance … the need to be better than, more than, recognised for far past any reasonable utility”. If this is

you, your people won’t want to follow or work hard for you. It’s that simple.

When I had Cy Wakeman, the author of No Ego, on the Follow My Lead podcast, she said, “Ego puts a filter on the world that corrupts your relationship with reality.” If you can remove ego from the equation, you’ll remove barriers from your relationships with your team.

2

Focus on trust with each team member

When I ask in our Welder Leader workshop, “Who is responsible for the bond of mutual trust between leader and team members?”, the overwhelming answer is “team members”. And they’re wrong. Trust is built between leader and team member by the actions and behaviour of the leader, not the other way around. People will judge your

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FEATURES

TEAMWORK

trustworthiness by your character, expertise and how well you share your expertise with each team member.

3

Be a good coach

4

Put your phone away when interacting

One of the most important habits any leader can improve is their ability to coach the individuals on their team. Author and executive coach Michael Bungay Stanier says any leader can be a better coach just by “staying curious a little bit longer and rushing to advice-giving a little bit slower”. Positivity impacts your relationship with your people if you can coach them to improve a skill gap.

No one likes to see someone else pick up their phone in the middle of a conversation. When this happens, it makes us feel much less important than whatever is happening on the phone. I can only write this

Trust is built between leader and team member by the actions and behaviour of the leader, not the other way around because I am guilty as charged, and changing this habit is an ongoing challenge.

5

Embrace the journey of each team member

It’s easy for leaders to get in the habit of assuming every professional on their team is in the same place in their life’s journey. Just because a 30-year-old and a 40-year-old might be doing the same job doesn’t mean they are in the same place on their journey. One could be single, while the other is married with kids. Those things absolutely matter. Get in the

56

habit of putting yourself in the shoes of where your people are on their life’s walk.

6

Ask for feedback about yourself

The number one competencydeficient area we have found in our Welder Leader assessment is asking for feedback from the team. This is so important because people want to feel like their opinion matters. The ability to be vulnerable in front of your team will instantly improve the relationship. One caveat: You must be humble when accepting

feedback, rather than becoming defensive, or the act of asking for feedback will put your relationship at a deficit.

7

Model what you want to see

If you only remember one thing, remember this: People watch everything a leader does, whether the leader likes it or not. So the example you model is exactly the behaviour you will get from your team.

John Eades is the CEO of LearnLoft, a full-service organisational health company whose mission is to turn managers into leaders and create healthier places to work. He is a speaker, host of the Follow My Lead podcast, and author of F.M.L.: Standing Out & Being a Leader and the upcoming book The Welder Leader.

For more, visit learnloft.com.

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FEATURES

TIME MANAGEMENT

How to avoid mental exhaustion When your mental bandwidth is depleted, it leaves little room for big ideas to flourish.

Carson Tate offers three ideas for replenishing your mental reserves

IN A highly competitive global economy, innovation, creativity and your business’s ability to differentiate itself through its ideas and products are essential for continued growth and profitability. For a worker today, information overload, 24/7 connectivity, constant interruptions from wherever you’re working, and email and text communication can lead to overwhelming anxiety.

All of this anxiety hijacks your time and mental resources, resulting in scarcity. And when you experience scarcity of any kind – time or mental – you become absorbed by it.

Your mind orients automatically towards an unfilled need.

The problem with mental scarcity is that it creates its own trap. It further perpetuates scarcity and reduces all components of our

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mental bandwidth – we are less insightful and less forward-thinking; we have less mind to give to dreaming about that next breakthrough idea. All of these are essential components of innovation.

If you want to support and nurture innovation in your work, it’s time to start thinking about how to reduce mental scarcity and increase your mental bandwidth. Here are three simple yet powerful ways to start.

Develop routines for regular tasks Develop a routine for common tasks so that your brain can automatically repeat them with minimal input by you.

Once the routine is established, it’s interpreted by your brain as a pattern. These

patterns, through frequent use, become hardwired into your brain. And the more you use a pattern, the less attention you’ll need to pay to doing this task, thus freeing up mental bandwidth for ideation. Consider developing routines for phone calls, opening documents, filing and saving documents, sorting and processing mail, and making travel arrangements.

Automate email processing A lot of the work you do is virtual – over email, text or perhaps a project management app. Email processing consumes significant amounts of time and mental capacity. Reduce the time and mental drain by automating frequent email responses, email follow-up, the prioritisation of incoming messages and the filing of reference materials.

