Australian Broker 15.15

AUGUST 2018 ISSUE 15.15

Reforming consumer protection AFCA’s lead ombudsman explains how dispute resolution is changing /20

R U OK? The FBAA’s Peter White on how brokers can look out for each other /22

STEPHEN MOORE The CEO of Choice Aggregation explains how brokers can transform a data deluge into a golden opportunity /14

And the award goes to…

All the action from the MFAA’s National Excellence Awards /24

ALSO IN THIS ISSUE …

Big deal Iva Rasic on the deal that ignited her passion for broking /16 Housing market data Why Melbourne is down but not out /26 In the hot seat Year-end predictions from Graeme Salt of Origin Finance /30

NEWS

IN THIS SECTION

Lenders Major pledges support for rural customers /04

Aggregators Finsure tops annual broker survey /06

Technology Ezidox developer in blockchain venture /10

Regulators AMP lodges defence against shareholders /12

Market Home value declines boost buyer confidence /08

www.brokernews.com.au AUGUST 2O18 EDITORIAL

SALES & MARKETING

News Editor Rebecca Pike

Sales Manager Simon Kerslake

Journalist Nicola Middlemiss Production Editor Roslyn Meredith

DATES TO WATCH

Upcoming can’t-miss events

ART & PRODUCTION Designer Martin Cosme

8 – 29 AUGUST

15 AUGUST

23 AUGUST

Vow Compliance Workshops

Darwin Golf Day

Business Banking Summit

Taking place in Melbourne (8 August), Brisbane (14 August) and Sydney (22 and 29 August), the Vow Compliance Workshops are scheduled to present the latest developments in the compliance space to brokers enrolled in the Vow Academy.

A day of golf and networking for MFAA members in Darwin and the Northern Territory. The annual Ambrose Competition will be held at the 55-acre Gardens Park Golf Links. Prizes will be awarded for individual and team placings.

The eighth Business Banking Summit will examine the latest insights and case studies on SME and business banking innovation. The RBA’s assistant governor of business services, Lindsay Boulton, is scheduled to deliver a keynote address during the event.

Production Manager Alicia Chin Traffic Coordinator Freya Demegilio

Marketing and Communications Manager Michelle Lam

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

EDITORIAL ENQUIRIES

Rebecca Pike +61 2 8437 4784 Rebecca.Pike@keymedia.com

SUBSCRIPTION ENQUIRIES

5 SEPTEMBER

13 SEPTEMBER

30 SEPTEMBER

MFAA PD afternoon, Perth

R U OK? Day

Hitting the road again, the MFAA’s property expert panel will discuss the latest market trends in WA during this half-day seminar that covers fraud detection, comprehensive credit reporting and succession planning, equating to 2.5 CPD hours for attending members.

In response to a sharp rise in the number of brokers reporting mental health issues, this year’s national suicide prevention day is endorsed by the FBAA. Turn to page 22 for FBAA chief executive Peter White’s article on the importance of asking the simple question, “Are you OK?”

Royal commission interim report due Commissioner Hayne is due to deliver his interim report no later than 30 September, following four rounds of public hearings that focused on farming finance, SME and consumer lending, and financial advice. Almost 7,000 submissions have been received by the commission and the final report is due by 1 February 2019.

tel: +61 2 8O11 4992 fax: +61 2 9439 4599 subscriptions@keymedia.com.au

ADVERTISING ENQUIRIES

Simon Kerslake +61 2 8437 4786 simon.kerslake@keymedia.com.au Key Media Pty Ltd Regional head office, Level 1O, 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, Bengaluru

19 OCTOBER

21 – 23 OCTOBER

16 NOVEMBER

Australian Mortgage Awards

COBA 2018 Convention

The leading independent awards event for the mortgage industry returns for another action-packed night in October.

Recognising Australia’s leading mortgage brokers, lenders, aggregators and advisers, the AMAs highlight outstanding achievement. The event will be hosted by Lawrence Mooney and feature Furnace and the Fundamentals and Linden Furnell.

This year, the Customer Owned Banking Convention will be held under the theme ‘The Challenge of Change’. With more than 1,000 people expected to attend at Melbourne Convention and Exhibition Centre, the convention will highlight the role of credit unions, building societies and mutual banks in the retail financial services sector and the community.

FBAA 2018 National Industry Conference

2

www.brokernews.com.au

FBAA returns with its annual conference and awards, to be held at Sea World on the Gold Coast. Under the theme ‘Evolution’, the conference will support brokers in navigating recent industry changes, while the evening’s Awards of Supremacy will see 500 guests gather to recognise leading industry personalities.

This magazine is printed on paper produced from 1OO% sustainable forestry, grown and managed specifically for the paper pulp industry 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 Ehrenberg-Bass 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.

www.brokernews.com.au

3

NEWS

LENDERS SME LENDER ADDS NEW CREDIT FACILITY Australia has confirmed it is to close a $75m asset-backed revolving credit facility with Credit Suisse, using a new Credit Suisse facility to refinance its current loan book and fund future originations. The facility is scheduled to mature in June 2020.

OnDeck CEO Cameron Poolman said, “Our new facility is testament to our parent company’s reputation and the strength of its international business, and of our ability to leverage its legacy of industry expertise and knowledge.”

ONDECK

BANKWEST CLOSES EAST COAST BRANCHES is to close 29 east coast branches in order to prioritise investment in digital and broker/third party offerings, reducing the number of branches on the east coast to 14.

The closures will commence on 17 August and affect around 200 staff members. The non-major has also announced a series of changes to its accreditation requirements and mentorship standards for new brokers, including the need for greater experience and police checks.

t AUSTRALIAN HOUSEHOLDS SECOND MOST INDEBTED IN THE WORLD Source: ABC News; BIS

Global snapshot: Household debt-to-GDP ratios

130

Mike Felton CEO, MFAA

4

www.brokernews.com.au

Australia

120 115

Denmark

110

Netherlands

105

Norway

100

Canada

95

Korea

90

New Zealand

85

Sweden

2012

BANKWEST

“Mortgage brokers have contributed to a fall in net interest margins of more than three percentage points over the past 30 years”

Switzerland

125

2013

2014

2015

MAJOR BANK PLEDGES SUPPORT FOR RURAL CUSTOMERS Promise follows royal commission hearings into agricultural and farm finance loans and includes two donations of $50,000 CEO of NAB, Andrew Thorburn, has made a series of pledges to the bank’s regional and rural customers, which currently comprise 40% of its customer base.

Speaking in Wagga Wagga, Thorburn outlined a three-point strategy to enhance NAB’s commitment to farm finance and rural customers, including an offset facility for farm management deposits (FMDs), interest rate changes for customers affected by drought, and changes to the branch network.

The move follows fourth-round royal commission hearings, which focused on customer treatment in remote and regional communities, including agriculture and farm THE

finance clients. The commission heard stories of farmers who had been forced from their land, as well as admissions from ANZ that its conduct breached banking codes.

Thorburn said, “Such customers go through particular challenges and may fall into arrears and be unable to make their loan repayments. We want to help at this time, not make it more difficult.”

Under the new commitments, NAB will “proactively” offer its agri customers the chance to offset their FMDs against lending, effectively discounting their loans’ interest rates. The bank is currently writing to all qualifying customers to invite them to arrange the offset. Further, FMDs can now be used as loan security, providing farmers with

2016

United 2017 Kingdom

access to additional security as capital to borrow against.

NAB will also stop charging a higher default interest rate to customers affected by drought and will readdress its plans to reduce face-to-face services in remote locations.

Thorburn added, “This is not just about branches; this is about taking a wide view on what more we can do to assist our rural and regional communities to thrive in the future.”

NAB has also pledged to make two donations of $50,000 each to support the drought funds operated by the Country Women’s Association of New South Wales and the Queensland Country Women’s Association. Further donations to either organisation, up to a value of $25,000, will be matched by the bank.

Thorburn added, “Rural challenges are real, and we need to determine how to support these areas better. The royal commission and other inquiries reveal that in some cases we have lost touch.”

www.brokernews.com.au

5

NEWS

A G G R E G AT O R S AFG INDEX CONFIRMS LODGEMENT GROWTH quarterly AFG Mortgage Index has confirmed a rise in total lodgement numbers of more than 4%, in addition to an increase in loan sizes.

