Australian Broker 10.18

SEPTEMBER 2013 ISSUE 10.18

$4.95 POST APPROVED PP255003/06906

+INSIDE + NEWS A look at what’s been making headlines P4 SPECIAL REPORT

BROKERS ON NON-MAJORS

See how non-major lenders ranked in our inaugural survey P12 MARKET TALK

PROPERTY PITFALLS

Australia’s worst places to sell a property P20 BEST PRACTICE

MACQUARIE:

Standing out from the crowd JAMES CASEY, MACQUARIE

Macquarie has topped Australian Broker’s Brokers on Non-majors survey

N

on-majors can face an uphill battle vying for brokers’ attention. As much as brokers often have philosophical differences with the big four, the majority of third-party volumes still go through the majors. But there are non-majors carving out a significant place in the mortgage broking market, and Macquarie is leading the way.

FULL STORY PAGE 18

EXITING GRACEFULLY

Retirement is a process for brokers, not an event P22 SPOTLIGHT

CLAWBACK ETIQUETTE

Jon Denovan on how brokers can protect themselves P26

NEWS

brokernews.com.au

2

WHAT THEY SAID...

NUMBER CRUNCHING MORTGAGE BREAKDOWN

PHIL NAYLOR

“We’ve gone through a successful period with the regulators, but now they’re saying ‘we’ve done that, so what’s next? What else can we regulate?’” P10

Home loan demand for August

FAST FACT

28.7%

The proportion of income now required to meet home loan repayments, the lowest in 10 years

Investors – 38.7% First time buyers – 11.3% Refinancers – 33.5% Other – 16.5%

Source: AFG

Source: REIA

AARON MILBURN

“You have to listen to the end customer and understand what they’re after before you design strategy around that” P18

STEVEN HEAVEY

SALES HEATING UP

“We’re not just an alternative to the big four; we’re better”

Individual capital city house and unit sales, 2012/13 financial year

P19

DID YOU KNOW? 12 month change (houses)

12 month change (units)

Sydney

11.7%

40.5%

Melbourne

13.5%

29.4%

Brisbane

20.9%

29%

Adelaide

3.5%

23.8%

Perth

25%

18.6%

Hobart

12.2%

22.5%

Darwin

20.9%

33.4%

Canberra

11.6%

43.3% Source: RP Data

54.8%

The proportion of Australians who don’t expect the election result to impact their financial situation at all. Eighteen per cent actually expect to be worse off Source: Aussie Home Loans

JON DENOVAN

“The thing about charging anybody anything is to make sure that it’s clear and transparent, because if you charge by ambush, you’ll always get pushback” P26

NEWS 4

brokernews.com.au brokernews.com.au

YBR positive in the face of loss ■ Yellow Brick Road (YBR) posted a loss of $6.6m in its annual report for the year to June, largely due to a growth in commissions, consultancy fees and other expenses and despite a 68.4% revenue increase to $24,880,000.

Mark Bouris The company’s most expensive item, commissions and consultancies fees, increased by 119% alone.

However, YBR executive chairman Mark Bouris maintains a positive attitude towards the overall results, claiming that the company’s management team kept overheads flat “when you consider the growth that we have experienced”.

“2013 was very important from a product manufacturing point of view. Our origination agreement with Macquarie Bank assists us to competitively market mortgages and other products under the Yellow Brick Road banner,” he said in the annual report.

“That in turn helps us recruit further branches and of course increase revenue. It shouldn’t come as any surprise that we have doubled our book of mortgages, on which we are earning annuity income and that has become a material asset to the group.”

Bouris says YBR’s focus in 2014 will shift away from product development, manufacturing and promotion and move towards holding cost structure and materially increasing revenue.

EDITOR Adam Smith

QBE SPIKES LMI PREMIUMS, CITES RISK OF ‘LONG-TERM VOLATILITY’ ■ QBE Group has raised its LMI premiums by 9% this year, claiming long-term volatility risk in the Australian property market is behind the decision, despite falling mortgage default rates across the country.

The insurance giant’s CEO, John Neal, told journalists at a media briefing that LMI is a ‘long-term’ product and that QBE anticipated more volatility in the housing market in years to come.

Neal’s comments arrive in the wake of QBE Group’s half-year financial results, which announced the company’s profits fell 37%, down to $523m in the latter half. APRA’s most recent figures place QBE’s gross earned premium in 2012 at $234.4m.

QBE shares a duopoly on the Australian LMI sector with Genworth (the two companies together control 75% of the market) and Neal says QBE’s pricing is similar to that of its only major competitor. ‘‘When someone pays us a premium in 2013, we think the life of the policy is between nine and 10 years… So you’re trying to look forward into the market place and make sure you’ve charged the right premium today.”

DID YOU KNOW?

37%

The amount by which QBE Group’s profits fell in the latter half of the 2013 financial year

RHG book dropping by 25% a year ■ The run-down in RHG’s mortgage portfolio over the past year resulted in a 26% fall in earnings in the year to June 2013, according to Banking Day reports.

At time of writing, RHG’s board is considering competing takeover offers and yesterday reported a net profit of A$30.3m for the 12 months to June – down from $40.7m in the previous corresponding period.

The company manages the remnants of what was the Rams Home Loans mortgage portfolio. The value of the book fell from $2.8bn at the end of the 2011/12 financial year to $2.1bn at the end of June.

The arrears rate stood at 4.25%, while the individually assessed provision for ‘bad and doubtful’ debts was $4.1m and the collective provision was $1.4m.

RHG’s board has entered into a

merger implementation deed in respect of a proposal by a syndicate led by Resimac to acquire all of RHG’s share for 48 cents a share. The bid values RHG at $148.1m.

The directors have not yet determined whether a competing offer from a syndicate led by Pepper Australia is superior and the Resimac syndicate has the right to submit a counter offer.

PUBLISHER Simon Kerslake COPY & FEATURES JOURNALISTS Mackenzie McCarty, Aidan Devine PRODUCTION EDITORS Roslyn Meredith, Moira Daniels ART & PRODUCTION SENIOR DESIGNER Rebecca Downing SALES & MARKETING SALES MANAGER Simon Kerslake ACCOUNT MANAGER Rajan Khatak MARKETING EXECUTIVE Anna Farah TRAFFIC MANAGER Abby Cayanan CORPORATE CHIEF EXECUTIVE OFFICER Mike Shipley MANAGING DIRECTOR Claire Preen CHIEF OPERATING OFFICER George Walmsley MANAGING DIRECTOR – BUSINESS MEDIA Justin Kennedy CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil Editorial enquiries Adam Smith tel: +61 2 8437 4792 adam.smith@keymedia.com.au Advertising sales Simon Kerslake tel: +61 2 8437 4786 simon.kerslake@keymedia.com.au Rajan Khatak tel: +61 2 8437 4772 rajan.khatak@keymedia.com.au Subscriptions tel: +61 2 8437 4731 fax: +61 2 9439 4599 subscriptions@keymedia.com.au Key Media keymedia.com.au Key Media Pty Ltd, Regional head office, Level 10, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 Offices in Singapore, Toronto, New Zealand brokernews.com.au 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 Australian Broker magazine can accept no responsibility for loss.

Australian Broker is the most-often read industry publication, according to independent research carried out by the EhrenbergBass Institute for Marketing Science at the University of South Australia in December 2008.

The research also found that brokers rate Australian Broker as the best for both news content and feature articles, followed by sister publication MPA. Overall, on all categories, Australian Broker ranks top followed by MPA. The results were based on a sample of 405 respondents who were the subject of telephone interviews.

NEWS brokernews.com.au

6

Canberra nation’s wealthiest region

WORLD NEWS UNITED STATES OF AMERICA CASH IS KING

Buyers are bringing cash to the table in the US, with several of the country’s largest metro areas showing double-digit increases in all-cash purchases.

New data from RealtyTrac has shown all-cash purchases rose in July, accounting for 40% of all sales of residential property nationwide. That’s up from 35% in June, and 31% in July of last year.

Several of the nation’s biggest metro areas saw doubledigit month-over-month increases in all-cash purchases.

Phoenix and Seattle each saw a 21% rise, while cash purchases in Riverside-San Bernadino were up 26%.

Cash purchases rose by 32% in Los Angeles, 66% in St. Louis and a whopping 82% in Dallas.

Across the board, sales volumes were up, rising 4% month-on-month and 11% from a year ago. The increase is the largest annual rise in sales volume this year. But sales volumes were down in states that have seen the biggest annual increases in median home prices, such as California, Arizona, Nevada and Georgia.

