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ISSUE 6.24 December 2009

‘Wonderland’ will operate next year

The forecast is definitely cloudy Cloud computing, such as Google Apps, could be the way of the future for small broking businesses looking for scalable software Page 8


Top dogs of 2009  New joint venture

aggregator to provide assistance to brokers It may still only have the project name of ‘Wonderland’, but providing “all relevant conditions, precedents and approvals are met”, the Macquarie Bank-backed aggregator will kick off early next year. As Australian Broker went to press, the three aggregators – The Mortgage Professionals (TMP), National Brokers Group (NBG) and The Brokerage (TB) – known for months to be in discussions with Macquarie Bank to form a new joint venture revealed in a prepared statement that they had signed an agreement in principle to merge. The announcement ended months of speculation dating back

to March this year when the story was first revealed by Broker news. Should all go according to plan, the new aggregator will comprise a national network of more than 900 brokers and a loan book of $16bn. A name for the new business has not yet been decided, although an insider close to the deal told Australian Broker a moniker had been picked out and, unlike its project name, would not be one to raise eyebrows. Besides the three aggregators, the two other signatories to the agreement are Macquarie Bank, which helped to facilitate the merger, and Jeff Zulman, the proposed CEO. Zulman described the proposed new entity as an “exciting development for the industry” with a business model “creating interest

in the marketplace”. NBG chairman Rod Lange said the merger could not come at a better time for brokers, while TMP CEO Michael Nicholson said merging the three businesses would achieve “economies of scale” that would underpin its brokers “in every aspect of their business”. The chairman of TB, Geoff Smith, said the merged entity aimed to give control and power back to brokers that were doing it tough at the moment. The project name of ‘Wonderland’ was revealed by Mortgage Choice CEO Michael Russell during the franchise group’s annual Christmas luncheon held for the media on 25 November.

Page 28 cont.


Some brokers not only survived, but thrived during another tough year. Some of the top performers share their highlights from the past 12 months Page 18


A time for growth? 2009 was a challenging year for most brokers, but ended on a note of optimism. We revisit some of the stories that made the headlines Page 24




Mortgage House signs deal with NRL hopeful Key points  Mortgage House signs deal with Central Coast Bears  Continues its long association with rugby league  Sponsorship to assist in teams bid for NRL status  Well received by club and fans

Mortgage House has stuck firm to its commitment to return to NRL sponsorship by putting its weight behind the Central Coast Bears bid for inclusion in the 2013 NRL Premiership. The mortgage lender and aggregator recently signed a multi-million dollar deal to become the team’s major sponsor. In addition, it also hosts and manages the NRL team’s website, which provides an online space for fans to visit and show their support for the bid. Mortgage House managing director Ken Sayer said he was proud to be a part of the team’s development from such an early stage. “Mortgage House has a long association with rugby league, but this is the first time we have been involved from the inception stage. There is a greater sense of achievement – the satisfaction of seeing a project grown from the beginning and come to fruition,” said Sayer.

“It is exceptional to see the community and corporate entities alike backing the bid and really getting involved at all levels.” Mortgage House has previously sponsored both the Melbourne Storm and the Sydney Roosters, with Sayer telling Broker news in June this year it would be “back in town” either later in the year or early next year. “I would sponsor a team every day of the week, provided there is a gentlemen’s exit clause so that when there is unacceptable behaviour we can vote with our feet,” he said at the time. News of the sponsorship attracted a lot of attention on Broker news from fans of the club. Most were supportive and praised Mortgage House for its efforts. Todd Nelson had this to say: “Great vision for Mortgage House; the Central Coast Bears are going to be huge. From Milsons Point to Lake Munmorah people will rally to their cause, which is inclusion to the NRL in 2013.” The launch was held at the Central Coast Bears’ new offices in Erina. The club’s two major sponsors, Mortgage House and Fortunity, attended along with members of the community, business leaders from the community and business leaders from the region. Central Coast Bears CEO Greg Publishing director.... Justin Kennedy Managing editor.....George Walmsley Editor........................Larry Schlesinger Journalist.............................Tim Neary Production editor............Carolin Wun Design manager..... Jacqui Alexander Designer...................Jonathan Phillips HR manager.................. Julia Bookallil Marketing manager.........Danielle Tan Marketing coordinator... Jessica Lee Traffic manager............. Stacey Rudd Advertising sales Simon Kerslake t: 02 8437 4786 f: 02 9439 4599 Rajan Khatak t: 02 8437 4772 f: 02 9439 4599 Editorial enquiries Larry Schlesinger t: 02 8437 4790 f: 02 9439 4599 Distribution Australian Broker is available by subscription. E-mail all subscriptions and mailing enquiries to: t: 02 8437 4731 f: 02 8437 4753

Ken Sayer

Florimo said the partnership with Mortgage House demonstrated that it wanted to be part of this journey back into the NRL in 2013. Get interactive on this topic. Follow the blog on: http://www. breaking-news/mortgage-house-tosponsor-new-nrl-team/38793

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 can accept no responsibility for loss. © Key Media 2009 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. This magazine is printed on paper produced from 100% sustainable forestry, grown and managed specifically for the paper pulp industry

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Firstfolio acquisitions take loan book to $18bn Key points  Firstfolio acquires three separate mortgage businesses  Moves mortgage book to $18bn  Each fulfils a separate strategy  Always on the lookout for new opportunities  Priority to integrate into the Firstfolio business model  Follows AV Jennings and Firstfolio One deals There are no such things as mergers – only takeovers, according to Firstfolio’s chief executive Mark Forsyth. His comments follow the successful completion of Firstfolio’s negotiations to acquire three separate mortgage businesses that will see Firstfolio increase its loan book to $18bn. “I’m going to get the best I can

out of the businesses, not crash them. I will definitely be reorganising the management to fit in with our business. That is the whole point,” he said. The ASX-listed mortgage and financial services group has acquired First Chartered Capital’s (FCC) $3.5bn loan book, wholesale mortgage manager, Loan Services Australia’s $2bn mortgage-managed loan book and boutique mortgage manager, Xplore Capital’s $400m managed mortgage book. Each of the three businesses reflected a different sort of strategy said Forsyth. “So the first one – Xplore Capital – being the financial services provider to the Amway network in Australia, is a new distribution channel with some small economic leverage. “FCC is not so much about economic

leverage because it is an aggregation book. So it is a new channel, with a healthy settlement of $70m a month in aggregation. “The LSA acquistion is principally around economic and process leverage because, effectively, we do the same things.” Asked whether there was more of the same in the pipeline, Forsyth told AB: “I’m always looking at a funnel of deals. Out of 10 deals, eight will fall over for various reasons so you constantly have a discussion ongoing or you never have the opportunity to close.” Right now, however, Forsyth said his focus was to “bed down” these three deals – a process he expected to take “at least three months”. November has been a busy period for Forsyth.

ASIC proposes $2m PI cover ASIC has proposed that Australian Credit Licence (ACL) holders carry a minimum of $2m in professional indemnity (PI) cover – double the $1m currently required by licensed brokers operating under WA legislation. The regulator also proposes that this cover should include ‘run-off’ cover (cover for claims made after the insurance policy has ended) with maximum PI cover set at $20m. The proposal has been modelled on the $2m cover currently required by licensed financial advisors. ASIC said experience in this sector suggested that smaller entities need “minimum cover of at least $1m or possibly $2m in

aggregate, with larger entities needing a larger amount”. ASIC said it welcomed “specific feedback on the appropriate level for both minimum and maximum cover required and also whether this cover should extend only to claims by consumers”. It noted industry opinion was divided about which level would be appropriate: “Some [earlier consultation respondents] felt $2m was a good minimum amount for non-lenders, where others argued that $1m would be sufficient.” Online estimates obtained by Australian Broker show about a $300 difference in insurance premiums between $1m and $2m PI cover.

“We think that this issue is complex and warrants further consultation,” ASIC said. Phil Naylor, CEO of the MFAA, said it was his understanding that the proposed requirements by ASIC are “generally consistent with the bulk of PI policies held by brokers in the industry”. However, he said the MFAA would review this before it finalised its submission. The MFAA requires all of its full members to have a minimum of $1m PI cover for any one claim and $2m in the aggregate, plus 12 months’ PI ‘run-off’ cover. ASIC is also seeking feedback on its view that to be adequate, “PI insurance cover must include

Mark Forsyth

Earlier in the month he signed a deal to coordinate AV Jennings’s marketing and sales programs with Firstfolio’s, and then he launched Firstfolio One – a boutique aggregation platform targeting best-in-class brokers. Firstfolio also secured a long term $25m funding facility to fund further growth with Welas Pty Ltd, a company associated with Firstfolio non-executive director Tony Wales.

Who does not require PI cover?  General insurance companies, life insurance companies  ADIs regulated by APRA  Companies that have an ASICapproved guarantee from a related APRA-regulated entity  Pure lenders: credit providers whose sole business is lending claims made against a licencee’s credit representative and dealt with through that representative’s external dispute resolution scheme”. Brokers have until 18 December to respond to the proposal. ASIC will finalise its regulatory guide in early 2010 and a final version will be released in March next year.