CEO David Bailey said regulatory intervention in 2017 and tightened lending criteria appear to have established a structural change that may be the ‘new normal’ for the market. He said, “Another pleasing aspect of these figures is the fact that the gap between major and non-major lenders continues to shrink.”

THE

YOUNG BROKERS SEE A POSITIVE FUTURE published in the MFAA Young Professionals Report, produced in partnership with Connective, confirm that brokers under the age of 35 see a positive future ahead. While lead generation and marketing were identified as major challenges, only 18% of young brokers believe perceptions of trust, respect and recognition across the industry will pose a challenge. Connective director Mark Haron said, “Looking at the information and data in this report, there is a lot to be excited about.”

FINDINGS

FINSURE TOPS ANNUAL SURVEY OF BROKERS ON AGGREGATORS Aggregator is celebrating “major industry honour” after being named Australia’s number one in annual broker survey by MPA magazine Finance and Insurance (Finsure) has been named Australia’s top aggregator in MPA magazine’s annual Brokers on Aggregators Survey, winning praise for the quality of its lending panel, white label offerings, communication with brokers and BDM support.

The latest accolade follows the group being named Aggregator of the Year at the 2017 Australian Mortgage Awards and comes as Finsure is set to complete a merger with ASX-listed WA regional bank ADI Goldfields Money Limited.

Finsure co-founder and MD John Kolenda said the acknowledgement was a huge thrill for the group and another key milestone since the company was established in 2011.

FINSURE

6

www.brokernews.com.au

“What makes this award so special is that it highlights the support we have from our broker partners and recognition that we are delivering for them,” Kolenda said.

“Finsure was runner-up in this survey last year, so we are pleased that we have continued to improve and evolve and meet the needs of the market. We have worked hard to add value across all areas of our services and believe Finsure offers an unrivalled service proposition to brokers.

“All Finsure brokers can get all their business needs met under the one roof. Our members really appreciate this and will hopefully continue to rate our proposition favourably across all categories.

“To stay ahead of the competition and have real relevance for your business partners, you need to provide multiple solutions that businesses would ordinarily source from external parties when they seek to grow. We are always seeking ways to improve our support to remain the number one aggregator.”

Seven years since Finsure was established, the group has a loan book valued at $35bn and more than 1,400 brokers, with targets to reach 1,600 brokers by year end.

Finsure has also agreed to the proposed merger with Goldfields Money Limited, which has been described as “transformational” for both companies. The merger is subject to a number of conditions, including obtaining all necessary Goldfields Money shareholder approvals.

“We believe the combined entity will enjoy increased scale, material revenue uplift and improved growth prospects, which will be beneficial to our brokers,” Kolenda said.

“We are not only in a period of unprecedented change, but also a period of unprecedented collaboration” Anja Pannek CEO, PLAN Australian

www.brokernews.com.au

7

NEWS

MARKET CONSUMER TRUST IN BANKS DECLINES confidence in Australian banks has declined 8% year-on-year, according to independent data collected by Yell. According to a survey of 1,000 Australians, the banks recorded the biggest yearly drop in consumer trust for the entire industry, with trust in financial advisers down 6%. Further, trust in mortgage providers has declined 5% since the last survey. Superannuation providers remain the most trusted industry sector, despite a decline of 5% year-on-year.

CONSUMER

PRIME LOAN ARREARS INCREASE on Australian prime home loans increased during May. The Standard & Poor’s Performance Index (SPIN) for Australian prime mortgages rose to 1.38% in May from 1.36% in April, and the SPIN for non-conforming mortgages fell to a record low for May of 3.65% from 3.86% the previous month. Performance was mixed across the states, with arrears in Victoria declining and NSW and Queensland recording modest increases.

ARREARS

“Gen Z will want to know more about a lender’s environmental policies than whether they can offer the lowest interest rate on a home loan” Mhairi MacLeod Founder and principal, Astute Ability Finance Group

HOME VALUE DECLINES BOOST BUYER CONFIDENCE Recent data suggests cooling property prices are bolstering residential sales and overall affordability prices have fallen across Australia, particularly in the capital cities, and according to Mortgage Choice this may be having an effect on the number of Australians applying for home loans.

While the latest housing finance data from the ABS shows that the number of home loans approved in May has decreased by 0.7% in trend terms, in seasonally adjusted estimates they have increased by 1.1%.

The data also shows that $31.9bn in dwelling commitments were made in May, an increase of 0.5% in seasonally adjusted terms from the month before.

CoreLogic data reveals that in May Australian dwelling values saw PROPERTY

their first annual decline since 2012.

Mortgage Choice CEO Susan Mitchell said, “It may be too soon to tell if APRA’s removal of the cap on investor loans is having any effect on the increase in demand for this type of home loan.

“In fact, national dwelling values slipped, led by a drop of 0.2% in Sydney and a 0.5% drop in Melbourne, which together have a significant effect on the national house market’s performance.

“This data is promising and suggests that housing affordability may be improving, enticing once cautious homebuyers to enter the market, or property investors seeking a bargain.”

Borrower preferences may also be starting to shift. An 11-month

trend of variable rate preferences could be coming to an end, with fixed rate home loans accounting for 18.67% of all loans written in June, up from 17.93% in May. In the wider environment, a combination of factors, including an increase in wholesale funding costs, regulatory changes and tightening lending policies are having an effect on the overall cost of borrowing.

Mitchell added, “Cautious borrowers who recently entered the market may be aware that, despite a stagnant cash rate, lenders are increasingly making small, out-of-cycle rate increases on home loan products.

“These factors are pushing some borrowers who are increasingly wary of the financial impact from future rate rises to seek certainty by fixing their loans. That being said, variable rate home loans continue to be the most popular type of home loan products across the nation.”

HONEYMOON RATES COSTING BORROWERS MORE Lender

Product

Source: RateCity

Intro rate

Revert rate

Extra paid after 5 yrs

Extra paid after 30 yrs

Community First Credit Union

Honeymoon Home Loan

3.65%

5.17%

$23,998

$103,051

Arab Bank Australia

HeadStart Home Loan

4.15%

5.49%

$29,348

$125,214

RACQ Bank

Mortgage Breaker

3.72%

4.99%

$22,111

$92,105

Hume Bank

Introductory Rate

3.99%

5.10%

$24,258

$99,987

Bank of Queensland

First Start Home Loan

4.70%

5.70%

$33,573

$140,816

Calculations based on a $300,000 home loan, variable owner-occupier loans and paying P&I. All introductory rates quoted are for 12 months.

8

www.brokernews.com.au

AUSTRALIA’S RATE CHANGES: A HISTORY Source: Canstar

Owner-occupier housing commitments (ex-refi) Cash rate rises

Lending falls

April 1994–April 1995

4.75% to 7.5%

-29.4%

February 2000–October 2000

5.5% to 6.25%

-25.9%

September 2003–January 2004

5.0% to 5.25%

-15.8%

June 2007–August 2008

6.25% to 7.25%

-31.0%

September 2009–March 2012

3.0% to 4.25%

-27.9%

HONEYMOON RATES COST BORROWERS MORE compiled by RateCity shows more than a dozen lenders are using ‘honeymoon’ rates to attract new home loan customers. However, the deals could see borrowers up to $33,573 out of pocket within five years and $140,816 over 30 years. RateCity spokesperson Sally Tindall said, “These discounts give a bit of breathing room in the first year, but more often than not they are shortsighted quick fixes. The day after the honeymoon is over, reality sinks in, and for many people their loan becomes a very costly financial headache.”

RESEARCH

www.brokernews.com.au

9

NEWS

TECHNOLOGY

SOCIAL MONITORING COULD BOOST SERVICE has found that while 80% of Australian financial service businesses believe social media has become more important, only 20% use it to measure customer sentiment – half the global average of 40%.

Roger Graham, senior director at Hootsuite APAC, explained, “The industry is operating in an environment where they need to understand exactly what their customers are saying. Social is a constant source of direct feedback and is vital for businesses.”

HOOTSUITE

EZIDOX DEVELOPER IN BLOCKCHAIN TECH VENTURE Firm behind Ezidox launches Future Hub to help businesses navigate a pathway to blockchain and cryptocurrency solutions technology firm behind broker tool Ezidox has launched a consortium involving technology, law, taxation and educational companies with a view to accelerating blockchain technology.

The Future Hub, by Lakeba, was launched in Sydney last month, and aims to help businesses navigate the pathway to implementing blockchain and cryptocurrency solutions.