Automate frequent email responses. Use a free text expander software app like FastFox for PC or Text Expander for Mac, or a more robust program like Wittyparrot. These will work in any program, including your email platform, and allow you to insert commonly used text with just a keyboard shortcut or by dragging and dropping text. No longer will you waste your mental energy thinking about what to say, or precious time typing out a response; you can reply automatically within seconds.

Automate your email follow-up.

Automate your follow-up by setting up and using the ‘waiting for’ rule. Here’s how it works: When you send an email where you need a response from the recipient, cc yourself on the email. That email will then be automatically saved in a folder you have designated for all of your follow-ups. As new messages are automatically added to this folder, the numeral indicating how

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many messages are in the folder will become bold. No longer will you spend time searching through sent messages or trying to remember if you’ve followed up on your open requests.

Automate the prioritisation of incoming messages. The most important mental processes, such as prioritising, often take the most effort and are energy-intensive.

Let your email program automatically prioritise incoming messages. Colour-code your incoming message by sender priority. For example, you might colour-code your manager in red, your top clients in green and turn the messages where you are cc-ed to light grey. So when you open your inbox, you can quickly scan them for the most urgent messages, such as those from your manager or key clients.

Automate the filing of reference

Mental scarcity reduces all components of our mental bandwidth – we are less insightful and less forward-thinking; we have less mind to give to dreaming about that next breakthrough idea materials. Automatically file all of your reference materials, trade publications and industry news by writing a rule. For example, you might write a rule to file all of your trade publications in a folder named Trade Publication Reading. Now, when you open your inbox, it will only contain email messages that require action by you, and you won’t waste precious time or mental energy sorting through messages you can read at a later date.

Cultivate joy Great insights occur more frequently the more relaxed and happy you are. Take time during the workday to do something totally unrelated to work that brings you joy, makes you laugh or just makes you smile. Spend some time on YouTube watching funny videos, call a friend, take a walk or read for pure pleasure.

It doesn’t matter what it is as long as it brings you delight.

Don’t let mental scarcity rob you of your next big, bold, breakthrough idea. Support and nurture your creativity and impact by increasing your mental bandwidth, developing routines for regular tasks, automating email processing and cultivating joy.

What’s possible if you shifted your thinking to “What impact can I make today?” instead of “How much can I get done today?”

Remember, you’re in the driver’s seat of your time, energy, attention, mental capacity – and impact.

Carson Tate serves as a consultant and coach to executives at Fortune 500 companies, including AbbVie, Deloitte, EY, FedEx and Wells Fargo. The author of Work Simply: Embracing the Power of Your Personal Productivity Style, her views have been included in several publications, including Fast Company, Forbes, the Harvard Business Review blog, The New York Times and more. For more information, visit workingsimply.com.

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23/09/2019 4:17:10 PM

PEOPLE

BROKERAGE INSIGHT

Waking up from the property coma Sydney-based Kanebridge Finance has been delivering property development finance for almost two decades. Managing director Marwan Rahme talks to MPA about what’s ahead for the brokerage KANEBRIDGE FINANCE has a storied history. Though the incarnation that it’s best known for today kicked off in 2001, it actually began life in 1999.

Registered as an AIQS member in 2000, the original focus of the company was heavily geared towards the construction economics sector. Kanebridge Finance was

MANAGING RELATIONSHIPS During his time in the finance industry, Marwan Rahme, the founder of Kanebridge Finance, has come to learn the importance of relationship management and the way it can create new customers from existing ones.

The company’s core business tends to involve high-net-worth individuals and property development investors, which naturally leads to numerous other business connections along the way.

“Traditionally, on the back of that you have the subsidiary clients such as the subcontractors, banks, associates and consultants around these developments, who manage the commercial sites,” says Rahme. “These often go on to become Kanebridge clients themselves.”

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established that year, and in 2001 it finally made the move into home loans and commercial construction loans – the organisation’s primary focus today.

Since then, the company has expanded further and now has four main subsidiaries: Kanebridge Finance, Kanebridge Wealth Advisory, Kanebridge Property and

GFC, which we all know about,” says Rahme. “During 2011/12 there was a lull, when properties were selling for the same price as they were seven years prior.”

But it’s the last couple of years that have arguably been the most troubling, with Rahme describing the market as “virtually non-existent”.

“We believe that Sydney is sort of the Hong Kong of Australia ... Land availability is always at a premium, so the only way is up” Marwan Rahme, Kanebridge Finance Kanebridge Capital. Together, they offer customers a full suite of property, growth and wealth solutions.

For managing director Marwan Rahme, the whole process has been quite the roller coaster. He’s occupied the top spot since 1999, and the property market has undergone numerous cycles during his tenure. He’s had a front-row view of the dramatic shifts in the market that have accompanied each cycle.