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Affiliates better then referral schemes National Mortgage Brokers (nMB) is looking to grow its affiliate marketing program after notching up 300 agreements to date among its 230 loan writers. Sal Cinque, director of sales and marketing at nMB, said its program was “nowhere near the

Key objectives brokers may realise from affiliate marketing:        

Build brand awareness Increase online traffic Increase number of leads Acquire new clients Increase sales Extend reach to new markets Develop a new sales channel Develop a cost effective distribution model

Source: nMB

point of saturation” – among the 300 existing agreements, 100 are held by a single broking group. Cinque described affiliate marketing as a great way to boost average productivity and build up a broker’s “local presence”, and that there was less likelihood of “slippage” (payments not made on time to referral partners) – a more common occurrence in traditional referral relationships “done on a handshake”. The aggregator provides a “blueprint” – in the form of marketing proposals and agreements – and an ‘affiliate system’ to track the entire “lead to loan settlement process”, ensuring affiliates are paid accurately and on time for all loan sales originated through their organisations.

BIS Shrapnel delivers rosy forecast for investors Continued growth in the investor market and corresponding demand for mortgages is likely to continue after BIS Shrapnel forecast rental growth around Australia to surge in 2010, following a period of more moderate growth in 2009. Over the three years to 2012, it predicts the national average yearly rental growth will be 5.8% – meaning rental households will pass an extra $1.9bn to landlords each year. BIS Shrapnel estimated national rental growth to be 5.1% in 2009, down from 8.3% in 2008, but still historically high. Its Home Buyer Monitor survey – which was conducted after the November 2009 rate rise – showed that as many as 30% of all prospective

purchasers were investors. This figure was unchanged from the previous survey in August 2009. Contributing to rental demand is the low rate of medium and

Jason Anderson

One of the bigger successes notched up by nMB brokers include eCapital, which has negotiated an exclusive affiliate agreement with real estate group Hocking Stuart. eCapital director Jim Henwood told AB the relationship had been initiated by first going direct to a couple of the Hocking Stuart offices and “getting the numbers on the board”. The firm then approached the group’s corporate arm. eCapital is now the exclusive finance arm for Hocking Stuart, which has in turn invested in the broking business. Henwood said the success was down to both eCapital’s boutique offering which fitted in with Hocking Stuart’s requirements and the affiliate tracking system provided by nMB.

“…the ability to access and track via the affiliate system was a big plus for us,” he said. Henwood said eCapital was looking to grow its affiliate relationships with other organisations, including the likes of sports clubs and accounting practices as well as expanding the business by bringing more “active” brokers on board. Affiliate marketing was first pioneered by to increase online sales. Cinque said examples of successful broker affiliate agreements included sporting clubs and ‘cause’ marketing. “We have one broker who donates a percentage of his commission to a children’s hospital in exchange for every loan he writes,” Cinque said.

high-density dwelling construction due to “tighter lending restrictions”. BIS Shrapnel says it is uncertain as to how long it will be before lending restrictions are eased. “Even if some improvement were to occur in the near future, it would be some time before supply improves as most medium and high-density dwelling projects take 12 to 18 months to complete,” it said. Jason Anderson, BIS Shrapnel’s senior economist said the forecasted growth in rents would “complicate” the RBA’s fight against inflation. In an update to its Residential Property Prospects, 2009 to 2012 report, BIS Shrapnel said construction of new medium and high-density housing had fallen to “the lowest level since 1991” and were “30% down from last year”, putting more pressure on the existing house stock. Anderson said while supply had plunged, demand remained

“very strong”. He said, “net overseas migration in 2008/09 is estimated to have been about 300,000 persons – a record high.” The number of first-home buyers in 2009 is running “at a record level of about 200,000” and they are likely to be adding to the pressure on rental markets. “Many qualifying first-home buyers were young adults living at home, accumulating the savings which are now required for home loans. A first-home buyer purchasing a former investment property will actually reduce the available rental stock,” said Anderson. However, with a strong upturn in detached house construction expected to come through in 2010, owner-occupier purchases of new houses running at a strong rate will alleviate the degree of undersupply in 2011. Meanwhile, BIS Shrapnel called the Australian appetite for new apartments “resilient”, despite the recent interest rate rises.

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The forecast: definitely cloudy

Cloud computing may be the way of the future for small broking businesses looking for scalable software to run their operations. At a presentation and panel discussion in Sydney, Google's global head of enterprise, Dave

Girouad, said small business owners had been one of the first sectors to adopt its cloud computing solutions, Google Apps, followed by the education sector and bigger organisations. Among the bigger organisations

What is cloud computing? Cloud computing refers to business applications (such as e-mail, word documents and spreadsheets) that are accessed via a web browser rather than through software installed on a computer or network. It’s of value to brokers because the technology is completely scalable, so it can be implemented by a team of two or three (a small broking firm), or by much larger organisations spread geographically, such as is the case at Mortgage Choice. The benefits include not having to buy new versions of software and being able to access new features, tools and new versions in real time. Some concerns remain around the security of data.

in Australia to have seen the light is Mortgage Choice, which, following a pilot run involving 70 users (including franchisees and staff in its head office), migrated all of its 1,000+ users from Lotus Notes/Domino to Gmail (as part of its adoption of Google Apps). Mortgage Choice CIO Neill Rose-Innes labelled the move to Google Apps a success. He said an expected flood of calls to the Mortgage Choice help desk, following the move to Gmail, did not eventuate. “We expected three support calls per user migrating across, but we got just 0.5 calls per user.” Rose-Innes said he expected “significant savings over time” as a result of going with the online-hosted solution. While he felt very strongly about the need to move to cloud computing, he said CEO Michael Russell’s support of the idea had been a big factor in the franchise group adopting the technology. Russell said Mortgage Choice was “actively preparing” to

Neill Rose-Innes

deploy further web-based applications across its business. One of the ways Mortgage Choice will use Google Apps will be as a self-help training platform for its brokers, rather than adopting the classroom style approach – particularly useful given the geographic spread of its franchisees. Other local organisations that have adopted Google’s cloud computing solution include New Zealand Post and telecom AAPT.

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For all the latest mortgage industry news, visit

AFG “scale” appeals to AMP Brokers Size was a key factor in AMP Financial Planning (AMPFP) choosing AFG as its new external aggregator, having previously kept this service in-house. The group selected AFG “due to its expertise and scale”. AMPFP’s head of product research Brad Barr said after conducting an extensive review of mortgage aggregator providers in the market, AFG was found to “have best strategic fit” for its planners and accredited mortgage consultants (AMCs). “Throughout the review process, AFG demonstrated they had the capability, capacity and desire to grow the lending services proposition with AMPFP and our AMCs,” Barr said. “Our planners and AMCs will have an increased level of support in the lending area, including access to a broader range of lenders and types of loans. AFG general manager of sales and operations Mark Hewitt said AFG was delighted to be working with AMPFP and described its selection as a “strong endorsement” of its service offering”. Prior to the agreement with AFG, AMPFP had provided aggregation services to its 380

Benefits for AFG:  Adds 380 brokers to its network  Revenue from providing services to these brokers  Bragging rights: AFG selected by AMP ahead of competitors

Benefits for AMPFP  Access to AFG’s wider panel of lenders and loan types  Access to full range of AFG support services  Broader lender proposition for customers accredited mortgage consultants via internal aggregator, AMP Lending Services, a division of the bank. Under AMP Lending Services, loan writers had access to 12 lenders via direct agreements, in addition to being able to offer AMP products. Besides offering a wider panel of lenders, AFG will provide AMPFP loan writers with administration, technology systems software, education, training, communications and marketing support. The three-year agreement with AFG begins in December 2009.

welcome ING Direct offset ING Direct has received an enthusiastic response from brokers following the launch of its 100% offset home loan – Orange Advantage, which was launched off the back of feedback from customers and brokers. It uses ING Direct’s fee-free Orange Everyday transaction account. “Our mortgage customers wanted an offset account and wanted to take advantage of the Orange Everyday debit card features,” said ING Direct CEO Don Koch. Koch said the development of the product was a “great example of open feedback from customers and our broker partners”. Colin Lamb director at Mortgage Solutions Australia praised ING for the initiative, saying he often fields enquiries from clients looking for an offset account product with a competitive variable rate. And while some clients qualified for the benefits of a pro-pack, many others didn’t, he added. “The ING Direct product seems to offer these clients similar benefits to that of the pro-packs,

but without a huge annual fee,” he said. Lamb also said the new product would suit a large percentage of his clients, and it provided the broker with “another option to the Big Four”. 1st Street Home Loan’s director Jeremy Fisher agreed, and told AB that it was great to see someone outside of the majors introduce a competitive loan product. He described the ING product’s interest rate as being “extremely competitive”. “This is by no means a compromise. ING have introduced a product that is fully featured at a competitive price. I believe my clients will be happy to support this new product,” he said.

Key features of Orange Advantage are:  Life of loan interest rate discount (0.25% pa) where total residential ING Direct borrowings are $300,000 or more  Use of ING Direct’s Orange Everyday transaction account as a 100% offset account  VISA debit card with access to offset funds via ATM, EFTPOS, internet and phone banking  Unlimited additional repayments  Free redraw  Annual fee of $199

Majors lose influence on MFAA board Brokers that complain that the major banks have too much influence over MFAA decisions may have a harder time arguing their case after the Big Four lost all direct representation on the industry body’s board following its AGM on 26 November. Alison Whittle, director of Tiffen & Co and The Mortgage

Detective, replaced the CBA’s Kathy Cummings as NSW/ACT state president, while Adelaide Bank’s GM for third party mortgages, Damian Percy, took over as chair of the national lenders committee, a position previously held by NAB Broker’s Matt Lawler. Westpac and ANZ are not represented on the board.