Recognised for being one of the first tech companies in Australia to have live commercial blockchain pilots across multiple sectors, Lakeba is working with Microsoft, IBM, Macquarie University, cryptocurrency and blockchain legal expert Piper THE

Alderman, and taxation expert Grant Thornton.

New partners relevant to the vision of the Future Hub will continue to be added as the consortium grows in scope and footprint.

Giuseppe Porcelli, CEO and founder of Lakeba Group, said, “All our partners will benefit in shared knowledge and in having expert partners on tap to help their own customers in the development and implementation of blockchain and other emerging technologies, such as machine learning, AI and quantum computing.

“Ultimately, we want to drive an entrepreneurial mindset for Australian businesses and

strengthen enterprise-level innovation in this market.

“Lakeba is one of the first to have commercialised a range of blockchain solutions as a result of recent strategic partnerships across a number of industries, including energy, education, resources, banking, and professional services groups.

“The accelerated investment in the development of blockchain solutions by our customers is evidence of the fast-growing demand and confidence of business leaders for this emerging technology.”

Darren Younger, chief growth officer for Lakeba and newly appointed head of the Future Hub, said, “It was gratifying to see the level of interest from Australian companies who have long wanted to take the blockchain journey, however hadn’t the confidence of doing so for lack of knowledge and awareness of the blockchain expertise available in this market.”

AUSTRALIAN FINTECH UPDATE

CASHDESK INCREASES CAPABILITY WITH API CashDeck, a platform to quickly and securely provide borrower bank statements, is opening up its platform capability with an API, meaning organisations can now build its functionality into their own platforms. CTO Wayne Robinson said, “This is an area the industry is focusing heavily on at the moment and has led us to develop a solution that provides a lot of value.” CashDeck is currently used by more than 700 broking firms.

SYDNEY-BASED

LOAN VOLUME etCapital >$250m G rospa >$600m P (cumulative volumes) RateSetter >$300m (cumulative originations) Wisr >$40m

10

www.brokernews.com.au

CONSOLIDATION M oneyPlace acquired

by Liberty

BANK FUNDING TO ALTFI SPACE $200m secured by Axsesstoday from Macquarie Bank $50m secured by GetCapital from NAB $75m secured by OnDeck Australia from Credit Suisse

MARKETING UPDATE

INTRODUCING PEPPER EASY Aaron Milburn, Director of Sales and Distribution at Pepper Money, talks about Pepper Easy and the exclusive borrower deals available this month

When Pepper Money entered the near prime loan space six years ago, what were the specific market trends that underpinned the move?

Pepper Money introduced the concept of near prime back when brokers started to tell us their self-employed clients were being rejected by the banks due to a prior credit blemish. This was happening even though those customers could demonstrate a clean credit history over the previous three years.

Building on this and catering to customers who are on the cusp of prime, Pepper Easy is our near prime range of home loans, available as full- or alt-doc loans.

How has the near prime market developed since 2012?

The way borrowers are making a living is changing, with more self-employed people and more people earning income from multiple sources. Near prime can be the ideal solution for those earning non-standard income, which is often a key reason why creditworthy borrowers are left behind by the banks.

Since launching the concept in 2012, Pepper Money has witnessed exponential growth in near prime, experiencing doubledigit growth every year. This growth continues as near prime evolves to bridge the gap created by traditional lenders tightening their lending criteria in all aspects of prime lending.

It helps to think of the near prime category as an elastic band which expands and contracts depending on internal and external factors.

What near prime does very well is provide brokers with certainty and a high level of comfort that solutions exist for their clients when the mainstream lenders say no, cementing the category’s relevance in the marketplace.

Based on current market demand, what are your projections for Pepper Easy over the next 12 months?

Pepper Money is on track to have its biggest year yet in near prime settlements, and to celebrate we’re offering our best promotion ever: a 50% reduction on the Mortgage Risk Fee on near prime loans during the month of August.

The near prime segment will continue to grow and become even more relevant. Those brokers who want to remain competitive and give customers a complete range of solutions can no longer afford to not be educated and fully across near prime.

Aaron Milburn

To find out more about Pepper Easy, contact a locally based BDM through our directory at pepper.com.au/broker/contact/bdm.

Alternatively, brokers can simply submit details of a non-traditional scenario via the Pepper Product Selector for an on-the-spot indicative offer. Or email scenarios@pepper.com.au and one of our experienced team will be in touch.

AT A GLANCE: PEPPER EASY

An alternative solution Pepper Easy is the logical solution for customers who fall just outside the acceptable lending criteria of traditional lenders, for purposes such as purchasing a first home, refinancing or building a dream home.

Caters to the customer’s individual circumstances

No third party approval required from LMI providers

Near Prime can help a wide variety of customers, including those with business and tax debts; credit impairment; non-standard income; or unlimited debt consolidation.

None of Pepper Money’s products, including our range of Near Prime loans, require approval from a third party mortgage insurer, which ensures the approval process is faster and simpler.

www.brokernews.com.au

11

NEWS

R E G U L AT O R S

WESTPAC RELATIONSHIP MANAGER BANNED Westpac banker Marten Pudun of Glenwood, NSW, has been banned from engaging in credit activities by ASIC after being found guilty of recklessly giving documents and false information to the major lender in relation to 24 loans. The former relationship manager was found to have helped in creating false payslips, employment letters and rental estimate letters; or accepted documents he knew were false; or was reckless in not investigating whether they were false.

FORMER

AMP LODGES DEFENCE AGAINST SHAREHOLDERS AMP has confirmed it will “vigorously” defend itself against all proceedings brought by its own shareholders has lodged its defence against shareholders in proceedings led by Quinn Emanuel in the Supreme Court of New South Wales.

The non-major is facing action after shareholders accused it of withholding information relating to its fees for no services and interactions with ASIC. It is also defending its report to ASIC by law firm Clayton Utz. AMP has confirmed it will be “vigorously defending” these and similar proceedings, including four other class actions over the issue.

Over recent months AMP has been accused of charging advice fees to clients where no service was provided, an allegation it admitted to and rectified with customer AMP

few as 10% of those questioned AS for Deloitte’s Australian Mortgage Report believe the royal commission will benefit consumers.

Further, 35% said the biggest benefit would come from APRA reducing capital levels for limited banking licences. Only 5% said the potential for greater regulation of non-bank lenders by APRA would benefit consumers. Deloitte’s findings were taken from a roundtable discussion with HSBC, Liberty, Police Bank, BOQ, Westpac, ING, Suncorp, CoreLogic and Smartline.

12

www.brokernews.com.au

HIA AFFORDABILITY INDEX BY CAPITAL CITY, JUNE 2018 QUARTER Source: Housing Industry Association

120

20-year average

110

HIA Affordability Index

111.7

100 More affordable

ROYAL COMMISSION WON’T BENEFIT CONSUMERS

refunds. The bank continues to deny misleading ASIC. Shareholders have now taken action against AMP, claiming it should have disclosed the information. However, AMP has said any information it did have in respect of these matters was not material to its share price, highlighting that the share price remained steady on the day of its extensive royal commission testimony on 16 April.

While the group has admitted to certain representations made to ASIC, it said it did not have the effect of misleading ASIC in any material way.

AMP maintains that regulatory dealings were confidential and not of a kind expected to be disclosed

to the market. However, shareholders have said that information surrounding Clayton Utz’s independent report should have been disclosed.

AMP clarified: “There is nothing about the independence of the Clayton Utz report that required disclosure. Further, Clayton Utz did not make any changes to the report as a result of communications with AMP which Clayton Utz did not agree with, and Clayton Utz carefully verified the accuracy of the statements in the report.”

AMP will return to the Federal Court in Melbourne on 14 August for the hearing of its application to have the four other class actions transferred to the NSW Supreme Court.

According to reports, AMP is currently engaged in a “$615m royal commission damage control plan” and shareholders have been warned to “lower their profit expectations” for the year. On 27 July AMP shares closed at $3.30, their lowest price in 15 years.

90

93.4

80

94.4

91.7

95.6 88.2

70 71.3

60 50

63.5 53.7

40 30 Sydney

Melbourne

Brisbane

Adelaide

Perth

Hobart

Darwin

Canberra

Average of 8 capitals

WHITE LABEL UPDATE

HOW DIGITAL TOOLS ARE RESHAPING THE CUSTOMER EXPERIENCE Technological advancement means today’s consumers expect greater efficiency and personalisation from their brokers, writes Advantedge General Manager Brett Halliwell the age of the digital consumer, new technologies are raising the bar in virtually every industry. Across sectors, innovators are reshaping the customer experience and, in turn, transforming customer expectations.