MILLIONS STILL UNDERWATER

More than 10 million US homeowners are still deeply underwater on their mortgages, according to a leading housing analytics firm.

RealtyTrac has said that 10.7 million US homeowners owe at least 25% or more on their mortgages than their properties are worth, and another 8.3 million are either slightly underwater or just barely above it.

Those numbers are improving, however. Deeply underwater homeowners – with a loan-to-value ratio on their properties of at least 125% – represented 23% of US residential properties with a mortgage in September, according to RealtyTrac. That number is down from 11.3 million deeply underwater homeowners – about 26% of all residential properties – in May. A year ago, there were 12.5 million deeply underwater properties.

“Steadily rising home prices are lifting all boats in this housing market and should spill over into more inventory of homes for sale in the coming months,” said Daren Blomquist, vice president at RealtyTrac.

CANADA MORTGAGES LEAD HOUSEHOLD DEBT

New Equifax data suggests that mortgage debt has eclipsed credit cards as the number one driver of Canadian household debt.

“It’s a good observation and from where I sit I concur with that,” said Keith Watters of CYR Funding. “What can we do about it? Raise the interest rates on the mortgages and lower the interest rates on the credit cards.

“As long as rates stay low the trend will continue,” Watters said. “I tell my clients to refinance mortgages because the rates are the lowest they’ve ever been. Get the money working for you.”

The report states that debt has risen across all age groups, bolstered by a 7.4% increase in outstanding mortgage debt year over year – up to $168,387 from $162,985. Unsecured debt has traditionally been the biggest credit culprit; however, while credit card debt hasn’t risen significantly recently, mortgage debt has – despite tightened lending standards.

DID YOU KNOW?

■ People in the ACT are, on average, wealthier than those living anywhere else in Australia, according to the latest ABS figures.

While the average Australian household’s net worth stands at $781,000, people living in Canberra are far better off, with an average wealth of $930,000 – or around 28% higher than the national average.

“Western Australia, NSW, Victoria and the Northern Territory all had levels of wealth close to the Australian average,” ABS director, Caroline Daley, told the Australian Financial Review yesterday afternoon.

23.7% The average portion of income needed for rent payments

The fact that public service jobs generally require Australian citizenship and tertiary education are believed to be two of the underlying factors behind the region’s wealth figures.

ACT house prices also rose above $576,000 in the June quarter, according to Australian Property Monitors’ quarterly housing report – a rise of 4.2% over the year.

However, the fact that many people who work in the greater Canberra area live in the adjacent NSW town of Queanbeyan, where average house prices are lower, is believed to be potentially skewing the data.

NT $793k WA $789k

QLD $705k

Source: REIA

AVERAGE WEALTH BY STATE

SA $687k

NSW $804k ACT $930k

VIC $813k NATIONAL AVERAGE $668k

TAS $668k

ASIC WARNING FAILS TO STOP MIKE MORGAN LOANS ■ Fraudulent home loan group Mike Morgan Loans was outed by ASIC late last month, but further investigation by Australian Broker has revealed the con artists are still attempting to do business with Australian consumers.

An email sent to Mike Morgan Loans by Australian Broker editor, Adam Smith, enquiring about the ASIC warning, elicited the following response: “Hello: We give all kinds of Loan at 3% interest rate, please visit our website and read more about us and also download the Application form, fill it and send it to us via email, We do hope to build a strong business relationship between this Company and yourself.”

Australian Broker contacted ASIC regarding the email, but a spokesperson for the regulator was unwilling to explain whether there was any way for Australian authorities to have sites like Mike Morgan Loans’ shut down.

“We came out with our warning on Friday… we’d hope that people take those warnings and be cautious when approached with unsolicited offers of financial products.”

Furthermore, sources reveal it took the regulator nearly three months to warn the Australian public about Mike Morgan Loans, though ASIC maintains it acted as efficiently as possible.

“ASIC acted in a timely manner in response to the claims... Prior to issuing a Public Warning Notice, ASIC must take steps to investigate the claims made and to ensure it has sufficient information about which, to warn the public.”

NEWS

brokernews.com.au

8

Adelaide encourages broker use with discount

ASIC commences legal action against lender and broker

■ Adelaide Bank has dropped

■ ASIC has taken legal action against a Cairns-based

0.22% from the SmartSuite residential home loan range for new customers taking out loans via a mortgage broker.

The lender’s general manager, Damian Percy, said the move comes as Adelaide Bank makes “significant changes” to the way it assists its broker partners, as well as being part of an overall push to “rejuvenate” the brand.

“We’ve been dedicated to servicing brokers for more than 20 years and built strong relationships within the industry, which allows us to understand their needs,” said Percy.

“The new reduced rate is just the beginning of some exciting changes we’re implementing to create a better environment and a more compelling case for our broker partners to do business with us.”

He said the bank is also

Damian Percy

committed to maintaining its ‘industry-leading’ position on loan approval turnaround times, particularly in an environment where the property industry is gathering momentum.

“The opening in a few weeks of our brand new headquarters at 80 Grenfell Street in the heart of Adelaide will also help us build on our strengths with workspaces and service areas that will greatly improve how we work together as a team in servicing our broker partners,” said Percy.

ADELAIDE’S BROKER SWEETENER

DID YOU KNOW?

0.6%

Australian GDP growth for the second quarter Source: ABS

Product

Current rate

Change

New rate

SmartSaver

5.21%

-0.22%

4.99%

SmartFit Variable

5.31%

-0.22%

5.09%

SmartDoc Variable

6.41%

-0.22%

6.19%

SmartDoc Plus

6.66%

-0.22%

6.44%

Product

New annual percentage rate

Comparison rate

SmartSaver

4.99%p.a.

5.03%p.a.

SmartFit

5.09%p.a.

5.24%p.a.

SmartDoc

6.19%p.a.

6.34%p.a.

SmartDoc Plus

6.44%p.a.

6.59%p.a.

lender and broker who offered high-interest credit contracts to consumers in one of Australia’s most disadvantaged local areas.

Proceedings have been filed in the Federal Court of Australia in Brisbane against Channic Pty Ltd (Channic), Cash Brokers Pty Ltd (Cash Brokers) and the sole director of both companies, Colin William Hulbert.

ASIC alleges that Channic and Cash Brokers breached the responsible lending laws that apply to lenders and brokers licensed under NCCP. Cash Brokers assisted consumers in obtaining loans from Channic at 48% interest per annum to enable them to purchase vehicles from Ang Hulbert & Associates Pty Ltd, trading as SuperCheap Car Sales (SuperCheap). Hulbert is also the sole director of SuperCheap.

ASIC alleges SuperCheap’s advertising targeted consumers on low incomes or in receipt of Centrelink benefits and those with bad credit histories.

All of the consumers are Indigenous Australians and most live in the relatively isolated community of Yarrabah near Cairns. In 2011 the Census identified Yarrabah as the most disadvantaged Local Government Area in Australia.

SYDNEY BROKERAGE BREAKS $1 BILLION MILESTONE ■ Sydney-based EasyBiz Finance Pty Ltd has broken through the $1bn milestone of loans provided to small and medium sized businesses across Australia.

Representing 39 lenders and 22 different loan products, the company is finding strong demand from business owners who are no longer prepared to be locked into mortgaging their homes to continue funding their operations and expansion.

“We are finding a niche in the market by being creative and fully investigating the cash flows and prospects of businesses, many of which can be taken to the next level of growth with a little more financial backing,” says EasyBiz Finance founder and CEO, Dominic Lambrinos.

NEWS brokernews.com.au

10

Advisers, brokers slammed for accepting shady SMSF commissions ■ Financial advisers and some brokers are being offered potentially dodgy incentives to put their clients in SMSF property investments, with promises they can double already generous fees and commissions by recommending property companies, according to the Australian Financial Review and Financial Rescue managing director, Neil Kendall.

While FoFA reforms came into effect on July 1 making it illegal for financial advisers to accept commissions, Kendall told Australian Broker that large cash incentives are potentially influencing recommendations made by both advisers and mortgage brokers. “[The incentives come] from people who are providing a package of self-managed super fund administration and an associated property and borrowing in that package,” said Kendall, who refers to such package deals as ‘McSuper funds’.

“These are not tailored to individuals’ circumstances. These are a pre-packaged solution that is rolled out to anybody who is prepared to take it… Financial planners are required to provide advice that’s appropriate to the client – not to take packages and sell them to clients.”