A storm in a tea cup AFG executive director Kevin Matthews described the recent controversy over the MFAA special resolution vote as a “storm in a teacup” compared to the real issue that is facing the industry body – licensing. Speaking to Australian Broker, he claimed many brokers did not see the value proposition in the MFAA beyond membership of the industry body Kevin Matthews being an accreditation requirement. Depending on what happens post-ASIC taking over as regulator, he speculated that many might not renew their MFAA memberships. “Many brokers are only members of the MFAA because it’s a requirement for accreditation with lenders,” he said. “They see no value in being members beyond that.” As a result, he said the MFAA needed to educate brokers about the value they added. Despite his concerns, Matthews said AFG would continue to support the MFAA.

NAB has two indirect representation on the board via its Advantedge group, following the appointment of Stephen Kane, CEO of FAST, as chair of the national brokers committee and treasurer, and Glenn Mitchell, BDM at PLAN Australia, who was appointed Victorian president. The appointments of Kane and Mitchell coincided with a special resolution motion to change the MFAA constitution to restrict the number of board members from any one related or consolidated group to two, which was passed at the AGM by a 75% majority. In a statement on its website the MFAA CEO said the special resolution was aimed at ensuring a “fair balance of representation on the Board.” “As a result of consolidation taking place in the industry and amongst the MFAA membership, the MFAA Board is conscious of the importance of ensuring it does not become dominated by any member or members but also is concerned about preserving the democratic rights of members to be elected to the Board,” it said.

The resolution was opposed by the CBA and AFG, though for opposite reasons. The CBA wanted only one board member per related group to ensure impartiality and a “diversity of voices” while AFG’s executive director Kevin Matthews told AB it could be argued that a group representing 40% of brokers (as NAB does through Advantedge) was entitled to more than two board positions. Prior to the meeting, Choice CEO Brendan O’Donnell urged all its members to vote in favour of the resolution to ensure the group it is part of still had “at least two representatives at board level”. Mortgage Ezy CEO Garry Driscoll was appointed chair of the national mortgage management committee, Specialist Mortgage’s Barry Elmslie was named WA state president and vice president of the MFAA. Others on the MFAA board include Chris Dobbie (Queensland state president) and Geoff Colls (Tasmanian state president.

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Russell: We have not recruited well The big question According to Michael Russell, the ‘big question’ facing the industry is “what will broker penetration get to?”. “I can’t answer that… but I look forward to the day when we write one in every two loans on a par with the bank’s first party channels,” he said. “That would be a terrific day to celebrate”.

Michael Russell

Mortgage Choice CEO Michael Russell says the franchise group has “not recruited well” in the past few years, but has since raised its game. Delivering a presentation to media at its annual Christmas luncheon, Russell revealed that Mortgage Choice recruited only two ‘green fields’ (someone buying a new franchise licence rather than an existing franchise) in the previous

financial year. However, things had since turned around for Mortgage Choice with eight new green fields added so far this year, while 17 existing franchisees have successfully sold their businesses. Mortgage Choice has set itself the goal of adding 14 green fields by 30 June 2010, the end of its financial year. Russell revealed that a number of underperforming franchisees were “managed out in 2009”, resulting in a decrease in the number of franchises. Included in this cut-back was the decision to restrict a number of its underperforming multiplefranchise owners to just one franchise. “We told them that they needed to focus on just one,” he said. Russell explained that the drop in franchise

National distribution of Mortgage Choice network (30 June 2009) National NSW/ACT Vic/Tas



Loan writers














Source: Mortgage Choice

numbers was offset by higher productivity, resulting in improved customer acquisition and retention. “It was a trade-off… but it was the right one for the long term,” he said. During the presentation, Russell also spoke passionately about its new wholesale aggregation venture, Beagle Finance, which officially launches at the start of 2010. “It’s a play for market share… no new learnings are required,” he said, adding that he believed Beagle Finance would provide a “new level of competition” in the aggregation space. Beagle Finance will also assist in increasing distribution, particularly that of Mortgage Choice’s new stream of non-core products. While Russell said its core business would always be mortgage broking, he mentioned “insurance to cover the debt” as going hand in hand with its service proposition, as well as offering general insurance and home and contents insurance.

ME Bank RMBS: sign of healthy demand Australian RMBSs are considered to be better than its competitors by both offshore and local markets, and the offshore interest will continue to grow, according to ME Bank’s manager for financial markets, Paul Garvey. His sentiment follows in the wake of another a positive sign for securitisation in ME Bank’s

Key points  Australian RMBSs better than the rest  ME bank prices $784m worth of RMBS  Third transaction without government support  Deal attracted offshore investors  Unique pricing structure

pricing of $783m of RMBS during November – its third successful venture into the market without government support. Garvey said the move continued to highlight improvement in the market, and that the AOFM should be seen as “just another investor in the market”. “These deals were deals with investors. I am confident that we would be able to continue to issue with existing investors in the market,” he told AB. In addition, from a funding perspective Garvey said it was “pleasing” to see that there was offshore participation in the transaction as well. A portion of about 16% of the deal was funded out of Europe. Furthermore, Garvey said while

ME Bank would not do another deal this year, it would continue to look at securitisation as a viable funding alternative in the future. Unique to the deal is the inclusion of bonds that can be

Liberty Financial extends its reach Liberty Financial boosted its distribution power significantly in November after Mortgage Choice added the specialist financier to its lender panel. The partnership’s first order of business will be the rollout of Liberty’s residential loans; with its commercial, motor vehicle and debtor finance products to be made available in due course. This addition brings the number of lenders on the Mortgage Choice residential panel – made up of a mix of banks, building societies and non-bank lenders – to 24. Mortgage Choice CEO Michael Russell said he was pleased to welcome Liberty Financial as the mortgage broker’s newest lender partner as part of its “ongoing proactive strategy” to broaden its service offering and provide superior consumer choice. Russell said the deal also re-engineered its core mortgage business. “Liberty has moved from being a sub-prime to a near-prime business. They have a purpose in the market place; providing access to loans to those borrowers who might have a slight blemish on their credit records,” he said. In addition, Russell said Mortgage Choice was “looking at a host of new initiatives” to help keep its franchisees top-of-mind with consumers. redeemed at face value or converted into one of the other bond tranches. The Melbourne-based lender priced the Class A1R $250m top tranche of the SMHL Securitisation Fund 2009-3’s floating rate bonds at .70 percentage points over swap rates. It also sold $500m of Class A1, triple-A rated paper and $16.4m of Class AB and Class B notes. Tranches mature in November 2040.

Bendigo and Adelaide Bank launches RMBS Bendigo and Adelaide Bank has launched its first stand-alone RMBS issue in more than a year – another signal that regional lenders are tapping into the securitised funding market at competitive rates without the help of the government. Bendigo is looking to issue $500m of debt securities, reported The Australian Financial Review. Fund managers have indicated the transaction will contain a number of cornerstone investors and price at a margin of 130 bps above the benchmark swap rate. The deal was expected to be priced early in December. Bendigo spokesperson Will Rayner said the transaction was attracting strong investor demand. The deal is the first a regional bank without AOFM support since the support scheme started in September last year.


industry NEWS IN BRIEF Massive consolidation likely for UK broker market

In the UK, one in four mortgage broker companies could change ownership as a result of the current economic climate. A study carried out by financial analysts Plimsoll forecast a prolonged period of consolidation due to a high number of cash rich competitors. David Pattison, author of the new Plimsoll Industry Analysis – Mortgage Brokers, said “… there are simply too many companies chasing too little market”. He added, “with many directors eyeing the exit doors and highly leveraged buyouts consigned to history for the time being, it really is a buyer’s market out there for cash rich companies.” Plimsoll identified a total of 92 companies well placed to make acquisitions.

APRA warns The Australian Prudential Regulation banks must Authority (APRA) is not swayed by play by rules arguments from the major banks

that new global liquidity rules will negatively affect the economy. APRA chairman John Laker told members of the Australian British Chamber of Commerce that Australian lenders would have to abide by the new global banking standards. “If you don’t want to play by those standards, then you’ve got to have a very careful explanation to the market,” SMH reported him as saying. The major banks have argued that the new liquidity rules would force them to set aside billions in cash and government bonds that would otherwise be used for lending.

Customer satisfaction: ING Direct top dog again

ING Direct outperformed its competitors once again in the latest Nielsen Financial Services Monitor. The report found that 78.3% of ING Direct customers are satisfied with bank, well above the market average of 58.6%. The lender also had the highest percentage of customers of any bank (74.6%) who would recommend its services to their family and friends. Bendigo Bank came a close second, receiving 76.9% in customer satisfaction, while Suncorp received 66.3% In terms of recommendations, Bendigo Bank again came second with 71.3%, while Bankwest was third.

Count MD reveals Mortgage Choice strategy

Should Count Financial eventually acquire Mortgage Choice, it would refer on lending work from its accountants to the franchise group’s network of brokers. On the back of the Count subsidiary, Countplus taking a stake in a “national financial planning group”, managing director Barry Lambert told The Australian the acquisition would be a good fit because “accountants are the greatest source of referrals”. He added: “We have accountants out there that don’t want to do insurance and the like. They can simply refer business to these guys, just as if we were ever in the same situation with Mortgage Choice; they could refer lending work to Mortgage Choice.” Count Financial owns 17.33% of Mortgage Choice.