The mortgage broking industry is no exception. Digital technology gives brokers the opportunity to automate labour-intensive processes, such as data entry and document collection, giving them more time to build quality customer relationships and differentiate their service.

ZipID and IDyou – enabling them to conveniently collect and submit client identification from their mobile devices.

Demand for these types of tools looks set to continue. According to data from MSA National, approximately 43% of home loan documents are now issued digitally, and, of those, 96% are signed digitally by customers.1 To further support brokers, we’ve created a dedicated website with relevant information on the digital enhancements and the Advantedge loan process requirements.

Enhancing the customer journey At Advantedge, we know how important technology can be to the customer experience, and we are continually improving our loan processes and innovating through digital enhancements.

Digital verification of identity and digital document ‘Send and Sign’ capabilities are available to brokers, making things easier, simpler, and enhancing the customer experience. Brokers can choose from two digital verification of identity tools –

Increased efficiency For many of our broker partners, incorporating these digital tools into their process has improved visibility over the progress of their clients’ loan applications, with a more streamlined customer experience and faster turnaround times – all helping brokers build positive customer relationships.

MSA National says 18% of documents are signed and returned within three hours, and 60% are signed and returned within three days. That’s the same time it usually takes for paper

IN

Brett Halliwell

documents to be received by the customer through the mail!

According to Advantedge’s latest broker satisfaction survey,2 both brokers and their customers have responded positively to the digital enhancements. Brokers were highly satisfied with the digital tools available to them, rating them on average 8 out of 10.

Half of the brokers surveyed had incorporated digital signatures into their business processes, and users praised how these tools are instrumental in increasing efficiency, helping to reducing the

number of errors in documents and making it easier for customers to execute loan documents.

In today’s fast-moving, connected society, technological innovation will continue to drive fundamental changes in how broking businesses operate, and the value they deliver to their customers.

Advantedge is committed to continuing to find new and exciting ways for brokers to provide the consistent, seamless experience that customers want and expect.

HOW TECHNOLOGY SAVED A CUSTOMER’S HOME PURCHASE Broker Ben Eick has become well known during his 14 years in the broking industry, having started out by building a successful franchise. Six months ago, he joined Nectar Mortgages in their NSW North Coast office, which provides products to customers in partnership with PLAN Australia.

Ben has been using Advantedge’s PLANLend home loans for his clients for some time, as they deliver on one of his key points of difference – finding solutions for clients who have complex lending needs.

Ben was recently approached by a client who was seeking to move back to her hometown of Maitland after 18 months living interstate while taking care of a sick relative.

The client, Taryn, and her family had found a new home they wanted to purchase in the area, but the property deal had proved problematic, as the broker and lender they were dealing with had taken over two months to organise a loan.

“When we went to see Ben, the number one thing we were looking for was speed, as we were running the risk of our property deal falling through,” Taryn says.

1

As at June 2018

2

As at February 2018

3

Efficiency Ben recommended Advantedge’s PLANLend product to the family because of the efficient application process, impressive turnaround times and competitive rate on offer. He kept them informed throughout the process, and the loan was formally approved within a week.

Ben says the swift turnaround was enabled by Advantedge’s DocuSign tool.3 “As long as you provide the client’s email address, all the loan documents are sent and received the same day. There is no ‘snail mail’, there’s less chance of errors, and everyone gets a soft copy of the documents,” he says.

“Getting loan documents back can often be a two-week process, if not longer, so having this tool has really added to the level of service we can provide.”

Taryn and her family are now happy and settled in their new home, and are delighted with the service they received from both Ben and Advantedge.

“It was very positive experience for us,” Taryn says.

As at April 2018

www.brokernews.com.au

13

FE AT URES

SPECIAL REPORT

DATA IS THE NEW BLACK Choice Aggregation CEO Stephen Moore explains why the role of the aggregator is changing, and how brokers can make an impending data deluge work to their advantage

KEY BUSINESS METRICS

$68BN

value of loan book

$1BN

minimum value of monthly settlements

11%

increase in loan book value year-on-year

11%

year-on-year increase in settlements

1,663

brokers in the network

300

new brokers joined Choice YTD

14

www.brokernews.com.au

a people-centric industry, the key to success is often as simple as meeting customers on their own terms; understanding their preferences, extrinsic motivations and the outcomes they value; then positioning solutions accordingly.

Traditionally, this process is the result of building personal relationships, but in today’s techdriven world, the same results can be achieved by mining the incomprehensibly huge digital footprints left on phones, computers and apps, every single day.

As concepts, big data and data governance need little introduction; as transformative tools for broking, much remains unexplained.

For Choice Aggregation CEO Stephen Moore, there is a clear and strong opportunity at the point where big data and broking converge. As a result, brokers are today in a unique position to combine digital and traditional customer service techniques to generate a deeper understanding of a client’s complete personal circumstances and financial goals.

“We are heading towards an environment where brokers are in the box seat because they know more about customers than any other channel today,” says Moore.

“What I see happening in the future is combining not just the upfront collection of customer data but also provision of that data on an ongoing basis, and combining that with the knowledge brokers have of customers. It will put brokers in a really unique position.”

Moore’s predictions are rooted in two key developments currently on the horizon: the introduction IN

of comprehensive credit reporting (CCR) and open banking.

CCR was first introduced in 2014, but only this year will customers be able to leverage their entire transaction histories to potentially obtain cheaper finance. Hand in hand, open banking will make vast amounts of customer data available to institutions throughout the financial ecosystem, including brokers.

“The combination of CCR and open banking means that, with the client’s permission, brokers will be able to

“Data management will be a core role of the aggregator for broker businesses. As we are seeing today, the collection of customer data has never been more important, and, even more so, protection and appropriate use of that data has never been more important,” Moore says.

The year-long calendar of educational events is designed to address the PD targets of both small and large brokerages and is reinforced with “unprecedented” investments in Podium, which Moore values in the “millions of dollars”.

“I can’t give away too much on where we are going, but we are now working on the next generation of Podium. One of the exciting developments is that Podium will digitally enable broker businesses, and there will be more to come on that. It’s pretty exciting,” he says.

“It really is a sign of the level of

“We are heading towards an environment where brokers are in the box seat because they know more about customers than any other channel” Choice Aggregation CEO Stephen Moore overlay the data an institution holds on their customer with the personal insight they have on that customer.

This will enable a more proactive and efficient way to help clients better manage their money; it means brokers will be better positioned than anyone in the marketplace, but that needs to be managed in the right way,” Moore says.

Supporting brokers as they move to capitalise on the strategic insight provided by CCR and open banking, Choice Aggregation has placed data governance and cybersecurity at the top of its curriculum for professional development days, along with business building and succession planning.

sophistication of broker businesses and therefore the increasing sophistication aggregators are required to provide to brokers as well.”

The changes will be rolled out in 2019 in tandem with enhanced digital and social media support for brokers. Moore continues, “Our view is that the future is about combining the digital and social interactions many customers enjoy and marrying that with high-quality face-to-face interactions. Brokers are looking to their aggregator to help them through that, and that’s really important for us.”

Increasing sophistication Data is only the start of how broking – and aggregation – are becoming

In partnership with

Stephen Moore, CEO, Choice Aggregation

more sophisticated. Moore observes challenges and opportunities in the evolving regulatory landscape and is quick to highlight the need for brokers to become business operators – as well as digitally savvy financial strategists – in order to maintain efficiency and results.

Equally, it’s “no longer enough” for an aggregator to simply provide access to software, training and lenders, he says.

“The aggregator of the future is a true business partner and provides increasingly sophisticated support across critical elements, such as technology enablement – developing a true end-to-end platform to help with business efficiency and

effectiveness,” Moore says.

“In an environment where more is expected from brokers – and that’s where we are headed – business efficiency becomes even more critical. For any successful broker, their rarest commodity is time. Any way that we can streamline processes, capture data once and reuse it, automate through the CRM when it comes to client communications. It makes a lot of sense for a broker business.”

Drawing on his own observations, Moore identifies three prime focus areas for brokers currently.

Firstly, he says they must maintain the right perspective; after all, sentiment breeds sentiment.

The second area of focus should remain on focus itself so brokers continue to provide great customer outcomes and experiences.