He said a major problem lies in the fact that property investment is still a grey area, largely outside the jurisdiction of major regulators.

“They fall outside the general regulation that applies to mortgage brokers and financial planners and certainly something needs to be done to tighten that up. I would suspect this hasn’t been thought through fully at this point in time.”

THESE ARE A PRE-PACKAGED SOLUTION THAT IS ROLLED OUT TO ANYBODY WHO IS PREPARED TO TAKE IT” – NEIL KENDALL

MFAA warns brokers against ‘predatory’ lenders ■ Commercial finance

brokers are being warned to watch out for ‘predatory’ lenders, with MFAA president, Phil Naylor, saying some broker members have noticed ‘sharks’ circling in the sector.

“It’s mainly in the commercial finance area – not so much the mortgage Phil Naylor area – and it’s a trend that members on our… commercial finance panel committee have noticed,” Naylor told Australian Broker.

While the MFAA isn’t able to provide any names due to defamation laws, Naylor said the fact that there’s no regulation in the commercial area is likely attracting unscrupulous lenders.

“We’re in a [tight spot] because we lobby very strongly to the government that there shouldn’t be any regulation in commercial finance. It just shows there are some small lenders on the fringe, in the commercial area, who are acting in a predatory way.”

He’s also quick to note that brokers are not believed to be working alongside the shady lenders, but rather are being duped right alongside their clients.

“The reason it’s come to our attention is brokers are complaining about [the lenders] because they’re concerned that they’re ripping off customers, but also giving the broker a bad reputation because … the consumer feels that somehow the broker’s let them down.”

The MFAA plans to publish an article in the October edition of their magazine, outlining how commercial finance brokers can identify dodgy lenders and avoid them.

Industries must unite to tackle excessive regulation: Naylor Finance industry spokesgroups must work together in an effort to keep the threat of overlegislation at bay, according to MFAA CEO, Phil Naylor.

Speaking at a filmed meeting with CPA CEO, Alex Malley, AFA CEO, Brad Fox and FPA general manager of government relations, Dante de Gori, Naylor stressed the importance of collaboration between industries in order to tackle issues with excessive government intervention in the finance industry.

“To me, the opposite of competition is collusion … and no one’s suggesting that we should collude. But I think it makes a lot of good sense [to] collaborate. I don’t see that there’s just going to be one huge profession one day – there’s lots of differences – but I think

there are some commonalities.

It’s important for the associations to work together … so that when we do get before the regulators, we know what each of the others are going to say and we can explain it [to regulators] very cogently.”

Naylor went on to argue that the ‘culture in Canberra’ is where bureaucrats view it as their role to create new regulation – whether it’s necessary or not.

“If they’re not writing regulations, they’re not doing anything. We’ve gone through a successful period with the regulators, but now they’re saying ‘we’ve done that, so what’s next? What else can we regulate?’ They’re out there finding solutions to problems that don’t exist.”

De Gori followed Naylor’s

comments by arguing that associations like his and the MFAA – not regulators – should be in charge of determining the standard for someone wanting to enter and practise a particular profession.

“I think we should control that standard, not the regulator. Then you look at how we can provide a professional framework for people to actually act, conduct and be motivated in the industry.

“We have a lot to learn from accounting bodies with respect to what they’ve done,” added de Gori. “We need to keep raising that bar; we need to push Canberra back and say ‘we can do this’ – but we need to show it and I think we need to work together around that.”

Dante de Gori

SPECIAL REPORT

brokernews.com.au

12

Brokers on non-majors Australian Broker takes a look at how the non-major banks are performing

F

ew would argue that the Australian banking sector is dominated by the big four. According to AFG figures, they account for three-quarters of the mortgages written in Australia. But competition is growing for the major banks, with non-majors providing a compelling proposition to borrowers and brokers.

Between home-grown upstarts and multinational lenders finding a foothold in the Aussie market, brokers are being provided a wider range of choices for their clients.

While our sister publication, MPA, takes a look at how all lenders across Australia compare, we wanted to hone in on nonmajors. In our inaugural non-major survey, we look at how lenders are performing with the third-party channel, and who’s standing out from the crowd.

METHODOLOGY We surveyed more than 500 brokers, asking them a range of questions about lenders’ performances. We then collated this data, applying weighting to ensure a similar sample size across the top non-major ADIs in the country.

The areas we examined were:

● BROKER REMUNERATION ● ONLINE PLATFORM AND SERVICES ● COMMUNICATIONS, TRAINING AND DEVELOPMENT ● BDM SUPPORT ● CALL CENTRE SUPPORT ● LENDER IMAGE AND REPUTATION ● PRODUCT QUALITY ● LOAN ASSESSMENT, APPROVAL AND SETTLEMENT ● CREDIT POLICY We then averaged the scores to find the overall service performance among non-major lenders.

SPECIAL REPORT

brokernews.com.au

13

BROKER REMUNERATION How the non-majors rate Broker remuneration

2.91/5

Commissions are a nice sweetener for brokers, but not a motivating factor in the lender they recommend to clients. Broker remuneration ranked as fifth most important out of the eight categories surveyed. Nevertheless, a bank that shows appreciation for brokers is bound to draw their attention, and AMP, Macquarie and Citibank stood out among the pack.

TOP PERFORMERS

1. AMP 2. MACQUARIE 3. CITIBANK Highly recommended:

SUNCORP, ADELAIDE

Money for no At 2.91 thing? out of a poss broker ible 5, s gave n on-ma lowest jors th avera e remun ge sco res for eratio n .B ranke d remu ut brokers a lso nerati on fift terms h in of imp ortanc e.

WE DON’T THINK COMPLEX EQUALS SMART. OUR COMMISSION STRUCTURE IS CLEAR AND SIMPLE – JAMES CASEY, MACQUARIE

SPECIAL REPORT

brokernews.com.au

14

ONLINE PLATFORM & SERVICES

LOAN ASSESSMENT, APPROVAL & SETTLEMENT

How the non-majors rate Online platform and services

How the non-majors rate Loan assessment, approval and settlement

As technology becomes a more important part of the way brokers do business, lenders are moving quickly to ensure their online offering makes the home loan process seamless. Macquarie, Suncorp and Citibank showed their online offering appeals to brokers, with ING Direct and Adelaide also scoring high marks.

The loan assessment, approval and settlement process was ranked as the single most important category by brokers. Rates, commissions and products all took a back seat to how quickly and efficiently a lender can settle a loan. If it’s important to brokers, it’s important to their clients, and Macquarie again topped this crucial category with Suncorp and Adelaide not far behind.

3.63/5

3.61/5

TOP PERFORMERS

TOP PERFORMERS

1. MACQUARIE 2. SUNCORP 3. CITIBANK

1. MACQUARIE 2. SUNCORP 3. ADELAIDE

Highly recommended:

Highly recommended:

ING DIRECT, ADELAIDE

ING DIRECT, AMP

CARVING OUT THEIR SHARE ff ?

Logging o ing the grow f o e it p s In gy, f technolo o e c n a t r impo ne nked Onli a r s r e k o br es as nd Servic a m r o f t Pla t importan t s a le e h t category.

Non-majors have a fight on their hands to carve out market share, as major banks dominate the market.

Mortgage market share, August 2013

26.3%

33.2% 66.8%

“WE LISTEN TO FEEDBACK AND WE ACTUALLY IMPLEMENT IT AS WELL. THERE HAS BEEN A LOT WE HAVE IMPLEMENTED OVER THE LAST TWO YEARS TO BUILD OUR BRAND AWARENESS IN THE MARKET AND TO RE-ENGAGE WITH BROKERS” – BELEN LOPEZ DENIS

Refinancers

73.7% First homebuyers

22.1%

77.9% Investors

Majors Non-majors Source: AFG

SPECIAL REPORT 15

brokernews.com.au

COMMUNICATIONS, TRAINING AND DEVELOPMENT

CALL CENTRE SUPPORT How the non-majors rate Call centre support

How the non-majors rate Communications, training and development

3.57/5

3.47/5

In a competitive lending environment, and one in which major banks often draw the lion’s share of broker business, non-majors have to work doubly hard to keep the lines of communication with the third-party channel open. Macquarie, Suncorp and Citibank again received accolades from brokers for offering training and development opportunities, as well as regularly communicating on product and policy changes.