News Gollan, Wood silent on aggregation deal details Australian Broker was left scratching its head after both Paul Gollan and Brad Wood declined to comment on an earlier media announcement that Astute (Wood’s aggregation business) had taken a shareholding in Australian Mortgage Brokers (Gollan’s franchise operation). AB contacted Gollan and Wood separately to find out the rationale behind doing the deal – particularly interesting given that both are aggregators – but both business owners offered a polite “no comment”. News of the deal, which did not disclose financials, was made known in a press release titled “An Astute move by AMB” issued by AMB. Gollan called the deal an “important milestone” in the company’s history. “We have built something very special at AMB over the past decade and will work with Astute to determine where they can add value to our business in terms of accreditations, services and systems,” he said.

Wood said that Astute had been in the market “for some time now” and had “jumped” at the AMB opportunity. “AMB has a similar culture and quality operators, and that suits our model,” he said. In September, AMB expanded its aggregation service to include brokers who operated businesses under their own brand names. At the time Gollan said the new service to non-branded brokers would be offered in addition to the continued support its franchise brokers received in growing their businesses. The new aggregation service trades under ‘AMB Origination’.

Paul Gollan

Brad Wood

Auction website aiming for 2,500 brokers

Key points  No comment on the rationale behind the deal  CEOs upbeat about the opportunities it presented  AMB recently expanded its platform to include nonfranchised brokers

Matthew Watts

A new website where lenders bid on non-conforming mortgage applications from brokers has set itself a goal of registering between 1,500 and 2,500 brokers by June 2010. Ezy Capital managing director Matthew Watts said its initial target was to have between 300 and 500 brokers by the end of 2009 – which he said the company was well on track to achieving. Watts told Australian Broker he was in talks with a couple of major broker groups which, if successful, would see the company surpass its end-of-year target ahead of schedule. “Our main focus has been to register a number of non-bank and private lenders as well as sophisticated investors and superannuation and mortgage trusts ready for the influx of new loan applications over the next 12 months,” he said. The website has signed up seven lenders, but due to

“private contractual agreements” and lenders only ever known by a screen name, Watts said he could not disclose who they actually were. “What I can say is we are currently in discussions with several non-bank lenders as well as some private investment groups and mortgage trusts that have shown an interest in being part of Ezy Capital,” he said. The site is seeking to deal only with professional brokers. To successfully register, brokers must be members of either the FBAA or MFAA, be members of a dispute resolution scheme and have relevant PI cover. Watts said Ezy Capital would adjust its policy once new licensing laws come through so that all registered members must be licensed. He said the website had agreed to an arrangement with larger broker groups “to make sure Ezy Capital accommodates their own brokers and to find a way to keep brokers under the main broker group’s entity”. “We want broker groups to retain their current relationships with their brokers and use Ezy Capital as an alternative avenue to place low-doc, no-doc or non-conforming loans,” he said. Brokers can earn commissions of 0.88% on loans up to $2m, 0.66% on loans up to $5m and 0.44% on loans over $5m (all inclusive of GST).

Read the latest issue of Australian Broker online


Feature FirstMac CEO: Kim Cannon

2009: A view from the top

As the curtain draws on yet another eventful year, Tim Neary asked some of the industry’s leading lights to look back and pull out some of their most pleasing accomplishments


t’s been another tough year. One in which not everyone who started out in the mortgage industry can say they finished it still in the game. But some did more than simply survive; they managed to thrive in 2009. AB asked a cross section of them on what some of their highlights were…

Mortgage Ezy CEO: Garry Driscoll

We did not have to make anyone redundant over this period ... we achieved all our goals

Personal highlight I set some personal goals around fitness and weight loss and achieved them all so that was a real personal highlight. Now I just have to buy some new clothes that fit. Business highlight Mortgage Ezy approaching the end of the GFC a far stronger, more recognisable and better structured organisation. Also, we did not have to make anyone redundant over this period. We set out at the start of the year with some specific goals around structure, market positioning, product and customer mix and corporate profile and we achieved all our goals – plus a bit more. The most significant industry event in Australia Without doubt the sale of Challenger to NAB. This has the potential to reshape the mortgage management industry in Australia and relaunch this sector as a major industry player in competition with the likes of CBA and Westpac. It is not simply what the NAB can bring to the table, but the positive impact it will have on the other funders who support mortgage managers. The most significant global industry event The massive financial support provided by governments around the world to prop up their financial institutions. Had anyone predicted that something of this scale was possible a couple of years ago, they would have been treated as a joke. It has been a truly amazing year.

Personal highlight To have achieved the milestone of being 30 years in business. Not many people get to 30 years. Business highlight The fact that we are still here. The fact that we’re still around to fight for business and compete against the major bank lenders. Most significant industry event to occur in Australia Actually, there were two equally significant events. First was the effect that the AOFM’s buying of bonds has had in keeping competition alive in the market. Second is Challenger departing the market and going to a major bank. Most significant global industry event The new regulations that are coming out and the likes of APRA trying to bring us into line with the rest of the world with its new guidelines for liquidity. This, in spite of us having a system here that is not broken like in the rest of the world.

Mortgage Choice, Glenelg and Western Adelaide: Wendy Higgins

Personal highlight It would have to be finishing the number one loan writer as awarded by MPA magazine. Business highlight Our 10% increase in settlements over the past eight months. It resulted in my loan book increasing by approximately $10m per month – and achieving $800m in June 2009. Most significant industry event in Australia Without doubt, the boost to the First Home Owner Grant. Most significant global industry event The continued devastating effect of the GFC. That said however, Australia is weathering the storm better than most.

Eastern Financial Solution director: Brad Nolan

Personal highlight It would have to be attending the St.George Flame Regulation Study Tour to London and Paris. St.George leads the way in nurturing relationships with brokers they want to do business with. I took several good ideas out of the sessions and have implemented them into our business here. We are starting to see results already. Business highlight Being able to increase our business to make 2009 our best year to date. At the start of the year we were aiming to minimise the downturn – to at least keep our volume levels constant with 2008 levels. Most significant industry event to occur in Australia On a broker level, the recent BAS requirement at 80% on Lo Docs has been fairly significant as self-employed people really now need to rethink their strategies going forward. On a broader level, the government stimulus package was exactly what was required and has probably seen us placed the best worldwide in terms of our economy. Things could have been quite different without it. Most significant global industry event The lenders’ reactions to the GFC and the implementation of regulation – worldwide and in Australia.


Feature Smartline director: Joe Sirianni

Personal highlight Being elected MFAA president and winning the Golden Morgie at the AMAs for lifetime achievement in the mortgage industry. Business highlight Smartline’s merging with longstanding and highly reputable mortgage pioneer Mortgage Force. Most significant industry event to occur in Australia Finally: the passing of national credit legislation through the Senate. This will certainly re-shape the industry going forward. Most significant global industry event The demise and collapse of the UK and US banking system, as well as the quasi nationalisation and government bailouts of many of the major banks in the UK and US.

PLAN Australia/NZ CEO: Ray Hair

Personal highlight On a personal level my children were again the highlights of my year. My son achieved third place at the Victorian Secondary School swimming state titles, in 15/16 springboard diving. This year my daughter Cara completed Year 12. She is an incredibly caring and giving young lady, working part time as a gymnastics coach, and is looking

to enrol in a nursing/midwifery degree. I am incredibly proud of her. Business highlight For me there were two business highlights. Hosting PLAN Australia’s first national conference and celebrating our 10th birthday in Cairns this year. With 450 delegates the conference was an outstanding success. In addition I was fortunate enough to be invited to join the St.George-sponsored trip to the UK to learn more about broker regulation and the effects of the GFC. It was a well organised and managed trip, providing great insights into the UK broker experience and an understanding of the challenges we will face in Australia with the introduction of regulation. Most significant industry event to occur in Australia Not surprisingly I think it was the NAB’s acquisition of Challenger Mortgage Management and therefore PLAN Australia, Choice and FAST. This, along with CBA’s acquisition of BankWest and an interest in Aussie, and Westpac’s acquisition of RAMS and St George are all part of the re-shaping of Australia’s mortgage industry. Most significant global industry event The ongoing government support of banks in the US and UK is critical to the continued viability of global banking systems. However, I see China’s ongoing support of the US economy as probably the most significant positive event of 2009. The US economy is drowning in debt, which will be a drag for many years to come. Arguably, without China’s support, the US economy is very vulnerable, which cannot be a good thing for global economic recovery. As 2009 winds down, the subject of Chinese investment in US banks remains on the agenda.