Thirdly, Moore says brokers must recognise that the status quo is “not an option”.

“We know that more Australians choose to see a broker today than ever before, but across the industry, brokers, aggregators and lenders need to raise the bar to meet the increasing expectations we are faced with. Don’t be overwhelmed by negative sentiment; stay focused on this fantastic role you provide for clients, and look to associate with people who are in the same positive mindset,” he says.

Staying ahead Choice has enjoyed a strong start to 2018 across several key metrics.

Settlements have increased 11% year-on-year, with the loan book also posting 11% growth to reach almost $70bn, a result Moore describes as “very strong given market conditions”.

Further, Choice now boasts a network of nearly 1,700 brokers after welcoming 300 new brokers since the start of the year.

There are a number of further developments in the pipeline. PD days will continue to take a leading role, with focus falling on industry insight and creating an environment in which brokers can learn from each other on a peer-to-peer basis.

“We recognise that not all brokers are the same and the best outcome a broker can have is to align themselves with someone who truly understands them and then tailor support to meet their needs,” says Moore.

Looking ahead, data will remain central to the continued evolution of the financial industry and its role in people’s lives. While predominantly driven by CCR and open banking, the unprecedented level of customer empowerment these are likely to enable will put the broker in a new position.

The final piece in the puzzle is that, while financial institutions must find the balance between big data and personal interaction, brokers will be well placed to leverage both.

There is little doubt this will require many new skills and the unwavering support of aggregators, but with the right groundwork data will have the scope to boost rather than burden brokers.

Moore concludes, “Data is the new black, and this is a long-term, sustained trend that we will see over the next five years plus. The role of an aggregator in accurate data collection, ongoing data management, and, most importantly, the insights on the back of that data to help brokers run more efficient, effective businesses and tailored communications to clients, will be defining.” AB www.brokernews.com.au

15

PEOPLE

Have an interesting deal?

Had a particularly difficult or interesting deal? Why not share it with us, email:

Rebecca.Pike@keymedia.com

A BIG DEAL

When the financial demands of family life maxed out one couple’s equity and credit lines, BorrowRight broker Iva Rasic restructured and consolidated their debts and, in the process, found a new passion for broking Location: Sydney

THE FACTS

Loan size and term $1.15m for 30 years

Client Young family of five

16

www.abonline.com.au

THE TAKEWAY

Aggregator Connective

repeatedly that nothing could be done, and they were starting to lose faith.

At our first meeting they laid everything out on the table – tears and all – and asked if I would be able to help them from drowning.

For any broker, that’s not a question that can

THE SCENARIO

Parents of young children are all too aware of how stressful it is to juggle family life and financial responsibilities – the bills keep coming and the children keep nagging for the latest toys, clothes and holidays. To keep on top of everything, and keep up with the Joneses, parents often turn to personal loans and credit cards, but when faced with the full demands of modern family life, these can quickly reach their limit.

Last year I was approached by a young family who, as a result of this very situation, had found themselves struggling under the burden of multiple credit card debts as well as car finance and personal loans.

As responsible but overwhelmed borrowers, their goals were clear: they wanted to reduce the interest on their home loan and tackle their other debts. However, both applicants had complicated incomes and the equity on their owner-occupied property was maxed out.

When I discovered they had already spoken to two other brokers and the branch staff at their current bank before me, my concerns grew. They had been told

Goal To refinance and consolidate debt

I powered through all the paperwork and then explained how we could cross-securitise the two properties to unlock more equity, which could then be used to pay down the other debts. Considering the number of people they had already explained their situation to, the clients were surprised to learn this was even an option, but also overjoyed to know there was a solution on the horizon.

I started to work on the crosssecuritisation and, once this was complete, they had more than enough equity and income to pay out all their other debts in one neat repayment. This was a clean sweep of their goals, and because they had freed up so much of their monthly income it transformed their quality of life as a family. This also enabled them to make additional repayments to pay down debt faster, rather than struggling to meet their monthly obligations.

With some patient waiting and a lot of effort, we did eventually get approval, and I don’t think I have ever been happier to get a deal over the line than I was on this occasion.

As a young broker at a relatively early point in my career, I glean lessons from every interaction I have. However, I feel as though this one taught me much more than the average deal.

Firstly, where there is a will there is a way, and I learnt that this was a vital attitude to bring to broking.

Secondly, this deal taught me a lot about debt restructuring and consolidation deals, including how passionate I am about them.

Not only have I found a niche in my skill set but I’ve also found one in my love for the finance and broking industry, and now I can actively build on that to drive more business.

The clients were surprised to learn that this was even an option, but also overjoyed to know there was a solution on the horizon be ignored, so I started to reassess their case to try to find the lucky break they needed.

THE SOLUTION

Iva Rasic Broker at BorrowRight

That break came in the form of a crosssecuritisation on a second home owned by the couple as an investment property.

The other brokers and the branch staff who had previously offered advice had failed to see the potential of this asset, but after looking at the full situation this became the best option on which to base their solution.

Since this deal, I have done many more similar deals which means I have managed to help many more clients to achieve seemingly impossible goals. It’s definitely a love-hate relationship, and there are many frustrating and challenging days, but for me the challenge is also the thrill. Additionally, the client is always more grateful when you have this much of an impact on their life. As a result, they are also more willing to recommend a broker who has transformed a source of stress into a positive financial outcome. AB

an

INDUSTRY UPDATE

WHAT THE NEW CODE OF LENDING PRACTICE MEANS TO SMALL BUSINESS Australia proudly became one of six online lenders to set a new precedent for the protection of small business in Australia by signing an industry-first Code of Lending Practice on 30 June.

Based on best practice examples from the United Kingdom and the United States where the online lending sectors are significantly more established, the customercentric Code sets lending standards the signing parties have agreed to adhere to and be accountable to once the Code becomes enforceable by 31 December. Importantly, and unlike many other industry codes, any online lender signing the Code of Lending Practice must confirm their compliance with the Code every year.

ONDECK

Dispute resolution All signatories will sign up to an External Dispute Resolution Scheme, the aim of which is to handle complaints and disputes specifically for consumers and small business.

Strong governance An independent Compliance Committee will be established and have responsibility for the Code’s monitoring and

enforcement. Its members will be carefully selected for their independence and appropriate qualifications to determine whether a signatory lender is compliant with their obligations under the Code. A Charter, the aim of which is to operationalise all governance aspects of the Code, will be designed to support the committee’s monitoring, review and enforcement activities.

Heightened transparency The Code will be supported by the introduction of a pricing comparison tool, which allows small business owners to compare the cost of an unsecured loan offered by a signatory lender, including the total repayment amount, APR, and simple annual interest rate.

Cameron Poolman, CEO of OnDeck Australia, said OnDeck recognised how important small business is to the Australian economy.

“There are issues of trust, access and agility arising from the traditional finance sector that have played no small part in why the online lending sector continues to grow globally and in Australia; but these are also issues that we as an emerging sector must

Cameron Poolman

address up front,” Poolman said.

“OnDeck is more than aware of just how essential it is for lenders to ensure we keep the faith with small business, and, as an industry, we know we still have work to do in building

a well-governed, responsible lending environment. Signing the Code of Lending Practice for the protection of small business in Australia as a first step was an obvious choice for OnDeck,” he added.

CLEAR AND ACCOUNTABLE COMMITMENT In signing the Code, OnDeck and its peers have made eight important promises to the small business industry we serve, which are to:

Be honest and ethical

Focus on our customers

Give you clear information about our loan products

Comply with our legal and industry obligations

Deal fairly with any complaints

Support and promote the Code

Consider your financial circumstances when lending to you and deliver high customer service and standards

www.abonline.com.au

17

PEOPLE

Get involved in the discussion Share your thoughts at

brokernews.com.au

FROM THE FORUM

Top comments from trending stories on brokernews.com.au

NON-BANKS CAN HELP ‘MORTGAGE PRISONERS’ Brokers can help the thousands of borrowers labelled ‘mortgage prisoners’ by directing them to non-bank lenders, says the FBAA. According to the industry association, going to non-banks is the way to overcome this.

FBAA executive director Peter White also said the government should step in and push banks to be realistic with their modelling.