Call centres can be a major source of frustration for brokers. When there’s a question on a deal, brokers don’t want to be left waiting in an interminable queue or transferred to someone with little knowledge and less power. Excellent call centre support ensures a smooth process for brokers and their clients, and Macquarie, Citibank and Suncorp again stood out in the category. ING Direct and AMP were also praised for their call centre support.

TOP PERFORMERS

TOP PERFORMERS

1. MACQUARIE 2. SUNCORP 3. CITIBANK

1. MACQUARIE 2. CITIBANK 3. SUNCORP

Highly recommended:

Highly recommended:

AMP, ING DIRECT

ING DIRECT, AMP

FAST FACT

25.1%

Non-majors’ total share of the mortgage market for August 2013 Source: AFG

SPECIAL REPORT

brokernews.com.au

16

LENDER IMAGE & REPUTATION How the non-majors rate Lender image and reputation

3.77/5

There’s no doubt that the big four dominate the lending landscape, and many non-majors can end up relegated to back-of-mind when borrowers are considering a home loan. But some non-major lenders have excelled at carving out a space in consumers’ consciousness, earning a strong reputation in the Australian marketplace.

Macquarie, Suncorp and ING Direct were ranked by brokers as the lenders with the strongest reputation, while AMP and Citibank also showed themselves to be well-respected by Australian consumers.

CREDIT POLICY How the non-majors rate Credit policy

3.56/5

Flexibility and clarity were two of the key characteristics brokers said they were looking for in a lender’s credit policy. Brokers indicated that a willingness to look at a broad range of clients and scenarios, and a clearly communicated policy went a long way toward winning their support. Adelaide, Macquarie and AMP all impressed brokers with their credit policies, and Suncorp and Citibank also performed well.

TOP PERFORMERS TOP PERFORMERS

1. MACQUARIE 2. SUNCORP 3. ING DIRECT

1. ADELAIDE 2. MACQUARIE 3. AMP Highly recommended:

SUNCORP, CITIBANK

Highly recommended:

AMP, CITIBANK

s Top mark e of e rag scor e v a n a h Wit le 5, f a possib o t u o 7 n .7 3 Reputatio & e g a Im h Lender ry in whic o g e t a c e is th the s received r jo a -m n no om anking fr highest r brokers

SUNCORP BANK IS THE CORNERSTONE OF THE NONMAJOR BANKING SECTOR WHICH IS VITAL FOR COMPETITION, IT BENEFITS THE CUSTOMER AND LEADS TO BETTER PRODUCTS, PRICING AND SERVICE – STEVEN HEAVEY, SUNCORP

BDM SUPPORT How the non-majors rate BDM support:

3.64/5

The BDM is the broker’s link to the lender, giving a human touch to the relationship. Knowledgeable BDMs can be a lender’s greatest asset. Brokers thought so as well, ranking the category second overall in terms of importance. Macquarie, Citibank and AMP all got high marks for their BDMs, with Suncorp and ING Direct also receiving a nod.

TOP PERFORMERS

1. MACQUARIE 2. CITIBANK 3. AMP Highly recommended:

SUNCORP, ING DIRECT

SPECIAL REPORT 17

brokernews.com.au

PRODUCT QUALITY How the non-majors rate Product quality

3.62/5

The product quality category looked at how nonmajors fared on competitive interest rates, innovative product features, the range of products on offer and how those products were differentiated from those of other lenders. At the end of the day, brokers have to have a compelling product offering for their clients, and Macquarie, St.George and AMP proved to have the product quality that brokers appreciated. ING Direct and Suncorp were also rated highly.

TOP PERFORMERS

OVERALL How the non-majors rate Overall

3.58/5

Taking into account every aspect of a lender’s service and offering to brokers, Macquarie, Citibank and Suncorp proved to be the favoured non-majors. Brokers said the lenders offered great BDM support, strong products and speedy turnarounds, helping the three come out at the top of our non-major survey. AMP and ING Direct also performed strongly across a range of categories.

TOP PERFORMERS

1. MACQUARIE

1. MACQUARIE 2. ST.GEORGE 3. AMP

2. CITIBANK

Highly recommended:

3. SUNCORP

ING DIRECT, SUNCORP

Highly recommended:

AMP, ING DIRECT

NEWS 18

brokernews.com.au

Non-majors: Standing out from the crowd

CONTINUED FROM PAGE 1

Three lenders stood out in Australian Broker’s Brokers on Non-majors survey, and they discussed how they’re drawing brokers’ attention from the big four

I

n Australian Broker’s inaugural Brokers on Non-majors survey, Macquarie stood out among its peers, topping seven of eight categories and ranking number one overall. The bank’s head of mortgages product, James Casey, said Macquarie’s success has been due to a number of small factors.

“Apparently there’s this Cornetto ad that talks about the boring bits. That’s what we’ve used in the business here. We’ve just got to get the boring bits right. There’s no one silver bullet, no one magic wand. It’s about doing little things right,” he said.

Casey said the bank has worked hard since its return to the broker market in 2010 to provide a compelling service proposition.

“When we came back in the market three years ago, we had our systems and processes locked in a time warp from 2007 or 2008. It took three years to improve those processes,” he said.

And three years of improvements hardly marks the end of the line for the bank. In spite of the strong result, Casey said it’s far from “mission accomplished” for Macquarie.

“It’s probably a never-ending project. I think it’s really wonderful that we’ve done so well, but the minute you think you’re done that’s when you’re in trouble.”

“IT’S UP TO US AS A LENDER TO GO INTO BROKERS’ OFFICES AND SHOW THEM WHAT AN ALTERNATIVE IS” – AARON MILBURN

STRONG PERFORMERS

AARON MILBURN

Though Macquarie stood out from the pack, other non-majors also performed extremely strongly.

Citibank and Suncorp were ranked numbers two and three, respectively, with both receiving stellar marks from brokers. Citibank head of broker distribution Aaron Milburn attributed the lender’s success to a number of factors.

“Firstly, it’s listening to and understanding what brokers want before trying to deliver strategically for brokers. You have to listen to the end customer and understand what they’re after before you design strategy around that,” Milburn said.

“Second, it’s making sure that all internal stakeholders are aligned to deliver that strategy to brokers.

“The third thing is the ownership model of allowing brokers to have direct access to credit officers so the timeframe of any enquiry is cut dramatically, and you deal with the person who

NEWS 19

brokernews.com.au

assessed your loan and no one else.”

Suncorp head of intermediaries Steven Heavey agreed that access was a strong selling point for non-majors, and was a key factor in Suncorp’s performance.

“Access is key and we understand brokers need to talk to the decision maker. This is why we give brokers direct access to the credit assessor. Approval to settlement is paramount and we support the brokers every inch of the way. Turnaround times have significantly reduced, driven by our workflow management tool which has enabled us to process loans quickly and seamlessly. But we strive for excellence and want to push further ahead to be number one overall,” Heavey said.

Citibank head of mortgage strategy product and marketing, Belen Lopez Denis, added that brand awareness played a significant role in ensuring success for non-majors. She said the bank had worked hard on putting its brand at the forefront of brokers’ consciousness.

“Marketing 101 says you need to get people to see your brand several times just to get them to recall the brand. For us it’s just the consistency of being there. There’s being there in the sense of events; for example, we’re one of the biggest sponsors of the MFAA, so we ensure we’re present at the key events. We’re also in partnership with several aggregators to make sure we’re top of mind. But I think it’s the reinforcement of our value proposition and having our face to the market through our BDMs supporting the brand. That’s where we’re becoming incredibly strong,” she said.

“You want to ensure your brand is front of mind, and once brokers actually start to use us, have good service delivery and good support. Then it becomes a recommendation. If a broker has a good experience with us, they’ll talk to other brokers,” Lopez Denis added.

PROVIDING AN ALTERNATIVE

Non-majors’ strongest proposition to brokers may be the fact that they fit so well with the third-party ethos. Brokers pride themselves on being upstarts, battlers and entrepreneurs, providing borrowers an alternative to being at the mercy of banks and offering a personal touch big lenders can’t manage.

Non-majors hew to a similar philosophy.

“Brokers like choice, and whether you like to categorise that as majors and non-majors, you’ve got competition and diversity in terms of size and offerings. Because of our size and our nature, we can be personal. Our scale allows us to do that,” Casey said.

Heavey also pointed to the human element as vital to the bank’s success.