“I was there from the 2001 peak to the 2003–4 crash. And then there was the

“It’s been idle, in a property coma – it’s the worst I have seen it,” he says.

Still, Rahme is far from a downbeat doomsayer. He is quick to point out that the worst is likely over, and better things are on the way as the market begins to correct itself.

“We’ve seen some positive outcomes over the past couple of months,” says Rahme.

“With the royal commission wrapping up, we’ve seen a lot of driftwood in the market disappear – and APRA has now relaxed a lot of the restrictions that were choking lending policies.”

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Aligning future planning With the firm based in Sydney, Rahme is keenly aware that there is frequently a disconnect between property prices and wealth and wages. It’s a situation he is concerned will continue to be an issue in the coming years.

“While we’ve become a true international city, my biggest concern is that a lot of the dwellings that are going to be in the works over the next few years will not necessarily be affordable,” he says.

“With the market recovering after a two-year downturn, we’re naturally worried that there will be a lack of supply in the Sydney market over the next couple of years, which would cause the same issues that the UK has.”

It’s possible, Rahme says, that there will be a shift in public policy that turns Sydney

into more of a build-to-rent market or multi-family housing market to compensate for the shortage of houses available at affordable prices.

“We believe that Sydney is sort of the Hong Kong of Australia – it’s effectively an island, bordered by the national park to the north and south and the Blue Mountains to the west,” says Rahme. “Land availability is always at a premium, so the only way is up. I believe the current government understands the need to go to medium and high density around infra­structure spend.”

Given the record spending on the North West Metro, the North Connex, West Connex and other major infrastructure, Rahme thinks it’s plausible that there could be rezoning in the future to allow for medium- and high-density living. If this rezoning was centred around traffic nodes, existing town centres and other community hubs across northwest and southwest Sydney, among other areas, Rahme believes it would be a great step towards protecting buyers from property prices becoming unattainable.

Accordingly, Kanebridge is setting its future focus on high- to medium-density developments around town centres, train stations and main arterial roads with ease of accessibility to employment.

“Looking ahead, our focus is on what is internationally known as a build-to-rent/ multi-family housing funding process, where developments are built specifically to lease,” says Rahme.

“It’s not unlike a commercial building at a relatively moderate yield; however, it’s very stable and solves the issue for dwellings in and around Sydney and the affordability crisis that we currently have. From a financial perspective, looking at becoming a commercial broker, that will be pioneering the buildto-rent financing model with banks locally and overseas”.

KANEBRIDGE FINANCE AT A GLANCE Company: Kanebridge Finance Founder: Marwan Rahme Locations: Sydney CBD and Norwest, NSW Year founded: 1999 Services offered: Property development, construction Number of employees: 2 Awards: 2019: Winner, AFG Commercial Broker of the Year 2017: Winner, AFG Excellence Award; 5th place, MPA Top 10 Commercial Brokers 2016: Winner, AFG Excellence Award; 6th place, MPA Top 10 Commercial Brokers 2015: Winner, AFG Excellence Award; 7th place, MPA Top 10 Commercial Brokers 2014: Winner, AFG Excellence Award; 8th place, MPA Top 10 Commercial Brokers 2013: Winner, AIB-Leighton Contractors Young Achiever of the Year Award 2010: Finalist, AIB Young Achiever of the Year; AIB Professional Excellence in Building Awards – Award for the construction of the Hills Indoor Sports Centre in Seven Hills 2008: Finalist, AIB Young Achiever of the Year

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PEOPLE

CAREER PATH

GROWING OPERATIONS AND ACQUISITIONS

Valiant Finance CEO Alex Molloy was once a university tutor and now advises thousands of businesses on how to attain and retain success Alex Molloy tutored in microeconomics and macroeconomics from his 2010 second year at university until his final year. He did the job during DRAFTS ADVICE semesters and sought internship opportunities in the holidays.

Having got most of the way through “I loved teaching and gradually grew from TUTORS a law degree and wanting to apply AT UNIVERSITY doing ‘peer-teaching’ in my second year to his learning to the real world, Molloy becoming a full tutor and eventually to took a clerkship at Linklaters LLP. He rotated between coordinating the tutorial program for the banking team and the mergers and acquisition team, the microeconomics course.” reviewing agreements, searching through cases to form a view on legal risks, and drafting advice to be reviewed by the associates who had guided him.

“I’m sure the advice I prepared was unrecognisable by the time it made its 2011 way to a client!”