White said banks had recently increased the interest rate buffer that they add on to a loan to ensure the borrower has capacity to pay if rates rise, but the extent of the increase had led to a situation in which borrowers who were already paying a mortgage were Wow... Peter has really shown his naivety. Whilst he is correct in his assertion that the current assessment regime is grossly inappropriate for those with existing investment lending, he is naive to think that the precious few non-banks remaining will be their saviour. The few non-banks that are left charge like wounded bulls, making any refinance to them a more expensive option ... kind of defeats the purpose really...

Just wow! | 31 Jul 2018, 09:02 AM

I was of the opinion the non-bank lenders applied the same assessment margins ... more in some instances. However, happy to stand corrected if someone can tell me a non-bank lender who doesn’t apply a margin.

Tony | 31 Jul 2018, 12:49 PM

being rejected for loans that would actually reduce their repayments.

“It’s madness. Someone wants to refinance to pay a lower rate, yet the bank adds an extra 4% to the interest rate and decides the borrower can’t afford to pay less,” White said.

“This doesn’t affect the wealthy; it affects those who can least afford it, and it has almost stalled the home loan refinance market,” Mortgage prisoners are borrowers who are unable to refinance to a lower interest rate due to changed lending criteria by the banks.

For someone who is supposed to be an industry expert I cannot believe the comments from Mr White. Regulators are placing pressure on the lenders across the board to be more realistic with assessment rates (even giving guides as to ranges to assess within). The lenders don’t just pick a figure out of the air and make it hard for a client to borrow. Saying a smaller lender on a lower rate uses a lower assessment rate on their loan assessment is misleading; they must operate under similar assessment rates to big banks. This article is click bait and so far off factual that I cannot believe it was even released.

Doubting Thomas | 31 Jul 2018, 04:31 PM

He is referring to the additional margin on existing home/ investment loans which are not being applied for. Liberty assesses at actual repayments on other debt and 2% buffer on actual rate for the loan being applied for. Pepper applies actual repayment plus 20%.

Just wow! | 31 Jul 2018, 04:40 PM

18

www.brokernews.com.au

www.brokernews.com.au

19

FE AT URES

IN THE NE WS

PROTECTING CONSUMERS

In May, the Australian Financial Complaints Authority (AFCA) received ministerial approval, paving the way for a new dispute resolution process with better outcomes for consumers and SMEs. Speaking exclusively to Australian Broker, Philip Field, lead ombudsman of banking and finance, explains the industry implications motion and attempt to resolve the complaints directly with the complainant before the scheme begins investigating the matter.

This has proven to be an efficient and effective means to resolve disputes quickly.

AFCA will build on this approach by working with financial firms to improve their internal processes so that individuals with a complaint can get it resolved without needing to approach AFCA. AFCA will also identify and work with financial firms to address and resolve any systemic issues that arise in any matters we deal with.

Philip Field, lead ombudsman, AFCA

How will the formation of AFCA help to restore consumer confidence in the financial services industry?

Many people who use the financial services industry for both business and personal reasons have strong and successful relationships with their financial firm, be that their bank or finance broker. When things go wrong, this can take a toll.

This is something seen daily at the Financial Ombudsman Service, with more than 40,000 disputes received last year and over 235,000 calls to the 1800 number. As can be expected, resolving a financial complaint can be a complex and stressful process for consumers.

The Australian Financial Complaints Authority (AFCA) is the culmination of an exhaustive review into complaints resolution that commenced in 2016, the Ramsay Review.

One of the ways AFCA will ensure that consumers get fair 20

www.brokernews.com.au

redress for their complaints is by helping financial firms to enhance their internal dispute resolution processes. This is based on one of the approaches that is already working effectively under the existing Ombudsman schemes – referring disputes back to the financial firm in the first instance, to set their internal dispute resolution process in

What could be the potential implications for the lending sector?

AFCA will be able to consider disputes with higher monetary limits for both consumers and small businesses. This means that if financial firms have carried out their internal dispute resolution process but have not managed to resolve the complaint to the satisfaction of both parties, consumers and small businesses can approach AFCA to resolve their complaints, instead of resorting to legal action that will be costly for both parties.

AFCA will use existing methods such as negotiation and conciliation

to resolve complaints. We hope that the use of these informal methods leads to a reduction in the number of complaints that proceed to a formal determination, resulting in a timely outcome for both financial firms and consumers.

In terms of customer outcomes, industry standards and the customer experience, what will be the overall impact on finance brokers?

AFCA aims to provide timely outcomes by dealing with complaints involving both lenders and finance brokers simultaneously.

This will provide timely and fair outcomes for all parties involved in a complaint. For the first time, disputes involving both a broker and a lender can be dealt with in one place at the same time.

We intend for AFCA to be known for providing a fair, impartial and timely service to consumers, small businesses and financial firms.

AFCA will therefore play a dual role in complaint resolution: firstly, by helping consumers and small businesses to solve their problems and get on with their lives; and secondly, by assisting financial firms by providing clarity and certainty.

Ultimately, we will be helping the industry to avoid complaints in the first place. AB

AFCA AT A GLANCE Financial Ombudsman Service AFCA replaces

Key changes Non-super dispute limit to double to reach $1m Compensation cap to increase from $323,500 to $500,000

Credit and Investment Ombudsman

SME credit facility limit to increase from $2m to $5m Compensation cap to more than triple to $1m

The body is chaired by Helen Coonan

Superannuation Complaints Tribunal

Primary producer SME compensation cap now $2m

MOVERS AND SHAKERS

NEW CEO FOR SMARTLINE

Appointment of former CBA exec follows REA Group’s 80% acquisition of broker group

Sam Boer

has confirmed that former CBA executive Sam Boer will serve as the new CEO of Smartline, effective from 14 August.

Boer will be responsible for driving Smartline’s financial services strategy and leading the business into its “next chapter of growth”.

Andrew Russell, REA Group’s executive general manager of financial services, said, “Sam brings a wealth of experience to this role and has a long history of leading high-performing teams to deliver value for customers. His recent experience at CBA and standing in the industry make him perfectly placed to lead Smartline into a new era of broking and finance.”

Smartline is settling more than $6bn in loans annually, with a total loan book of approximately $25bn, which it says gives the REA Group Financial Services segment greater scale and capability for the long term.

REA Group acquired an 80.3% stake in Smartline in June 2017, strengthening its REA GROUP

home loan offering, which also includes the consumer and broker platforms at realestate.com.au.

During his tenure as GM of third party banking at CBA, Boer oversaw the introduction of new benchmarks for broker qualifications. These required brokers to have at least two years’ experience writing regulated residential loans; to hold at least a Diploma of Finance and Mortgage Broking Management; and be a direct credit representative or employee of an approved aggregator, head group or ACL holder.

Boer said, “I have known and admired the Smartline team for many years and am delighted to have been selected to lead the business in its next exciting stage with REA Group.

“I look forward to meeting up with the franchisees, staff and all other stakeholders that support this quality business, and working with them to achieve further success in the years ahead.” AB www.brokernews.com.au

21

FE AT URES

OPINION

ARE YOU OK?

Stressful jobs, high-pressure deadlines and personal problems all have an impact on mental wellbeing. Ahead of R U OK? Day on 13 September, FBAA executive director Peter White explains how brokers can look out for each other

statistics on mental health are shocking. One in five Australians currently suffers from a mental health issue, while data from the ABS shows that 45% are likely to deal with a form of mental illness at some point in their lives.

Every three hours someone commits suicide because of challenges with their mental health, while one in four will experience depression. It’s an issue that’s costing the economy more than $60bn each year and $12m in lost working days. As the mental health advocate for the finance and mortgage broker industry, it’s something the FBAA striving to combat.

A person’s thoughts, mood, behaviour, or the way they see the world around them can be affected by mental illness.

These disorders can alter a person’s ability to function normally at work, in relationships or in everyday tasks.

Over the past year the FBAA has been paving the way to help its members, and the industry as a whole, on the road to better mental health.

The FBAA advocates for improved support in the wider finance sector. We know that the number of people dealing with these challenges in the broking sector is rising, and we need to do everything we can to help those numbers fall.

Through our partnerships with key stakeholders in the health field and the

THE

22

www.brokernews.com.au

to ask the question, “Are you OK?”, and to start the conversation with friends, family and colleagues. It’s extremely important, as people often feel they can’t talk about their challenges, or that others won’t understand.

The finance and mortgage industry can be a very stressful environment to work in.

We know that many within our sector are suffering from mental health challenges and that some have committed suicide because of them.