Hosting PLAN Australia’s first national conference was an outstanding success


Dan Liszka is managing director of Alchemy Innovation Development (www., which runs its “Stepping Up program – Becoming Investor Ready – Preparation for an Equity Capital Raising” in association with the NSW Department of State and Regional Development

top ten tips

…raising capital With the economy on the mend and the industry upbeat, 2010 might be the year you look for capital to expand your broker business. Dan Liszka provides these tips on how to bring investors on board. Entrepreneurs looking to raise capital for their venture need to position their companies for the market upswing, and they need to be aware that investors in this climate are looking for great value. So what are the top 10 tips that entrepreneurs should consider when raising equity capital in Australia? Tip 1: Write a good business plan Make sure it has realistic financial projections. Tip 2: Establish a Public Limited Company It is illegal for Pty Ltd companies to offer shares to the general public without a prospectus. Equity capital raisings are governed by specific sections of the Corporations Act that need to be strictly complied with. Tip 3: Appoint a minimum of three knowledgeable, well-networked and experienced board of directors People invest in teams and the better networked your directors are, the greater your chances of building confidence and momentum in the investment offer. Tip 4: Explore all avenues of capital-raising VC and Angel Investors are not the only way to raise capital in Australia. Believing that all you need is one large investor is a fallacy, when many smaller ones will often achieve the same outcome. If managed properly, it can be easier to sell 20 x $50,000 parcels than finding and converting one investor for $1m. Tip 5: Create an investor-friendly environment Use facilities such as trust accounts, cooling-off periods, minimum subscription amounts, professionally-prepared offer documents and share certificates, all of which give investors confidence. Tip 6: Structure the offer correctly to make it attractive to both early and later-stage investors Don’t get greedy, but at the same time don’t give away too much equity in your business. Tip 7: Articulate your offer to investors correctly They want to see the potential for the investment. They may be interested in the product/ service or technology, but are more interested in what realistic returns they might see in the future. Tip 8: Set clear milestones for your business over the next three years and provide an exit strategy Investors want to be able to track and assess your progress towards an exit strategy in the foreseeable future. Tip 9: Create and practise a professional pitch presentation This will be an essential tool in presenting and selling your opportunity to potential investors. Remember – what’s in it for the investor? Tip 10: Correctly market the offer and ensure that you are compliant with ASIC’s rules and regulations. Most entrepreneurs don’t realise the legal minefield and potential issues associated with capital raising. Get it wrong and you could receive a $20,000 fine, five years’ jail and eventually have the company wound up and all of your hard work wasted.



Change…in the breast pocket of an old suit

A lot can happen in two years, especially if you’re talking about the mortgage industry

Larry Schlesinger


head of the annual Mortgage Choice Xmas media lunch, I hauled out an old suit I'd not worn for some time, and on my

way into work, found a note stuffed in the breast pocket. When I unfolded it, I discovered that it had the heading ‘Questions for Michael Russell’, something of a coincidence you’d agree, given the gathering I was to attend a few hours later. The first question I’d prepared to ask him was as follows: “Having had a few months to reflect, what do you think the Challenger deal has done for Choice Aggregation and for the wider market?” I then realised that these series of questions were nearly two years old, prepared for a lunch I had with Russell in Melbourne in November 2007, when he was still in charge of Choice Aggregation,

and shortly after Challenger had stunned the market with its purchase of Choice, PLAN Australia and 19% of FAST. Intriguingly, the second question I had written down was: “How is the transition in ownership [to Challenger] going?” Just reflecting on these two questions brought home the realisation of how quickly and severely things have changed in the industry. Russell has of course moved on to steer Mortgage Choice down a new path of diversification and wholesale aggregation while Choice’s ‘ownership transition’ has been turned upside down with Challenger making way for NAB under the new ‘Advantedge’ label. As for my meeting with Russell, I remember it as a pleasant lunch in a quiet Melbourne laneway not far from the Challenger office where Choice is still based. We discussed many industry issues at the time, including that of consolidation and the arrival of a band of new aggregators offering brokers equity in their businesses (readers may recall a series of columns we ran in Australian Broker at the time

debating the viability of these new entrants). While the first signs of what was then a ‘US sub-prime crisis’ were just starting to emerge, no one could have predicted back then that Choice would change hands again and that a major bank would own three of the country’s biggest aggregators, not to mention all the other major market upheavals – CBA/BankWest, CBA/Aussie, Aussie/Wizard, Westpac/RAMS/ St.George. You can only wonder what the landscape will look like this time next year, let alone two years from now. All signs point to many more significant changes to come.

All the best for 2010 As this is our last issue for 2009, on behalf of the team on Australian Broker and Broker news, I’d like to wish all our readers a hearty Merry Christmas and all the best for the New Year. Few would disagree it has been a challenging year, but all signs point to better times ahead for everyone who has worked so hard on their businesses in the past 12 months. See you all in 2010! – The AB team


off the cuff

Andrew Hetherington Intellitrain’s general manager

What was the last book you read? The Defector by Daniel Silva If you did not live in Australia, where would you like to live? The United States. I spent some time going to university in Texas on an exchange program and found the people to be warm and friendly. If you could sit down to lunch with anyone you like, who would it be? My wife and my new five-month old daughter. What was the first job you ever had? The paper route in Sunbury, Melbourne. What do you do to unwind? I do the occasional triathlon so doing a few ‘kays’ on the bike or going for a run helps. What’s the most extravagant gift you ever bought yourself? A road bike for the triathlons, although I stacked it recently, so it’s got a few more scratches on it now. What CD is currently playing in your car stereo? Norah Jones; it’s my wife’s CD but it’s good. If you could give anyone starting out in business one piece of advice, what would it be? Plan ahead. It’s a little like painting; if you don’t do all the preparation beforehand, the end result won’t be as good as you anticipated. If I was not working in the mortgage industry, I would like to be…? On a permanent holiday. Where was the last place you went on holiday? Fiji. It was magic, the people were great and it’s very relaxing. What is the one thing most people would not know about you? I did a stint tree-planting in the Canadian wilderness. The site was so remote that we were flown in by helicopter and set up in a camp for a few weeks at a time.


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ISSUE 6.1 January 2009

Branding is the essential strategy page 32

Regain control of your business

The rational process: cost-cutting

page 31

page 29

N2: FBAA members not muzzled N12: Credit reporting reform urged N 22: REIA on FHOG

Big bank warning Brokers be warned – the major banks are likely to turn around and bite the hand that feeds them. FirstMac, ING Direct and Challenger, all of which have significant stakes in the broker space, warned that brokers’ loyalty to the major banks would make it easier for these banks to cut commission further in 2009. The implication was clear – think carefully about where you put your business or face the consequences of yet more cuts. FirstMac CEO Kim Cannon told hundreds of delegates at the Australian Securitisation Conference that further cuts were on their way: “I have heard some of the majors may be talking about 0.4% cash, no trail and that would severely impact the broker market.” Cannon said that since the banks had “started playing with commissions and broker loyalty” there was now a “fear factor that commissions will be cut quite dramatically”. “Just as fast as they have taken those brokers – they can throw them away just as quickly

Kim Cannon

– they proved that in New Zealand. They cut out trail commissions years ago and they’ve just been slowly cutting commissions back.” Sharing the stage with Cannon at the conference, Challenger’s GM for Treasury and Securitisation, Andrew Twyford, said: “It just seems to be a natural course that once the banks feel comfortable they have the power back, they begin to pull back on the amount of share of income to those introducers.” These views were echoed by ING Direct’s Brett Morgan who, in an interview with sister publication MPA magazine, warned that commissions could drop if they continue to drive business to the major banks. Morgan, ING Direct’s former executive director of intermediary mortgages, said: “If brokers continue to support two or three major Australian banks with 90% of their business, something will happen again. So it’s really in brokers’ hands to change the dynamics. Otherwise, something will change and it won’t be in their favour.” Page 34

Brokers to dominate mortgage market Key points

s Brokers currently writing 65–80% of new mortgage business s The figure could become even higher with market convergence s FirstMac boss reveals new broker/mortgage manager hybrid s Resi looking to ramp up relationship with brokers

Despite the gloom and doom of current market conditions, brokers are set to significantly increase their foothold in the industry via a new hybrid business model. Speaking at an IIR Mortgage Industry Forum in November 2008, Choice Aggregation Services CEO Brendan O’Donnell said brokers are in a good position to dominate market share. He said that, while the sector had taken a hit from all sides with commission cuts, lender drop-outs and a slow-down in home-lending growth, brokers

were also privy to opportunities that resulted from the current environment. Currently, 65–80% of all new lender home loans are originated by brokers, he said, a factor that flagged an opportunity for brokers to extend their hold to a broader spectrum of the market. O’Donnell predicted that this would be achieved with further market consolidation over the following 12–18 months, namely by a convergence of mortgage managers and mortgage brokers. Page 34

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ISSUE 6.3 February 2009

Green shoots of recovery

Getting over the new hurdles

Business planning – made easy

Levelling the playing field

page 24

page 28

page 26

N4: Govt funds trainees N8: Life insurance popular N 14: Low-doc tightens further

BankWest: aggregators back on the level BankWest has finally ended its exclusive agreement with its top six ranked aggregators, with its new level playing field approach to commissions well received by the industry. Effective 1 March, all BankWest accredited brokers who settle loans of less than $3m will receive 0.5% upfront and a stepped trail of 0.15% in the first two years, then 0.2% in the third year, 0.225% in the fourth and 0.25% in the fifth and ongoing years. Where an existing BankWest loan is refinanced and there is no increase of the loan amount, the bank will pay an upfront commission of $150. Although the latest commission changes mark a reduction in the rate paid to the lender’s top six aggregators – PLAN, Choice, FAST, Aussie, Mortgage Choice and AFG – the new structure has been well received.