“A large part of our investment to the business has been in our team, who have the time to meet with brokers and explain in detail the benefits of Suncorp Bank products and why they are better than our competitors. The service today is very different, we’re not just an alternative to the big four, we’re better.”

On the same front, a challenge for non-majors, Casey said, is keeping this personal touch while still managing to drive efficiencies.

“Our greatest challenge is how to industrialise without losing the human aspect. How do we let technology do the heavy lifting without losing the human touch? This is a people business, and we don’t want credit engines making the decisions.

How do we keep that human face but still have operational efficiencies?”

But the most important thing non-majors must keep in mind, Milburn said, is to deliver what they promise.

STEVEN HEAVEY

ACCESS IS KEY AND WE UNDERSTAND BROKERS NEED TO TALK TO THE DECISION MAKER – STEVEN HEAVEY

“At the end of the day, you can have all the marketing in the world and the biggest brand, but that doesn’t mean you’re going to be successful.

This bank continues to grow its volumes on the back of doing what it says it’s going to do. You can have the flashiest shopfront in the world, but if the inside is not too great you’re not going to have many people come back.”

Ultimately, Milburn said, it’s incumbent upon non-majors to make their case to brokers.

“It’s up to us as a lender to go into brokers’ offices and show them what an alternative is.”

And commitment pays as well, Casey said.

With non-majors typically unable to compete on branch footprint, the third party becomes an increasingly important channel. Non-majors appreciate this, Casey said, and brokers appreciate it as well.

“When brokers are such an important channel for non-majors, it really sharpens our focus and clarifies our thinking on a whole lot of issues. I think generally brokers feel the vibe that you are committed to them,” he said.

MARKET TALK

brokernews.com.au

20

Australia’s worst places to own property The lifestyle may be great, but some suburbs across Australia have shown themselves to be risky investments. Aidan Devine investigates Forget whether they are great places to live; some property markets have not been kind to the people who own property there, not only crashing in value but lacking signs of strong buyer interest.

The following are markets where vendors are struggling to get a good result:

NOOSA HEADS, QLD

You wouldn’t have much to complain about living in Noosa. The sea has that turquoise colour that screams ‘holiday’, and it hardly ever rains. Too bad about the property values. Apartment prices have tumbled by just short of a third of what they were five years ago, according to RP Data, while the average homeowner trying to sell their property is chipping 20% off their asking price just to make a sale. Investors are struggling too. The average rental yield figure on units is just 3.9%. Ouch.

COOCHIEMUDLO ISLAND, QLD

Sandy beaches wrap around this island in Moreton Bay, near Brisbane, which is apparently a popular hangout for turtles. What could be bad about that? Owning a property on this jaw-dropping stretch of land would certainly impress most people, but it wouldn’t convince them to take the property off your hands.

The average property takes almost a year to sell and, when it does, the owners are getting, on average, a quarter less than they originally asked for. Add to that the fact that property values are 7% lower than they were five years ago and you get a property market that, financially speaking, isn’t great to be in.

BERRIMA, NSW

If you had bought back in 2008, you’d be cursing your luck. Prices are close to half of what they were back then, and RP Data July figures suggest that not many people want to buy there anymore.

Houses are staying on the market for an average of 229 days, which is more than seven months.

Buyers who eventually purchase these houses are also getting great discounts. The accepted offers they’ve made on properties have averaged 20% less than the vendors’ listed prices.

PEPPERMINT GROVE, WA

Perched within the Southern Highlands of NSW, Berrima is a popular stop between Canberra and Sydney. It is little more than a village, but that hasn’t stopped house prices from averaging in at around $600,000. That may sound impressive, but prices were considerably higher five years ago.

Sure, Peppermint Grove is super elite. But if you’re one of Perth’s super elite who have dropped their money into Peppermint Grove properties and are now looking to sell, you’re unlikely to get a good result. Property prices have sunk by more than a fifth over the last five years, which, considering the average property is valued at $3m, equates to hundreds of thousands of dollars.

Most Peppermint Grove properties are also taking more than five months to sell, and although that is not unusual for properties with that price tag, vendors are still slashing their original asking prices by more than 20%.

In other words, even though prices have dropped, vendors are still getting considerably less than they would have wanted and are waiting a long time to get it.

OTHER MARKETS WHERE IT IS CURRENTLY TOUGH TO SELL Median price

5-year growth

Days on market

Vendor discount

Bundaberg, QLD

$365,000

-17%

245

-20%

Plantagenet, WA

$220,000

-4%

237

-23%

Suburb

Region

Woodgate (Houses) Mount Barker (Units) Nelly Bay (Houses)

Townsville, QLD

$352,500

-2%

220

-23%

Hawks Nest (Units)

Great Lakes, NSW

$310,000

-44%

203

-32%

Albany (Houses)

Albany, WA

$517,500

-20%

203

-22%

Anstead (Houses)

Brisbane, QLD

$590,000

-12%

198

-21%

Airlie Beach (Units)

Whitsunday, QLD

$460,000

-23%

177

-23%

Woorim (Units)

Moreton Bay, QLD

$310,000

-14%

176

-23%

Palm Beach (Houses)

Pittwater, NSW

$1,815,000

-28%

173

-22% Source: RP Data, July 2013

MARKET TALK brokernews.com.au

21

What have the Queensland floods done to home values?

Widespread flooding in the Sunshine State hasn’t hit values as hard as anticipated

ROCKHAMPTON

Following devastating floods, Rockhampton residents reported seeing their homes and backyards drowning in metres of water as the river swelled in from all sides. Roads became paddleways, fences turned to driftwood, and a startling reality hit: this didn’t seem like a place where anybody would want to be a property owner.

That was in January this year, and though an ensuing ‘mud army’ came in to clean up the mess, the damage to house values promised to take longer to fix – or would it?

The latest RP Data figures show that the city’s property values have not been severely affected by the floods.

Rockhampton property values in riverside areas such as Koongal, Depot Hill and the CBD appear to be no worse off than they were before the floods.

Houses in the CBD have had just 2% shaved off their values in the 12 months to June, while the same period has seen Koongal and Depot Hill both witness a 12% increase in values.

ROMA AND IPSWICH

Judy Fredriksen notes in the Ryder Report that the contrasting effects of flooding on growth in property values can be seen in Ipswich and Roma, which have seen severe flooding in recent years.

In Roma’s case, floods have come three summers in a row, but property values are still recording average annual growth figures of 13.4%.

The water may have caused a lot of human misery in this Darling Downs town, but it hasn’t taken away the tremendous coal seam gas fields nearby and the growth this has injected into the market. Even over the last year, Roma property values have punched above their phenomenal average annual growth figures, growing 14%.

Ipswich is a different case. Not affected by the resources boom as significantly, property values have not performed as strongly. June 2013 property prices in the Ipswich CBD were down 19% on June 2012 prices, and while this could be an argument for a flood-induced price fall, the 19% drop is superseded by price falls in many Queensland areas where there has been no flooding at all. These include suburbs in Cairns and on the Sunshine Coast, such as Portsmith or Sunshine Beach, where values have dropped by more than 40%.

BUNDABERG

If there was any doubt as to whether floods invite as much of a drop in prices as most of us would

THIS YEAR, AUSTRALIA’S SUGAR CAPITAL EXPERIENCED ARGUABLY THE WORST FLOODING IN THE STATE. BUT DID HOUSES LOSE HALF THEIR VALUE?

FAST FACT

2%

The amount house values in Rockhampton’s CBD have fallen since last year’s floods Source: RP Data

think, perhaps the final illustration of how property markets react can be seen in a classic example – Bundaberg. This year, Australia’s sugar capital experienced arguably the worst flooding in the state. But did houses lose half their value?

With property prices growing fairly strong in a handful of suburbs, but falling by more than 10% in just two of the city’s 24 suburbs, the answer would appear to be ‘no’.

More good news for Queensland Good news has finally started trickling out of the Queensland housing market, with the Real Estate Institute of Queensland (REIQ) indicating sales activity and house prices in the state are strengthening.

The REIQ June quarter median house price report found the number of sales had increased “significantly”, with preliminary numbers indicating house sales across the state had increased 22% on March quarter figures.

The June 2013 quarter figures were also 40% higher than figures for the June quarter of 2012.

“This is the fourth consecutive quarter of positive news, said REIQ spokesperson Anton Kardash. “The September quarter last year was a particularly strong one for the Queensland market and that momentum has been sustained throughout the following three quarters of sales activity.”