Our aim is to enable everyone to talk openly about this subject with their friends and colleagues if they are facing difficulties, as having the conversation is extremely important. To help look after our industry family and support them when times get tough, we are adopting a holistic approach to the crisis, promoting good mental health. We’re doing this through open discussion, awareness activities and events, and providing ongoing opportunities for individuals to share their thoughts.

Thanks to the assistance of organisations like Resilia, the Centre for Corporate Health and the R U OK? campaign, we are able to maintain a culture that supports all FBAA stakeholders in better recognising and understanding mental health issues within the industry.

We feel privileged to be able to action this, along with health and fitness groups

We know that the number of people dealing with mental health challenges in the broking sector is rising

Peter White Executive director, FBAA

government, the FBAA is committed to providing platforms and forums that allow open discussion and education.

Because this is an issue that affects the industry as a whole, we are aiming to provide assistance across the sector, with the FBAA reaching out to all brokers, not just members.

We will continue to encourage people

for our members to promote physical health, and business coaching to support their continued work in our industry.

The FBAA is proud to support R U OK? on 13 September and beyond. We will be encouraging all our members as well as the entire finance industry to join the conversation, because every day is a day to ask, “Are you OK?” AB

19 October • The Star Sydney

BOOK YOUR TABLE NOW Event partner

Award sponsors

Official publications

Organised by

www.australianmortgageawards.com.au

www.brokernews.com.au

23

PEOPLE

CAUGHT ON CAMERA The MFAA hosted its National Excellence Awards at the Crown hotel in Melbourne on 26 July. The awards, audited

by Hall Chadwick, ecognised 20 leading brokers, lenders, aggregators and innovators from across Australia.

The MFAA awarded three key industry leaders Life Member status in recognition of their dedication, contribution and service to the industry and association.

MFAA CEO Mike Felton said, “These awards acknowledge the diversity of our membership and represent a great opportunity for individuals and businesses to be recognised for their achievements and innovation in what is unquestionably a highly competitive environment.�

24

www.brokernews.com.au

www.brokernews.com.au

25

DATA

WESTERN AUSTRALIA

VIC SPOTLIGHT

Apartment lifestyle takes hold as Perth recovers from mining freefall

DOWN BUT NOT OUT

According to the results of a survey conducted by property consultancy firm Urbis, the apartment lifestyle looks to be catching on in Perth, as sales of such properties increased by 18% in the March 2018 quarter.

“Perth apartment sales were the highest level recorded since the beginning of 2016,” says Clinton Ostwald, national director of property economics and research at Urbis. “It really is a barometer of the Perth economy. Post the mining boom, the decline could be felt.

However, with the economy benefiting from a rise in mining sector investment to maintain its expanded capital asset base, this is flowing through to the local apartment market.”

Given the limited investor confidence in this market, owner-occupiers account for 42% of sales, “continuing the trend in the rise of the owner-occupier market”, Ostwald says. “Though it may be a smaller city, it is by no means our least popular for apartment dwellers.”

Area

Type Median value

Lagging behind Sydney in performance terms, Melbourne’s property prices have started to falter. However, economic clout and population growth could still drive demand

Quarterly

12-month

growth

growth

Perth

H

$510,000

0.0%

-1.5%

WA Country

H

$345,000

1.2%

-4.2%

Perth

U

$395,000

1.3%

-4.2%

WA Country

U

$249,000

-0.4%

-10.7%

SOUTH AUSTRALIA

Political change lifts forecast after manufacturing slump Adelaide has been fighting a languishing economy since the departure of manufacturing firms from the area. However, recent political changes suggest a more positive outlook.

“Since the new government was elected in March there has been a surge in confidence in the economy,” says Pat Gerace, CEO of the Urban Development Institute of Australia SA. “The change brought excitement, and a pro-growth agenda from the new government has given the business community some inspiration for the immediate future. [The government] has also opened up the possibility of rezoning corridors in parts of Adelaide’s western suburbs for more infill housing.”

The rezoning initiative was introduced by the previous government. However, stamp duty reform plans could affect demand and supply.

“It’s likely that several projects could suffer a slowdown in demand, and this might contribute to some projects not proceeding to the construction stage,” Gerace says.

Area

Type Median value

high prices have taken their toll on the Melbourne market, putting a ceiling on growth potential in the CBD and inner ring.

CoreLogic’s Hedonic Home Value Index shows that, over the three months to May 2018, Melbourne has even lagged behind Sydney in terms of performance. However, the city still has a lot going for it.

“The Melbourne property market is down but not out. Even though it is taking a breather after five years of exceptional growth, there is no sign of a collapse in sight,” says Michael Yardney, CEO of Metropole Property Strategists.

“While Melbourne’s property prices are likely to fall by around 3% this year, they will be underpinned by a robust economy, jobs growth and Australia’s strongest population growth.”

The number of jobs available in the area increased by more than 70,000 in 2017, reflecting the strength of the local economy. This in turn has brought in migrants looking for opportunities – Melbourne opens its doors to 35% of overseas migrants to the country. By 2031, it could overtake Sydney as the biggest Australian city.

“Melbourne now rates as one of the 10 fastest-growing large cities in the developed world, with its population likely to increase by around 10% in the next four years,” Yardney says.

Property consultancy Urbis also reports that the middle-ring suburbs of Melbourne have been performing admirably with the support of considerable infrastructure investment. In an Urbis media release about the findings of a national survey conducted in March 2018, the firm says, “The future supply pipeline in the middle ring continues to grow; however, inner-city future development prospects have slowed due to upcoming elections and competition from hotel and office development.” AB VERY

Quarterly

12-month

growth

growth

H

$460,000

-1.1%

3.4%

Median price (houses)

SA Country

H

$305,000

6.1%

0.9%

$1,438,323

Adelaide

U

$370,000

-5.3%

5.3%

SA Country

U

$241,000

37.3%

0.9%

www.brokernews.com.au

It’s still a great time to be a mortgage broker Lately we have seen a downward trend in the number of investor applications being received, and there are numerous potential reasons for this. Most likely, the trend is due to the tight lending requirements surrounding investor loans currently, further compounded by cooling property prices across the Greater Melbourne area.

Further, we are seeing a significant increase in first home buyers getting into the property market in Melbourne and taking advantage of the stamp duty waiver on properties valued at $600,000 or less. However, one surprising yet common trend we are seeing is parents helping their children with buying their first homes by becoming their guarantors.

If there is one positive that is still driving fundamentals in the Melbourne property market, it is a population that is growing faster than expected.

From a broker’s perspective, buyers need help now more than ever before in order to navigate through their lending requirements and find the right lender, whether that is a major or second-tier bank or alternative finance provider.

Bernard Desmond Director and finance specialist, Loan Market

SUBURB TO WATCH: ASHWOOD

Adelaide

26

BROKER PERSPECTIVE

Median price (units) $775,159

Source: CoreLogic

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

10.7%

78.9%

95.5%

1.8%

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

7.7%

38.6%

40.7%

2.8%

AUSTRALIAN CAPITAL TERRITORY

New stamp duty rules provide boost to investors and businesses OPPORTUNITIES AND KEY INFRASTRUCTURE

Liveability

Public transport

Shipping

The EIU Liveability Transport system will Melbourne has Australia’s Report gave Melbourne integrate rail, trams and largest and busiest a perfect score of 100 buses, with more rail container port, accounting for infrastructure projects underway for 36% of trade

Population Victoria is the second most populous state, home to 5.791 million people

HIGHEST-YIELD SUBURBS IN VICTORIA Suburb

Type

Median price

Quarterly growth

12-month growth

Ravenhall

U

$183,150

9%

-49%

Dimboola

H

$100,000

-2%

-19%

Warracknabeal

H

$105,000

-9%

-16%

Murtoa

H

$112,500

-2%

8%

Merbein

H

$175,500

-2%

-1%

The ACT’s lifting of stamp duty on commercial properties valued at under $1.5m is primed to bring in more investors, in addition to boosting small businesses, according to Colliers International.

“Removing this expense could mean that a small business operator who previously thought owning their own premises was completely out of reach can now seriously consider this option,” says Matthew Winter, manager of investment services at Colliers.

“The conveyance duty abolition will also make the ACT more attractive for commercial property investment by making it cheaper to purchase here, which in turn increases potential returns and makes the territory more competitive when weighed against other jurisdictions.”

Further, the ACT government predicts ongoing strong population growth in Canberra of 6% by 2020.

Around 60% of this will be due to natural increase and 40% from net overseas and interstate migration.