Michael Nicholson

Ray Hair, CEO of PLAN, stated that the previous arrangement, which involved volume components, would have been counterproductive and the new offer was much more amicable. However, the biggest tick of approval was given by aggregators who previously fell outside of the bank’s tier-one list. The CEO of The Mortgage Professionals, Michael Nicholson, said he was very pleased with BankWest’s decision to abolish its previously hierarchical commission system. “We were on their ‘tier two’ when they made that separate arrangement with the tiered levels, which we weren’t happy about,” he said. “However, they’ve realised that, and now have made a fairer proposition to the market, and we still have a very good and close relationship with BankWest.” Page 34

Wizard just another product on the Aussie shelf Once one of the most recognisable brands in Australia – its orange, black and white logo displayed in malls, suburbs and street corners across the country – Wizard Home Loans will soon become just another mortgage product sold by Aussie brokers. Speaking to Australian Broker, Aussie executive chairman James Symond confirmed the Wizard brand would “go away”. “The Aussie brand will be what customers see on the shopfronts,” Symond said. Indeed, new Aussie signage and a fresh new look for former Wizard stores will start

appearing at the end of April, but the brand will not disappear entirely. Symond added that Aussie was looking at keeping the Wizard brand as a set of products on its panel. “It just won’t be front of house but part of the supermarket – it will become a branded product on our shelves,” he said. Around 120 out of the 160-odd Wizard franchises in operation at the time of the sale are expected to move across to Aussie, adding to the 30 Aussie retail stores already established nationally. Page 34

Key points

s Wizard brand to vanish from shopfronts s Aussie brokers to sell Wizard products s New signage to start appearing at end April

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 It’s hard to believe that 2009 has

ISSUE 6.5 March 2009

come and gone as thoughts turn to what 2010 might hold. Australian Broker highlights some of the stories that made headlines in what was a challenging year for most brokers, but one which ended on a definite note of optimism

Effective crisis management

Economics: living on the edge

‘Perfect storm’ can bring opportunities

page 30

page 28

page 24

N12: Broker’s domain name theft N20: Shift to savings N 26: Moody’s ratings change

Mortgage Choice: broker proposition stronger than ever While many brokers may view the contraction of the lending market as a major blow to the industry, according to listed broking franchise Mortgage Choice industry consolidation has made the broker proposition stronger than ever. Speaking at the company’s interim results briefing, CEO Paul Lahiff dispelled concerns over the diminishing relevance of the third party distribution channel. Lahiff pointed to the latest Fujitsu Consulting report, which placed broker-originated business at a stable 38–40%, adding that the data was broadly consistent with major banks. “Notwithstanding concentration of most lenders, the major banks are clearly using brokers in a very substantive way,” he said. According to Lahiff, four of the five biggest Australian banks – the CBA, ANZ, NAB and St. Paul Lahiff

George, had increased their use of the broker channel, with the CBA and ANZ taking a particularly aggressive stance. While brokers retained a steady 38% share of Westpac’s book, and increased their share of business from 22% to 23% at NAB and from 41.7% to 42.1% at St.George, the most notable increases were at the CBA and ANZ. CBA’s broker channel surged by 4% to 39% while ANZ saw the biggest gain – an 8% rise, from 36% to 44%. The figures, according to Lahiff, were testament to the fact that lenders, in particular the majors, were “still seeing brokers as a very critical channel [and] as a way of getting new mortgage business”. Lahiff said he did not expect the situation was going to change in the shorter term. On the consumer front, brokers continued to fare well. Lahiff said that, despite market contraction, competition was still strong. “I don’t think the broker proposition [among consumers] is any less valid.” Page 34

Macquarie looking to enter aggregation space Macquarie Bank may again be appearing in the broker market, with several respected industry players claiming it is preparing to dabble in the aggregation space. The bank, which exited the mortgage and personal loans space in 2008, is believed to have approached several boutique aggregators with a cooperative proposition. While a code of silence binds the involved parties, several people who spoke with AB on the condition of anonymity confirmed that a meeting for interested parties had been held in Sydney six months ago. One source told AB that six aggregators were believed to be

involved in the project – one from South Australia, one from Western Australia, one from Queensland and three from NSW. The source added that, while the aggregators had signed confidentiality agreements, an announcement from the bank regarding the movement was due shortly. The person heading Macquarie’s move into the aggregation space is believed to be Tim Brown, the former head of Macquarie Mortgages. It is also believed that the project will run under a similar arrangement to that of former cooperative aggregator Mosaic Financial Services. Page 34

Key points s Macquarie Bank to enter aggregation space s Lender approached boutique aggregators six months ago s Six aggregators believed to have signed up s Macquarie’s aggregation model to run in similar way to that of former aggregator cooperative Mosaic Financial Services


6 Jan MFAA/BankWest Home Finance Index predicts more first-time buyers will enter the market AB:Franchise group City Pacific Finance sold to OneLend AB:FBAA president Peter White says members free to criticise the industry body following AB receiving mystery document slamming FBAA constitution 15 Jan NAB Broker announces that brokers with a rating of 0, 1 or 2 Stars will receive limited accreditation AB: Heritage Building Society CEO John Minz says brokers a priority channel for the future AB: Abacus backs proposal for positive credit reporting model 27 Jan Mortgage stress falls 6% from December with 635,000 households in some degree of pain, compared with a peak of 900,000, according to Fujitsu’s Stress-o-meter AB: PLAN founder Alex Moulieris promoted to chairman of broker platforms at Challenger Insider: “Boom times” as Smartline’s Milperra branch hit by ATM bandits Off the cuff: SEQUAL’s Kevin Conlon reveals he was born in Malta and was once a stowaway on a “coastal trading ship”


1 Feb Suncorp introduces ‘target business’ commission structure requiring brokers to comply with list of parameters to receive remuneration

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2 Feb BankWest pleases brokers with access to its new Rate Tracker Ultra product AB: Aussie executive director James Symond says merged business aiming for $1bn a month in settlements 16 Feb Challenger reports normalised NPAT of $106m AB: New industry body, the Australian Institute of Professional Brokers, promises stronger collective voice for brokers AB: NAB Broker e-mail blunder discloses special commission arrangement with Mortgage Choice AB: Broker anger unleashed as Investor Finance enters final stages of liquidation AB: Steve Weston calls an e-mail campaign by FirstRock questioning the stability of aggregators under Challenger’s umbrella a “PR stunt” AB: The low-doc market retreats further as lenders tighten up criteria Off the cuff: If Steve Lambert wasn’t CEO of National Brokers Group he might be running a “top end” restaurant


1 Mar Aussie/Wizard merger comes into effect 1 Mar BankWest ends exclusive arrangement with top six aggregators; all brokers to be paid 0.5% upfront and stepped trail starting at 0.15% AB: National Mortgage Broker’s Gerald Foley demands “banks give something back” after cutting commissions and dragging out settlement times 2 Mar Bluestone Group records profit before tax (unaudited) of $5.4m for the six months to 31 December 2008 AB: GE Money forces Wizard borrowers to refinance through Aussie or face hefty exit fees. Challenger’s Steve Weston says move shows “contempt for the borrower” AB: Broker Vladimir Alter pledges to donate 50% of upfront commission for the month of February to bushfire victims as the industry unites to help AB: We break the news of Macquarie’s play in the aggregation space 10 Mar AFG index shows mortgage sales up 40% in February as first homebuyers rush to meet the June deadline

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Headlines that we never saw Crystal ball gazing is more art then science. While many predictions did in fact come true, there were many that did not come to pass. Here are a few headlines that didn’t quite make it into Australian Broker in 2009:  ‘Australia enters recession’: Australians cheered in unison as the country achieved what the UK, Europe and US failed to do – avoid an official recession (defined as two consecutive quarters of negative growth). While it may have been nothing more than a symbolic victory (just 0.4% growth in the March quarter) it undoubtedly lay the foundation for a renewed sense of optimism and set the country apart from first world colleagues. The Mid-Year Economic and Fiscal Outlook later forecast the Australian economy to grow at 1.5% in 2009/10 and 2.75% in 2010/11.  ‘Rates drop below 2%’: On 2 February, the day before an official RBA announcement, Loan Market Group executive director John Kolenda said he expected rates to fall to below 2% “as the global economic crisis worsens”. While the RBA went ahead and slashed rates the next day to 3.25% and again by a further 25bps in April, that was the end of monetary policy easing as the cash rate stayed at record levels of 3% until October. By then an improvement in the economy saw the RBA lift the cash rate by a quarter percentage and then again by the same amount in November. It’s unlikely we’ll ever see the cash as low as 3% again – though never say never.  ‘Banks slash commissions again’: In our very first issue of 2009 we reported on concerns expressed by the likes of ING Direct, FirstMac and Challenger that should brokers continue to show their loyalty to the major banks, they would repay the favour by cutting commissions further. While rumours of further cuts continued to surface, none of the major lenders took a knife to commissions, though St.George and NAB did some re-jigging to their models. Ending the year on an optimistic note, the final JP Morgan Australian Mortgage Industry Report said rather than “re-visiting the commission structure” banks were looking at “improving the efficiency of the broker relationship to enhance the effectiveness of processing volumes”.

AB: Former UK HBOS mortgages boss says brokers are cheaper than bank branches 19 Mar Rebranding of ABN AMRO as Royal Bank of Scotland (RBS) completed 24 Mar Aussie Home Loans announces it has signed up over 100 Wizard franchisees to its new franchise contract in just three weeks Insider: The AB editorial team receives a reminder from Kaplan to upload their ‘assignment’ by 5pm! Off the cuff: Smartline’s Joe Sirianni says he enjoys riding his bicycle in his lycra pants

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ISSUE 6.8 May 2009

Industry help for those in need

Communication the key

How to succeed with referrals

page 20

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page 22

N4: CBA denies commission cuts N10: Research your leads first N 14: 80% LVRs?