REIQ data shows that over the June quarter the median house price in Brisbane increased 1.6% to $527,250, and it increased 3% over the year ending in June. The number of house sales in Brisbane also increased compared to the previous quarter and last year – up 32% and 44% respectively.

“REIQ estimates of Queensland investor activity also show that the number of investment dwellings financed is tracking at about the historical average,” said Kardash. “No doubt investors have recognised the strong rental market, including low vacancy rates, and are taking the plunge, while first home buyers remain relatively absent.”

BEST PRACTICE

brokernews.com.au

22

The art of exiting gracefully Sean Richardson of Freshwater Financial Services says retirement for brokers is a process, not an event

I

recently noted research published in Mortgage Professional Australia, indicating that almost 80% of mortgage brokerages are either sole practitioners or two- to three-person operations.

Further, only 37% of these businesses have actually considered or implemented a structured succession plan. If we assume from various sources that there are approximately 12,000 mortgage brokerages operating, this suggests that over 7,000 of these businesses have yet to commence any structured succession plan.

Looking across the life cycle of a mortgage brokerage, the stages are: • Business establishment, focusing on new business opportunities • Business development and accumulation of referrals • Stabilisation of the business as referrals and the trail book mature • The wind-down phase when the recurring income stream satisfies lifestyle costs; less focus on new business • Full retirement – possible value from the business to supplement retirement lifestyle According to recent data released by the MFAA, the average age of a mortgage broker is 49, and 39% [approx. 4,800 brokers] are over 55 years old.

In financial planning terms these members can commence a transition-to-retirement strategy.

In real terms, the possibility of early retirement probably disappeared at the onset of the global financial crisis. These macro events also create the need to plan transitioning out of the business or to part- or full-time retirement.

OPTIONS TO EXIT

When moving through stages three to five above, we are all considering how our business value is calculated and what strategies are available to us to extract this value. The three main options available in the current environment are: • The outright sale of your trail book (not your business), providing you with an upfront component and a deferred amount subject to clawbacks and out-of-line trail-book run-off • The vesting of shares to an existing employee or business partner by way of deferred bonuses.

This generally happens over a five- to 10-year period before the shareholding is completely absorbed • Allowing the existing trail-book income stream to naturally run off, or outsourcing this post-settlement function to companies specialising in the area of extending loan life

[BROKERS] ALL NEED TO COME TO TERMS WITH THE CONCEPT THAT THEIR CURRENT LIFESTYLE IS ALIGNED TO THEIR CURRENT INCOME STREAM One of the hurdles in the current lending environment is that banks are unlikely to lend solely against the trail book, so including property becomes imperative unless you sell to active corporate trail-book buyers. This may limit the number of purchasers available to consider buying your trail book.

The vesting of shareholding is a long-term vision that requires buy-in from your new business partner. The concept of management by consensus needs to be considered as your shareholding is diluted and your new partner wishes to exercise their rights in the vision and direction of the business.

The idea of allowing your trail book to run off seems like a waste of the time you have invested over prior years, although the transition works well if you can refer all enquiries to a ‘friendly’ contact.

Alternatively, you can register with organisations that specialise in trail-book management and see the run-off extended.

Whatever option is acceptable to transitioning brokers, they all need to come to terms with the concept that their current lifestyle is aligned to their current income stream. The replacement of cash flow with a capital lump sum, even if completely reinvested, is unlikely to replace the cash flow lost.

Inherently, small businesses are time poor, with energies directed to the most immediate tasks. What we need to get across to all is that succession and retirement planning is a process, not an event.

THE COALFACE brokernews.com.au

23

Reinventing the wheel of fortune EasyBiz finance director Dominic Lambrinos used his accounting and entrepreneurial background to redefine commercial broking At first glance, it might seem as though Dominic Lambrinos had stumbled on a gold mine when he developed his unique commercial brokerage, EasyBiz Finance, a few years ago (just take a look at his recent milestone in the News section of Australian Broker). However, the reality is that more than 30 years’ worth of finance and entrepreneurial experience have gone into the project.

“I started life as an accountant [age 17] … Part of my accounting work was talking to banks and looking into different avenues into finance. I left accounting at 34 and owned some business myself, so I … found out first hand how hard it is for someone to borrow money,” says Lambrinos.

“In the course of all this work, I’d find all these lenders who didn’t have their shops on the main street, the ones that would specialise in particular forms of lending. You know, lender A would do commercial loans; lender B would just do trade finance; another one would just do debtor’s factory. I just collected them like stamps.”

The GFC brought it all ‘‘to a head’’, according to Lambrinos, who set up EasyBiz shortly after.

“We’ve got 29 lenders on our panel at the moment, and they offer something like 24 products.

What I guess sets us apart is, yes, it’s great to have all those loans and all that, but we were able to approach business finance with an accounting hat on.

“Being accountants, we’re good with numbers. As a commercial broker, one day [the loan] might go to a funeral parlour, the next day it might be a guy who sells meat wholesale – you don’t know what’s going to come tomorrow.

But one thing which is consistent in that is the numbers – and that’s what we’re good at. That’s where we stand out.”

Furthermore, Lambrinos and his team specialise in supplying customers with multiple highly tailored loans. “If you went to a major bank … they would want

ONE DAY [THE LOAN] MIGHT GO TO A FUNERAL PARLOUR; THE NEXT DAY IT MIGHT BE A GUY WHO SELLS MEAT WHOLESALE – YOU DON’T KNOW WHAT’S GOING TO COME TOMORROW – DOMINIC LAMBRINOS to make sure they’ve got your house and all your business tied up in one place. If something goes wrong, you lose everything.

In our situation, you connect lenders up, but nothing’s cross[ed over]. So the fellow who’s lending you money to buy stock in China is different to the fellow who’s lending you money for when you sell it to Harvey Norman or wherever. So all the risks are sort of pigeon-holed – if something goes wrong, you don’t have a domino effect.”

Lambrinos likes to jokingly compare his company’s strategy to a McDonald’s classic, saying they’ve effectively restructured a commonplace set of financial ingredients and made it better.

“When they invented the Big Mac [hamburger], I guess they put a lot of work into it and they’re still selling it now…

We’ve picked up our Big Mac.

FINANCIAL SERVICES 24

brokernews.com.au

Zurich CFO’s suicide sees chairman resign

Z

urich Insurance Group CFO Pierre Wauthier was recently found dead at his home after an apparent suicide.

The Zurich-based company said in an online statement, “The police are investigating the exact circumstances of his death,” but declined to disclose any further details.

“The board of directors, group executive committee and all of our colleagues are deeply saddened and pass on our condolences to the family and relatives,” CEO Martin Senn said in a statement.

Wauthier, born in 1960, was appointed to the CFO post in September 2011 after holding previous roles as group treasurer and head of centrally managed businesses. He had worked for Zurich Insurance since 1996, the company said.

Vibhu Sharma, group controller, will take over the CFO role on an interim basis.

In light of Wauthier’s death, Zurich Insurance Group chairman Josef Ackermann abruptly quit, saying the family of the firm’s late finance chief

New investment opportunity stinks

A

I HAVE REASONS TO BELIEVE THE FAMILY IS OF THE OPINION THAT I SHOULD TAKE MY SHARE OF RESPONSIBILITY – JOSEF ACKERMANN

FAST FACT

$883m* *The after-tax profit for Suncorp’s general insurance division, up from $493m in 2012

felt he should shoulder some of the responsibility for the executive’s apparent suicide.

“I have reasons to believe the family is of the opinion that I should take my share of responsibility, as unfounded as any allegations might be,” Ackermann said in the statement, adding that he was resigning to avoid any damage to Zurich’s reputation.

ISN POACHES POLITICIANS The former minister for health and the former treasurer of Victoria have been appointed as chair and deputy chair, respectively, of the Industry Super Network Board (ISN).

Peter Collins AM QC, former minister for health, attorney general and treasurer of NSW, has been appointed as chair of the ISN board, after previously acting as deputy chair. This position will now be filled by former premier and treasurer of Victoria John Brumby.

ISN chief executive David Whiteley said he was delighted to welcome John Brumby to the board and Peter Collins to his new role.

“Mr Collins and Mr Brumby have held highly esteemed positions in public office and have a demonstrated commitment to our guiding principle of putting the interests of members first.

We are proud to have them leading our board.”

Source: Suncorp

new investment opportunity has hit the market for clients that have an interest in sustainability.