EXPERIENCES A ‘TRIAL BY FIRE’ Molloy considers his summer internship at Goldman Sachs his first real 2013 finance role. As an intern, he was treated like a junior analyst, helping CATCHES THE ENTREPRENEUR BUG assess transaction opportunities, build models, run Molloy joined McKinsey & Company as a business analyst, working with smart comparable sets and build slides. and dedicated consultants providing strategic advice and analysis to corporate “I was coming out of a university with a lot of enthusiasm and government clients. He spent over two years ping-ponging but not a lot of practical know-how. It was a trial by fire, but between projects in finance and healthcare, I learned an incredible amount in a short period of time.” looking at everything from technology strategy to public health. Promoted to associate in 2016, 2016 Molloy was offered sponsorship by McKinsey FUNDS THOUSANDS OF SMES for postgraduate study but had already caught Molloy and Ritchie Cotton founded Valiant with a vision of creating a the bug to start his own venture. world-class platform that gave businesses access to finance. As CEO, Molloy “I owe most of my professional development, handles day-to-day management duties, focusing on customer acquisition, both quantitative and interpersonal, to my leaders sales and operations, while Cotton and friends at McKinsey.” leads the business’s product and engineering end. Since inception, Valiant has helped thousands of 2019 and beyond small businesses from every walk of FOCUSES ON THE MISSION life gain access to funding, from ski The team at Valiant will stay laser-focused on its mission to become lodges and indigenous art centres to “the only place for business finance”. That means its digital platform and restaurants and tradies. people need to provide an experience so seamless, unbiased and easy that its customers and referrers won’t have any reason to go anywhere else. Valiant always looks for something to build or improve on to reach its mission.

“Our next step is to grow our network of referral partners to get our platform and expertise in front of as many customers as possible. Part of that is making our partners aware of what Valiant has been able to achieve for customers already – we have 9.9 out of 10 for customer service on Trustpilot.com – and showing them how many of their peers are already successfully working with us.”

2008

“Our main accomplishments are the outcomes for these customers because we know how critical funding is to the success – and often survival – of small businesses, and the flow-on effects their success has for employment and prosperity in their local community”

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PEOPLE

Feel like you have to bend over backwards to get an SMSF loan these days?

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CALL TODAY 1800 TOO EZY (866 399) This brochure is for distribution by Mezy Assets Pty Ltd (ABN 56 606 554 321) T/A Mortgage Ezy (Mortgage Ezy) only & ‘Ezy SMSF Solutions’ are only for Mortgage Ezy Accredited Introducers. Contact your broker for more details. #The Average Annual Percentage Rate Comparison rates are based on a $150,000 loan for 25 years. This Comparison Rate applies only to the example or examples given. Different amounts and terms will result in different Comparison Rates. Costs such as redraw fees or early repayment fees, and costs savings such as fee waivers, are not included in the Comparison Rate but may influence the cost of the loan. Government charges may apply. Comparison Rates shown are current as at 16 September 2019 and are subject to change. *Variable Interest rates are current as at 16 September 2019 & are subject to change. Terms, conditions & charges apply & are available on request. All applications are subject to Mortgage Ezy’s normal credit assessment criteria. Please note fixed and variable rates are subject to change which results in rate to borrowers being offered may not necessarily be the same as those offered to other customers. Mezy Assets Pty Ltd (ABN 56 606 554 321) T/as Mortgage Ezy | Australian Credit Licence No. 494807.

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PEOPLE

OTHER LIFE

TELL US WHAT YOU GET UP TO Email rebecca.pike@keymedia.com

“I a m very excited to bring smiles to children’s faces. The illustrations are so full of colour and animals, and the characters have so much fun in each book”

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Initial orders for Crossley’s first book

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Number of books planned for the series

3–4

Months before Crossley's next three books become available

A LITERARY LEGACY Mortgage broker Andrew Crossley, author of The 100k Property Plan, deviates from his usual topic to leave a legacy and bring joy to kids WHILE KNOWN for writing books on property and finance, mortgage broker Andrew Crossley wanted to leave a legacy for his kids and have some fun at the same time. He recently penned three children’s books, giving an insight into his softer side: Billy and Harry Love to Play, Billy and Harry Go to the Zoo and Billy and Harry Go to the Beach.

“The characters are named after my

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children,” Crossley says. “I love to see their faces when I show them what the characters are wearing and the activities they are doing. My children now talk in first person when telling me if they like or don’t like what the characters are wearing.”

Crossley’s new literary endeavour will see four more titles in the series released over the coming months in bookstores

around the country: Billy and Harry Go Camping, Billy and Harry Go on a Winter Holiday, Billy and Harry Go to the Playground and Billy and Harry and the Lost Treasure.

“The many children who already have the book love the stories,” Crossley says.

“I hope to create interest from schools as well, as I have used words and language that are educational in nature.”

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