Forum: hope or hype? As Australian Broker went to press, major aggregators and lenders were about to meet behind closed doors in Sydney as part of an MFAA-facilitated ‘forum’ aimed at resolving the current crisis in turnaround and processing times. The meeting comes at a time when some lenders are taking up to a month to assess applications and there is anecdotal evidence suggesting brokers are losing business to branches and direct channels due to the blown-out times. It also comes as broker distrust of the big banks continues to grow, but at a time when these lenders are receiving more than 90% of mortgage applications On the other side of the fence, banks have expressed frustration due to the quality of some broker applications, claiming reworking of applications has fuelled delays. Despite these different perspectives, aggregators AB spoke to before the meeting were hopeful that a positive outcome for brokers was possible, although expectations remained modest.

Delay won’t derail regulation launch Key points

s Regulation consultation time extended until September s Minister Sherry confident January roll-out date will be met s Opposition claims regulation timeframe will not be met s Delay could be a positive, for brokers to work out details

Brokers can still expect to come under federal regulation on 1 January 2010, despite some reshuffling of the plan, according to the Minister for Superannuation and Corporate Law, Nick Sherry. When the national broker regulation timeline was officially launched in October 2008, Sherry announced a two-phase system: Phase one, planned for mid-2009, was to involve getting national legislation in place and establishing a national licensing regime. Phase two, planned for mid-2010, was to finalise all areas, all details and all legislation.

“The lenders know what the issues are. Whether there is willingness to resolve them will be interesting,” said AFG executive director Kevin Matthews ahead of the meeting. “A more formalised approach can’t do any harm. Will it make any difference? Well, at least the issues will be on the table so there is nothing to lose,” he said. Matthews said aggregators’ present issue was to do with competition and the lack of the second-tier banks “standing up and taking some volume from the major banks”. “Our bargaining power has diminished… we use to have a big stick; now we have a feather duster.” Connective principal Mark Haron said a solution to the servicing problems would need to be based on “better quality business from brokers” but also a “more balanced approach [by] lenders to service levels [for] their third party and propriety channels”. Haron was hopeful that lenders coming to the meeting would be “fairly open minded”. Page 28

However, while Sherry said in a recent announcement national regulation bills are on track to be introduced into parliament by mid-2009, he revealed that the passage of the legislation will be delayed until September to allow the states to pass their relevant referral legislation. A spokesperson for Sherry told Australian Broker that the decision was made at the request of the states and territories and was supported by industry stakeholders. However, she added that full licensing would still commence from 1 January 2010, as initially planned. Page 28


1 Apr After six years, Paul Lahiff resigns as managing director of Mortgage Choice AB: Homeloans Ltd promises higher commission on new product with ‘bank functionality’ AB: MFAA writes to Wayne Swan to complain about behaviour of GE Money 7 Apr MFAA CEO Phil Naylor announces plans for forum between lenders and aggregators, primarily to thrash out service issues 8 Apr RBA cuts cash rate to record low of 3% AB: After renewing sponsorship of North Melbourne FC, Astute’s Brad Wood says broking and AFL make a great fit AB: CBA applauded for its backlog ‘blitz’ involving 160 processing staff 21 Apr Michael Russell appointed as CEO of Mortgage Choice 22 Apr Following an AOFM investment, FirstMac announces one-year fixed rate ‘FightBack’ mortgage of 2.99% 27 Apr Draft NCCP Bill released for public comment 28 Apr MFAA hosts lender/aggregator forum behind closed doors in Sydney AB: ASF chairman Stuart Filler says RMBS recovery still some way off 30 Apr ING Direct cuts ties with seven mortgage managers Insider: It’s the ‘lone’ broker as Loan Market Group gets its own name wrong in a media release Off the cuff: Homeloans Ltd Tony Carn reveals ambitions to be a narrator, despite not speaking up until the age of five


1 May ACCC allows AMS Mortgage Services (GE Money) to proceed with exit fee waiver agreement with Aussie for Wizard-branded home loans AB: No explanation given for 25% drop in Mortgage Choice share price AB: Kathy Cummings puts to bed rumours about CBA commission cut 5 May Firstfolio introduces an administration fee of $150 per month (plus GST) for inactive Lawfund brokers AB: RAMS says it’s taking “positive steps” to address up to one month delay in processing AB: nMB’s Gerald Foley backs brokers to take 50% of distribution pie 12 May Federal budget includes plans to extend boosted FHOG for another six months 22 May Deadline for responses to draft NCCP Bill AB: PLAN, Connective and Choice upbeat following MFAA forum AB: Two brokers say they have had money refunded by Mark Whittingham AB: Finconnect’s Tanya Sale calls Firstfolio’s admin fee a “money grab” as some former Lawfund brokers consider legal options Off the cuff: Firsfolio boss Mark Forsyth says he’d be a beach bum in an alternative life

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ISSUE 6.10 May 2009

Regulation timeline for brokers

PwC Barometer: Protecting business financial planning is key identity page 24

page 22

page 19

N4: ACCC ruling unfair N10: Financing for SMEs N 14: Swan offers budget help

Brokers 2 – Whittingham 0 Broker claims against lead generation services provided by Mark Whittingham are set to start pouring in after a campaign for refunds initiated by Australian Broker and Brokernews resulted in victories for two claimants. Amid a continuing flood of complaints, one broker has managed to recover his funds from lead service provider, Home Loan Selection Services (HLSS), and another broker is on the verge of getting a refund. NSW-based broker, Michael Badger, had to phone into a Victorian Consumer Advocacy Tribunal (VCAT) hearing to defend the $4,400 he recovered from his credit card company, after HLSS managing director, Mark Whittingham, failed to deliver leads. Badger managed to recover the money after presenting an email he received from Whittingham prior to signing up with HLSS. In the email Whittingham assured Badger that all unused credits would be refunded if he decided to end the arrangement after 30 days. After Badger did not receive the leads he paid for, and was unable to get in touch with Whittingham, he contacted his credit card company and received a refund based on the email. In retaliation, Whittingham issued

a VCAT order against Badger and sent debt collectors in a bid to recover the funds. The result was that Badger had to phone into the aforementioned VCAT hearing on 6 May. At the hearing Whittingham claimed that the email he sent Badger promising the refund for unused leads was not from him. However the judge dismissed his argument, allowing Badger to hold onto his money. Since Badger’s victory another broker, Stan Marinis, has also won a case against HLSS, after Whittingham failed to show up to their VCAT mediation on 8 May. Marinis contacted VCAT to arrange for the mediation, after he did not receive the leads he had paid for. As Whittingham did not make an appearance at the hearing, he now has until 22 May to refund the money to Marinis or to try to arrange another hearing date. Page 28

Brokers facing new lender fees Having only recently suffered through commission cuts, brokers are going to see further likely decreases to their pay cheques after two major banks flagged new accreditation fees. Following the introduction of its new mandatory accreditation requirements which require brokers to settle at least one loan with the bank every six months, Westpac has announced it will also be introducing a broker “re-accreditation fee”.

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While initial accreditation with the lender will be free of charge, any broker who has this cancelled will have to complete a reaccreditation session which will incur an associated fee. At time of print the “appropriate” amount of the charge was being discussed between Westpac and its “key business partners” and stakeholders. Following in a similar vein, the CBA said it was currently in the process of making changes to its accreditation requirements and

To read broker comments and for background on the story follow these links on Brokernews: More brokers rally against leads “scam” more-brokers-rally-against-leads-quotscam quot/34085?keyword=whittingham Broker taking lead generator to VCAT mediation broker-taking-lead-generator-to-vcat-mediat ion/35088?keyword=whittingham Leads: Broker wins refund after Whittingham no-show leads-broker-wins-refund-afterwhittingham-noshow/35167?keyword=whittingham

that these would be introduced in the second half of this year. “A fee will not be charged for accreditation but where brokers are required to attend an ‘up-skilling workshop’ because they have not maintained their product, policy and process skills a fee to cover retraining costs will apply,” said CBA’s head of third party, Kathy Cummings She went on to say that the amount of the fee has not yet been confirmed and further details will be available closer to the date. Page 28



1 Jun MFAA called on the government to keep licensing procedures simple and easy, to avoid driving out smaller operators 3 Jun Pisces confirms it is in voluntary administration as it restructures the business 3 Jun Jail time for former broker and convicted fraudster Adrian Camilleri AB: Rumours of Mortgage Choice/Count Financial grow as respective CEOs meet AB: Kevin Matthews says decision by institutional investors to hold onto AFG shares a “vote of confidence” 9 June AFG index says first homebuyer numbers have dropped, but investor market growing AB: MFAA to lobby against “silly” IDR and EDR proposals in draft credit bill AB: Vanilla Loans founder Geoff Brieger says its brokers will not accept commissions 19 June Aussie John commences legal proceedings against Gadens Lawyers over advice he received in 2003 and 2004 AB: ACCC chairman Graham Samuel defends decision not to block Westpac/St.George and CBA/BankWest mergers 30 June Connective broker numbers surpass 1,000 Insider: Typo in draft credit bill points to life sentence for offending brokers Off the cuff: Mortgage Choice CEO Michael Russell admits to having both AC/DC and Andrea Bocelli playing in his car stereo