Initial Hygiene (formerly Pink Hygiene) is backing a new absorbent hygiene waste (AHW) recycling technology from nappy and pad recycling experts Relivit. They expect the partnership to unlock approximately $120m worth of savings.

Relivit’s managing director, Mark Dunn, says that, aside from the environmental benefits, it is also a very viable business.

“By recycling nappies, sanitary pads and incontinence pad waste, which currently costs Australian businesses and councils approximately $60m to bury in landfill each year, businesses and councils are able to reduce both the environmental and financial impact of this AHW significantly,” said Dunn. The other $60m comes from the value of the materials currently being wasted.

The company is currently looking to raise $400,000 in working capital through the Australian Small Scale Offerings Board so that they can complete everything they need to do before going back out to the market to raise construction finance, which will be in the order of $6–8m.

Car financiers rapped by ASIC More than 30,000 car owners are to be refunded more than $15m after an ASIC investigation into tyre and rim insurance premium financing.

The ruling came after ASIC carried out an industry-wide review into the improper financing of tyre and rim insurance premiums by some of Australia’s largest car financiers.

The National Credit Code allows the financing of premiums for just one year. ASIC argues that financing of car insurance premiums for more than a year can lead to customers paying undue interest on premiums and being unfairly locked into longer contracts with one insurer.

The review was prompted after BMW Australia Finance notified ASIC that it had breached the National Credit Code and subsequently refunded nearly $1.4m to 2,466 customers. The car financiers reviewed have put in place steps to refund the money.

“These businesses were quick to – PETER KELL respond once it was brought to their attention,” ASIC deputy chairman Peter Kell said.

“We acknowledge the high degree of cooperation of the car finance industry in bringing about this important result for consumers.”

THESE BUSINESSES WERE QUICK TO RESPOND ONCE IT WAS BROUGHT TO THEIR ATTENTION

ONE YEAR ON 26

ONE YEAR ON What a difference a year makes … or not. Australian Broker reflects on the punditry, news and trends that made headlines 12 months ago Australian Broker Online, Sept 2012

Mortgage Choice announces planning arm Mortgage Choice last year unveiled its plans to move into financial planning, scheduling a soft launch of its wealth business for October. The franchise brokerage joined the chorus of industry pundits touting diversification as the future of mortgage broking, planning to make one-stop shops available to its franchisees and aiming to operate 60 financial planning businesses by 2015.

What’s happened since?

Mortgage Choice recently announced it would delay the launch of its financial planning business, not because of lack of interest but because of overwhelming interest. CEO Michael Russell said the company planned to push the launch back by a couple of months to ensure its franchisees had the capacity to handle the volume of business coming their way. To date, 93 current franchise owners plan to invest in a financial planning franchise within 12 months.

FHBs afraid of commitment A RAMS survey last year found that first home buyers were reluctant to commit to a purchase, despite what they considered to be optimal buying conditions. The survey found only 17% of first home buyers were looking to buy in the three months ahead, despite nearly 75% of respondents claiming it was a good time to buy.

What’s happened since?

First home buyers seem to be maintaining a holding pattern, sticking with their ‘wait and see’ approach. Recent AFG figures showed that first-time buyers accounted for only 11.3% of the market in August 2013. That’s down from nearly 16% at the same time last year. Investors, though, have come back in force, especially in NSW. Investment purchases accounted for 49.5% of the loans processed by AFG in NSW in August.

brokernews.com.au

They get hit with a bill and they hate you – Jon Denovan on clawback fee etiquette

A

ttitudes towards charging clients clawback fees may be changing, but brokers still need to be fully aware of their legal obligations in order to avoid client – and regulator – push-back, Gadens partner Jon Denovan told Broker TV. “I think there’s a changing view about the ethics of getting clawback from borrowers. You must remember that, before, buyers were liable to pay deferred establishment fees, or exit fees.”

While deferred establishment fees have now been outlawed, borrowers still don’t have to pay major establishment costs, argued Denovan, meaning somebody else is subsidising it.

“And the person who is subsidising it is the lender – if the loan runs long enough – or you, if it doesn’t run long enough … So it’s only fair that you should be able to claw that back.”

However, Denovan stressed that transparency is crucial, as is ensuring that you meet your legal obligations. “… Charging for clawback is exactly the same as charging for commission, and if you’re dealing with regulated loans, to charge commission to borrowers you have to have a thing called a ‘quote’.

That has to be signed by the borrower before you provide credit assistance. So the timing is important. It’s no good having it as an afterthought – it needs to be done before you suggest or arrange a specific loan for the borrower.”

The most important thing, according to Denovan, is to be transparent about these charges from the start to avoid push-back later.

“The thing about charging anybody anything is to make sure that it’s clear and transparent, because if you charge by ambush, you’ll always get push-back. [Asking is] not something to be afraid of. You are arranging a loan; you’re doing your job – the borrower’s paying nothing for your services.

“You say, ‘Look, if you repay the loan within three years or five years or whatever the clawback period is, you will have to pay part of the establishment fee because I have to pay back my commission’.”

Denovan said it would then be extremely important to remind the borrower, preferably annually, about the clawback fee.

“Three years down the line they’ll forget, and suddenly they’re selling their house, or refinancing, and they get hit with a bill for $3,000, and they hate you. So keep them in the loop and things should be smooth sailing.”

FORUM 27

brokernews.com.au

Brokers shall remain nameless Brokers have defended their right to comment anonymously on industry forums

Inspiring debate

Feedback from readers seemed to show vehement disagreement with Peter White’s call to end online anonymity, but Papery responded with diplomacy, and defended the value of online forums.

‘‘I read the AB forum almost daily (have done so for a couple of years now) & do participate on occasion. For the most part I find the comments appropriate, interesting, educational & on occasion humorous. Yep, every so often comments do pop up which could be construed as over the top (emotional) & occasionally argumentative...The recent posts concerning valuers/valuations for example. ‘‘This forum compliments what we get fed at Lender & Aggregator PD Days...it brings viewpoints in from right across the country & the emotion & passion from all sounds [sic] probably can’t be helped. I’m happy to read past the very small % of idiot comments, which are usually poorly phrased anyway. ‘‘I have no problem with anonymous comments, or with fully named input.’’

Papery on 29/08/2013 6:19PM

F

BAA president Peter White recently took aim at anonymous comments on industry websites. “… We’ve seen the standard of debate dragged down by those who post without real names. Ridiculous comments, abusive posts and comments by those who are uninformed on the details, serve to divert attention away from the important issues,” White said.

Few readers agreed with White’s sentiment, saying anonymity allowed them to speak their minds without fear of repercussions from lenders or aggregators. Boned was one of the brokers who had suffered retribution for commenting under his real name.

“I was advised to use an alias by a BDM as management within my aggregation group didn’t like my comments – I guess the truth hurt in those few instances where I told it as it was. This would just simply mean that I would not comment any further, and in fact, I’d probably just unsubscribe from all future communications.”

Really? said that anonymity, rather than hurting the quality of debate, actually made debate possible.

“If you insist on real names, you’ll never get a good, honest debate. It’ll be watered down tripe. People will have to ‘toe the party line’, or at worst, refrain from commenting. By enabling anonymity you can attract good debate.”

BEWARE DODGY SMSF DEALS

The Australian Financial Review recently warned that advisers and some brokers were being wooed with commission incentives to recommend SMSF property companies.

What do you think?

Leave your comments at brokernews. com.au

QEDRisk on 26/08/2013 11:44AM “For many SMSFs over-investment in property totally blows what anyone would consider to be a prudent asset allocation model. Going 100% property totally contradicts any conventional wisdom and is just outright naive.”

And Aarong gave a rousing defence of our freedom of speech, and pointed out (quite correctly) that Australian Broker already filters out defamatory comments.

“Freedom of speech is an extremely important issue and the entire industry would degrade without it. People and businesses have a natural and human right to free speech. There is NO corresponding right not to be offended. You don’t have the right to stop my free speech even if you do find it offensive, and you shouldn’t. You just have the right to turn me off and not listen.

Someone should point out to Peter White that publications like the Australian Broker don’t simply post anything sent to them. There is already a filter for useless or purely offensive discussion and the Australian Broker already exercises its right to either print or not print content.”

PEOPLE AND BUSINESSES HAVE A NATURAL AND HUMAN RIGHT TO FREE SPEECH. THERE IS NO CORRESPONDING RIGHT NOT TO BE OFFENDED

Regional Broker on 26/08/2013 10:50AM “Any broker who accepts this commission or even recommends clients to these investment is just foolish.