Area

Type Median value

Quarterly

12-month

growth

growth

Canberra

H

$698,000

0.4%

7.3%

Canberra

U

$433,200

-1.3%

0.5%

www.brokernews.com.au

27

DATA

QUEENSLAND

12-month

growth

growth

Brisbane

H

$535,000

0.0%

2.6%

QLD Country

H

$435,000

-1.1%

1.6%

Brisbane

U

$395,000

-2.5%

-1.8%

QLD Country

U

$385,000

-2.5%

1.8%

NEW SOUTH WALES

MEDIAN HOUSE AND UNIT PRICES

Residential vacancy rates even out as market begins correction

$1,000,000

Type Median value

Quarterly

12-month

growth

growth

Sydney

H

$980,000

2.1%

4.7%

NSW Country

H

$465,000

-0.9%

5.0%

Sydney

U

$715,000

2.1%

2.1%

NSW Country

U

$385,000

-1.3%

2.6%

28

www.brokernews.com.au

Total auctions

67

Cleared

31

Uncleared

24

Clearance rate

56.4%

PERTH Total auctions

24

Cleared

7

Uncleared

8

Clearance rate

46.7%

$1,100,000

Houses

Units

Sydney Melbourne Brisbane Adelaide

Perth

Hobart

$512,500

$461,000

$340,000

$0

$390,000

$100,000

$490,000

$200,000

$323,750

$300,000

$462,026

$500,000 $400,000

$535,000

$700,000 $600,000

$715,000

$800,000

$700,000

$900,000

$870,000

With demand from overseas investors decreasing, vendors are turning their attention to owner-occupiers and interstate investors. “With changes to foreign investor banking regulations, developers are starting to move away from investor stock and are tapping into the local market,” says Clinton Oswald, national director of Property Economics and Research at Urbis.

“As projects move to completion, we will be keeping a close eye on settlement rates, given the reduced level of investor funding offered by the banks.”

The focus on the new market may be giving unit stock a boost. More than 24,000 apartments are under construction as part of 123 housing projects currently on sale, and 32 developments were completed in the March 2018 quarter, while construction commenced on 29. With building approvals slowing down, Sydney’s construction is in the delivery phase; the city could therefore see a significant uptick in properties on the market.

Area

ADELAIDE

Darwin

$417,000

Quarterly

$371,500

Type Median value

There were 1,172 homes taken to auction across the combined capital cities this week, returning a preliminary auction clearance rate of 55.8%. Last week, 1,411 auctions were held and the final clearance rate was unchanged over the week at 52.6%. Over the same week last year, auction volumes were higher, with 1,627 homes going under the hammer across the combined capital cities, returning a success rate of 69.4%. The weighted average has remained within the low- to mid-50% range for nine consecutive weeks now, and auction volumes have trended lower over each of the last four weeks. In Melbourne, Australia’s largest auction market, a preliminary auction clearance rate of 60% was recorded across 560 auctions this week, up from 56.1% across a higher 631 auctions last week. One year ago, the clearance rate was a stronger 74.9% across 756 auctions. There were 403 Sydney auctions this week, returning a preliminary auction clearance rate of 52.4%, compared to 50.1% across 552 last week, and 69.2% across 609 auctions one year ago.

$530,000

Area

WEEK ENDING 15 JULY 2018

$655,000

A rising economy and affordability are making the Sunshine State an attractive option for interstate migration.

“The 6.5% increase in total job volumes in 2017 is the best in a long while,” says Simon Pressley, Propertyology MD. “Housing affordability and lifestyle attractions all the way up the east coast have always been there; however, Queensland has lacked job growth for some years.”

Many migrants are moving to regions outside Brisbane, like Cairns, Townsville and Toowoomba.

“More than half of Queensland’s population choose to live in locations other than the state’s capital.

Propertyology analysis of a few buyer activity metrics showed clear signs of tightening occurring in regional Queensland, particularly in Cairns, Hervey Bay, Mackay and the Gold Coast,” Pressley says.

Oversupply is mainly observed in Brisbane’s CBD and inner-ring suburbs as new and off-theplan apartments are released. More than 10,000 apartments are expected to be completed within the next year, further exacerbating stock issues.

CAPITAL CITY AUCTION CLEARANCE RATES

$295,000

Population growth drives positivity and second-tier cities flourish

Canberra

CAPITAL CITY HOME VALUE CHANGES Capital city

Weekly change

Monthly change

Year-to-date change

12-month change

Sydney

-0.2%

-0.5%

-2.9%

-4.9%

Melbourne

-0.3%

-0.7%

-2.3%

0.2%

Brisbane

0.0%

-0.1%

0.2%

1.0%

Adelaide

-0.1%

0.0%

0.3%

0.8%

Perth

-0.1%

-0.6%

-1.2%

-2.1%

Combined 5 capitals

-0.2%

-0.5%

-2.1%

-2.1%

*The monthly change is the change over the past 28 days

BRISBANE CANBERRA Total auctions

47

Cleared

27

Uncleared

13

Clearance rate

Total auctions

70

Cleared

18

Uncleared

32

Clearance rate

36.0%

67.5%

SYDNEY Total auctions

403

Cleared

154

Uncleared

140

Clearance rate

52.4%

TASMANIA

MELBOURNE Total auctions

560

Total auctions

1

Cleared

272

Cleared

1

Uncleared

181

Uncleared

0

Clearance rate

Clearance rate

60.0%

TASMANIA

Area

The hot streak tempers, but Hobart remains on top Hobart remains one of Australia’s hottest markets at present. According to Empower Wealth director of research Jeremy Sheppard, Hobart’s average demand-to-supply ratio is similar to that of Sydney during its boom period.

“The impressive thing about Hobart is that the worst market according to supply and demand is not nearly as bad as in other significant urban areas around the country. That means it’s not too hard to pick a winner,” Sheppard says. “Hobart has cooled a bit since late last year but is still pretty hot. Demand is still well ahead of supply, so growth doesn’t look like levelling out.” It’s a winwin situation for everyone, from buyers and sellers to landlords and tenants.

“Properties are being snapped up pretty quickly and venders are getting the prices they want. The auction clearance rate is very high too,” he reports.

N/A

Type

Median value

Quarterly growth

12-month growth

Hobart

H

$467,000

9.9%

8.6%

TAS Country

H

$285,000

-1.7%

5.7%

Hobart

U

$340,000

1.6%

5.0%

TAS Country

U

$240,000

1.7%

1.3%

All data sourced from CoreLogic.com.au

www.brokernews.com.au

29

PEOPLE

Aggregator Choice

IN THE HOT SEAT Graeme Salt, broker and consultant at Origin Finance, reflects on his transition from town planner to broker and predicts how the rest of 2018 will play out for his industry peers

Who or what inspired you to become a broker?

Believe it or not, I started my professional life as a town A planner and ended up working at the UK House of Commons for a minister covering urban affairs. As a result, I have spent many years in the construction industry, and this experience has really set me up well for understanding how property markets work.

I mentor often and find the people who succeed in broking are those who have not just known banking; if you have had a well-rounded career or if you have many outside interests, you are more likely to succeed.

Q

What are your top survival tips for working in finance?

Look after your customers and your customers will look after A your business. I advise all my mentees to focus on the customer; clients will only go with you if they trust you, and for them to trust you they have to get to know you.

You have to spend time with the customer and get them to understand you. My clients get to know quite a bit about me and my experience, but they also have to deal with my sense of humour – including dad jokes.

Q

How do you believe major events over the last year influenced broking?

The one constant is that nothing will stay the same going A forward. Last year was a pivotal year, and 2018 looks to be maintaining this trend. APRA and ASIC are understandably and seriously scrutinising the industry, and the findings of the royal commission will have profound ramifications.

One thing about this industry is that it is dynamic and it evolves. At first many thought APRA’s clampdowns would be the death of broking, but I see them as positive. Clients are now coming to us after they have been declined by the majors, and we are often finding solutions for them in the non-conforming sectors, not least because we are seeing the offer from the securitised lenders becoming very compelling.

Q

What’s one thing, personal or professional, that you hope to achieve in 2018?

I have a dream of swimming from Perth to Rottnest Island.

A At the moment, it is more of a pipe dream because of kid duties, but it is important to me to stay fit. You can’t run a healthy business if you are not healthy yourself! AB

Q

30

www.brokernews.com.au

www.brokernews.com.au

31

32

www.brokernews.com.au