I will never recommend an investment.

It is the financial planner’s role to look at the suitability of any investment.

Mine is to obtain a suitable loan working in conjunction with the planner and/or accountant.”

PEOPLE

brokernews.com.au

28

Brokerage hits $60m a month

B

rokerage group Shore Financial, established in February of this year, lodged over $60m in home loans applications in August 2013.

“Our results are more than pleasing,” says Shore Financial sales director, Theo Chambers. “Shore Financial’s recent success can be attributed to a number of factors, including broker recruitment, a high level of engagement, increased referrals from the Richardson & Wrench agent network and a stronger property market.”

In April this year, Shore Financial announced an exclusive partnership with Richardson & Wrench real estate and Andrew Cocks, the real estate company’s executive director, says the partnership is ‘unique’ compared to other referral models.

“The partnership is such a success because the financial services offering is truly, fully integrated within the real estate business. Every R&W real estate office is able to adapt the financial services offering to their business model to best suit their clients. Shore Financial has become part of the agents’ business.”

Chambers also believes that part of the secret to Shore Financial’s record growth has come from brokers attending open house inspections and auction nights, as well as R&W agents working together with the Shore Financial brokers.

“Consumers are embracing the chance to save thousands of dollars from our brokers providing free second opinions on their current home loan pre-approval,” he says.

Shore Financial is feeling confident for the remainder of this financial year and is on track to write $100m in home loan lodgements per month by the end of 2013.

“Shore Financial has recently purchased a commercial office on Mount Street, North Sydney to make room for new mortgage brokers wanting to join the group and has expanded with the addition of Shore Financial Planning,” says Chambers.

THEO CHAMBERS

SMARTLINE HANDS OUT BROKER HONOURS Franchise brokerage Smartline recently honoured its top brokers at the business’ yearly franchisee awards. Smartline managing director Chris Acret praised the winners for a successful year in a tough market.

“In an environment where businesses in all industries are facing margin pressures, they have focused on smarter ways of operating and have embraced innovation without cutting corners on customer service,” Acret said.

Smartline’s award winners were: Franchise of the Year (individual) – Ian Simpson (NSW) (assessed on numerous criteria, including loan volumes, growth of business, loan application quality and client service) Franchise of the Year (business) – Dave Urquhart & Sandy Mazzucchelli (WA) (assessed on numerous criteria, including loan volumes, growth of business, loan application quality and client service)

Marketing Champion Award – Karen Le Comte/Jillian Clifford (Qld) (awarded to the franchise owner who best markets their business to their clients and community) Lenders Choice Award – Cathy Anderson (SA) (voted by the lenders’ loans assessors as to which Smartline Adviser had the highest quality loan applications and was the most professional in their dealings) Client Care Award – Matt Brennan (WA) (awarded to the franchise owner who has provided the highest level of client service. All finalists achieved an average client service rating of over 9.8 out of a possible 10) Rookie of the Year – Helen Lossev (Vic) (awarded to the best newcomer in their initial first full 12 months of business. The criteria includes loan volumes, business development and contribution to the team)

CHRIS ACRET

Rising Star of the Year – Bevan O’Farrell (WA) (the franchisee who has strongly grown their business over the year) Wendy Perry from South Australia received the Spirit of Smartline Award as the franchisee who best reflects Smartline’s values and spirit.

brokernews.com.au

IN FOCUS

N

ational Mortgage Brokers recently honoured its top brokers at a ‘1st XI’ event in Sydney.

The event included a harbour cruise and dinner, featuring after-dinner speaker Peter FitzSimons, and a boardroom session with David Koch and Paul de Gelder.

CAUGHT ON CAMERA

INSIDER

brokernews.com.au

30

Sex sells…property?

T

he term ‘property porn’ was taken to a whole new level recently when local media pounced on an advertisement for a Sydney housing development, complete with a fully naked young woman splashed across the group’s website.

Samadi Developments, who describe themselves as a ‘small family business’ and ‘one of the longest established and most respected private companies in the industry’, told News Ltd reporters that the ad was intended to be eye-catching.

“Our marketing company decided the building would be very beautiful and wanted to reflect that with a beautiful female body,” said Sam Elbanna from CPM Realty. “People looking for developments online are looking for something a little bit out there.”

While the jury’s still out as to whether the photo meets legal requirements – nudity alone doesn’t breach Australia’s advertising standards code, providing it’s non-sexualised and relates to the product it’s selling (debatable, in this case) – we’re left wondering when the male edition might be coming out? By way of inspiration, Australian Broker would like to offer the following advertisement for a building supply store in San Francisco:

FACIAL HAIR FOR THE FACIALLY AWARE

A

hh, beards. Beautiful, bouncy, bodacious beards.

Seems every male hipster over the age of 14 is sporting one – and the trend appears to be seeping into the corporate realm as well, with the likes of Richard Branson and Steve Wozniak flaunting facial fuzz. But is it OK for male brokers to go unshaved at work outside of Movember?

While some professionals, like firefighters and chefs, aren’t encouraged to – or are outright banned from – growing facial hair, there’s no obvious health and safety risk for loan writers wanting to sprout a ‘stache’.

However, some employers continue to consider the five o’clock shadow unprofessional, and it’s not unheard of for company policy to forbid beards (though this has caused some controversy when it comes into conflict with an employee’s religious beliefs). Others say it depends upon the culture of an organisation, and that the tone is usually set by the highest-ranked man in the company.

As a rule of thumb for beards at work, J. Scott Omelianuk, co-author of Things a Man Should Know, says: Look around – at the most conservative companies, it isn’t a question of finding an appropriate look: any beard at all is probably a lousy idea.

Get a second opinion – don’t make the decision alone.

Keep it simple – when the decision has been made to keep the hair, Omelianuk says it should be well kempt and trimmed.

Cut! Omelianuk thinks it’s best for individuals to go without until they’re professionally established – unless the direction comes from the top.

Finally, in case you’re still having a tough time figuring out when to say when, you should definitely not be able to do this with your facial hair:

Anonymous decision: Broker news comments to remain incognito A statement made on the Australian Broker website by FBAA president Peter White, arguing that comments on industry news sites should include the writers’ full names, was met with overwhelming opposition – on the comments board, that is.

Responses ranged from the humorous – “I agree,” signed ‘Anonymous’ – to the downright harsh: “Peter grow up... it’s a world of chat rooms and people will say what they want and be who they want, deal with it. If this is the biggest issue the FBAA has to whinge about, then I think they need a new leader,” signed ‘Todd’.

In the end, just three of the 23 comments posted on the story at time of writing were in favour of White’s suggestion – that’s around 13%. However, Australian Broker’s online poll asking “Should online comments remain anonymous?” received the opposite response. Almost all (94%) of those polled said no. Odd. In any case, Australian Broker can confirm that we will not be requiring readers to provide their full names alongside comments on our website – though we would like to clarify that we do routinely filter out those deemed defamatory, slanderous, or advertorials.

So comment away, ‘China Chops’, ‘Rastafarian’ and ‘Really?’ – just keep it clean. And remember, our IT guy knows where you live.

DIRECTORY brokernews.com.au

AGGREGATOR / WHOLESALE BROKER FAST 02 9233 8222 www.fastgroup.com.au Page 11

Choice Home Loans 1800 188 288 www.choicehomeloans.com.au Page 7

LENDER

Homeloans Ltd 13 38 39 www.homeloans.com.au Page 13

Liberty Financial 13 11 33 www.liberty.com.au Page 3

Macquarie 13 62 27 macquarie.com.au/mortgages Page 32

ME Bank (03) 9708 3994 mebank.com.au Page 5

31

Pepper Homeloans 1800 737 737 www.pepperonline.com.au Page 17

NON BANK LENDER

Rent4Keeps 1300 76 30 20 www.rent4keeps.com.au Page 8

SHORT TERM LENDER

Interim Finance 02 9982 2222 www.interimfinance.com.au Page 2

Mango Credit 02 9555 7073 www.mangocredit.com.au Page 1

Quantum Credit 1300 135 212 www.quantumcredit.com.au Page 4

OTHER SERVICES

Deposit Power 1800 678 979 www.depositpower.com.au Page 15

RP Data 1300 734 318 Page 23

Trailerhomes 0417 392 132 Page 26

WHOLESALE Resimac 1300 764 447 www.resimac.com.au Page 9

To advertise in Australian Broker, call Simon Kerslake on 02 8437 4786