25/05/2009 12:57:20 PM


1 July Smartline officially merges with WA-based Mortgage Force 1 July CBA requires brokers to submit four loans every six months to keep accreditation AB: RAMS customer base reaches 15,000 AB: Count Financial MD Barry Lambert says it is in no hurry to buy Mortgage Choice 6 July First homebuyer activity falls by 30% since its peak in March, according to AFG AB: John Symond stretches the Aussie brand further with move into life insurance AB: Gadens to remain Aussie lawyers despite being sued by John Symond 8 July Registration of brokers for new licence put back to 1 April 2010 14 July Homeloans Ltd joins the panel of Mortgage Choice 15 July ASIC releases consultation paper covering general conduct obligations for brokers AB: FBAA backs IDR requirements in draft credit bill 21 July Genworth Mortgage Trends Report finds proportion of broker-written loans now at 41% AB: Aggregators note improvements in lender service levels AB: Employees left out of pocket as LoanTrack closes its doors 29 July Mortgage Choice signals diversification focus following appointment of Simon Dehne as national manager, non-core products Insider: RAMS mascot Raymond shakes his booty all around town Off the cuff: Finconnect’s Tanya Sale might trade in her day job one day to run a funky bar on the beach


3 Aug WA-based Ballast buys the Sound Finance Group AB: Opinion divided over whether there is a place for part-time brokers AB: What next? The AOFM’s $8bn RMBS investment scheme draws to a close AB: Outside of Bankwest, Westpac and CBA, the other banks say they have no plans for volume quotas


Year in review 17 Aug St.George reveals simplified broker commission structure, effective from 1 October 18 Aug NAB announces plans to acquire Challenger’s mortgage management business 21 Aug Mortgage Choice annual NPAT declines by 23.9% to $13m AB: CBA boss Ralph Norris tells aggregator heads at a lunch that brokers are a key distribution channel for the bank 25 Aug Suncorp reports annual NPAT of $348m in “challenging year” 28 Aug Homeloans Ltd reveals annual NPAT of $7.2m AB: Tanya Sale squares up with RTOs after slamming ‘fast-track’ broker-to-planner courses AB: MFAA calls in consultants as it undertakes strategic review 31 Aug AFG says its business is “not for sale” Insider: Greater Building Society trumps them all with Jerry Seinfeld campaign Off the cuff: Resi’s Lisa Montgomery has ambitions to be on the big stage


9 Sep Bankwest makes Capped Rate Home Loan available through brokers 9 Sep MFAA culls 1,500 brokers who failed to obtain Certificate IV by 1 July deadline AB: Matt Lawler promises Challenger-affiliated brokers “certainty and support” AB: MFAA says proposed ASIC licence fee is fair AB: RAMS cuts ties with 18 aggregators to improve SLAs AB: NAB/Challenger deal a turning point for industry, says Choice’s Brendan O’Donnell 21 Sep Choice Aggregation Services finds “significant interest” in recently launched whitelabelled offering 25 Sep Westpac-sponsored AMA Awards sees multiple success for Smartline and Club Finance AB: MFAA/BankWest survey finds brokers still better at service than banks AB: ING has most satisfied customers according to Nielsen survey AB: AMB launches wholesale aggregation arm Insider: A spot of good fortune lands Zobel Finance some free advertising on an X Box game Off the cuff: Adelaide Bank’s Damian Percy reveals he once performed in an Elvis impersonation comedy musical

People moves Promotions – Industry personalities who climbed the corporate ladder: NAME


Role at the start of 2009

New role

John Flavell

NAB Broker

Head of sales

GM for distribution

Chris Bowen

Federal govt

Assistant treasurer

Financial services federal minister

Steve Sampson

Provident Capital, Provident Cashflow

General manager, Provident Cashflow

Group National Manager Lending, Provident Capital & CEO of Provident Cashflow

Tasso Papachatgis


Head of sales


Departures – Stalwarts that bid the industry adieu: NAME

Role at the start of 2009

New role

Paul Lahiff

CEO, Mortgage Choice

CEO of WD Scott Global

Matthew Nolan

CEO, Provident Cashflow

Working in financial services

John Kolenda

Exec director, Loan Market

Pursuing restaurant interests

Peter Hall

Country executive, Genworth


AB: RAMS encourages online lodgment following introduction of paperless mortgage application process AB: We join brokers as they head to London with St.George to learn about the impact of regulation from UK counterparts AB: AFG expects 5,000 brokers to quit the industry in 2010 AB: A survey by RFI points to the web as a major business tool for brokers AB: FirstMac welcomes government decision to extend AOFM scheme for further $8bn Off the cuff: Mortgage Ezy CEO Garry Driscoll reveals his first job was a junior clerk at NAB

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ISSUE 6.20 October 2009

Government stimulus helps build confidence


1 Oct RAMS cuts exception fees across all mortgages AB: Nearly one in two brokers will turn to their aggregators for help with licensing, our survey says AB: FBAA disagrees with MFAA over diploma as future industry entry level 6 Oct Bluestone reports NPAT of $6.1m for the year ended 30 June 2009 6 Oct RBA lifts cash rate by 0.25% to 3.25% 7 Oct ACCC won’t intervene in NAB/Challenger deal AB: Murdered standover man Michael McGurk revealed as director of short-term lending business, Bentley Smythe AB: Ray White takes 100% stake in Loan Market Group 16 Oct Homeside brand pricing changes: interest rates on variable loans based on customer’s total lending; plus LVR 28 Oct Senate signs off on NCCP bill, paving the way for licensing of brokers and new conduct requirements

Parliament House

 After a boom fueled by grants, a recovery is about to begin The industry is gearing up for a broader and sustained recovery following an ‘artificial boom’ in broker-introduced mortgage settlements in the June quarter. The surge was largely a result of the government incentives for first homebuyers.

According to MISC (Market Intelligence Strategy Centre) brokers wrote a record $18.3bn in settled loan contracts in the months of April, May and June – an 18% ($2.87bn) increase on the same quarter last year. A spokesperson for MISC told AB there was “bit of artificiality” in the “extraordinary result” due to the confluence of a number of factors. These included first homebuyers accelerating their purchasing decision over

speculation that government incentives would be removed in the Federal Budget. During the quarter, the average loan size increased to $267,724 (from $246,626 in June 2008) with much of this growth attributed to builders ‘accessorising’ their house and land packages to cater for borrowers with between $14,000 and $29,000 in federal and state grants money to spend towards their home purchases. MISC expects loan sizes to decrease as these extraordinary factors dissipate and subsequent months to be down on June quarter settlement figures. But the million dollar question is, by how much? Major industry players are optimistic about a sustained and broader recovery continuing for the rest of 2009 and into next year. AFG general manager for sales and operations Mark Hewitt said its mortgage index for September revealed the biggest ever spike in investor loans in a single month (from 27.1% to 33.4%) and more “broader interest” across the market. After the surge in first homebuyers, he said, investors and second and third homeowners were moving up the chain. Hewitt added that a lot of grant demand was pulled forward on speculation, ahead of the Federal Budget, that the grants would cease. Page 29 cont.


The buck stops with lenders The much-debated proposed legislation that placed the onus to prove a borrower’s identity on brokers has been dropped Page 24


Change management We get the lowdown on managing change across an organisation from several experts in the field Page 26


Rising rates: back to normality AMP economist Shane Oliver explains why rising interest rates are a sign of an improving economy Page 28

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ISSUE 6.21 October 2009

Web of opportunity

Alan Shields

 Internet is the key for brokers, new survey finds A broker’s website should be a key weapon in their armoury and should have the potential to attract significant amounts of business, according to new consumer research.

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Retail Finance Intelligence’s (RFI) Consumer Attitudes to Mortgage Brokers Report, which surveyed over 2,000 mortgage holders, found that one in five respondents (20%) who used the internet to make home loan enquiries then used a broker to obtain their home loan. (Only 22% actually went ahead and applied over the internet and

36% through a branch). When combined with RFI research that shows the broker proposition is most appealing to younger, tech-savvy borrowers (those aged between 25 and 44), the online opportunity looks even more attractive. Alan Shields, research director at RFI, said the internet was something brokers could not ignore. “This group (those aged between 25 and 44) is also the most likely to use the internet to apply for a home loan and it is therefore important for brokers to have high internet visibility and customer targeting to engage this group,” he said. Shields said brokers needed to have a way of capturing people online. “More research for a home loan is being done online. Brokers need to ask consumers what they want in a website,” he said, adding that things like good calculators and tools appeared to work well. According to the RFI research, more than one in ten (11%) borrowers find out about their broker via an internet search. RAMS head of marketing, Lynne Wyatt, said it regarded a strong online presence as a “key pillar” of its business acquisition strategy. The non-bank lender and franchise group also sees the internet as a growing source of leads for brokers. Page 32 cont. Turn to page 26 for a more in-depth look at the results of this survey.


US industry warns about regulation A report from the US about the pain that mortgage brokers and bankers are feeling under the regulatory regime Page 12


Aiming at the top end of the market Brokers should target Australia’s high net worth individuals who are looking to invest in real estate Page 16


Will growth begin to slow down? A series of new economic forecasts have cast a shadow over the prospect of accelerated growth in the foreseeable future Page 24


26/10/2009 3:52:08 PM


3 Nov RBA raises the cash rate by another 0.25% to 3.5% 10 Nov Advantedge announces product enhancements aimed at helping mortgage managers be more competitive 11 Nov Firstfolio launches boutique aggregation model, Firstfolio One AB: Macquarie aggregator expected to have $16bn book AB: NAB Broker apologises for “horrible” service to brokers AB: Wayne Ormond says Refund will defend itself against ACCC charge that it breached the Trade Practices Act AB: Loan Market Group director Sam White tells conference delegates to focus on building trust and long-term relationships 19 Nov Firstfolio in talks to acquire three mortgage businesses including Loan Services Australia AB: New sense of optimism at PLAN Australia and Loan Market conferences AB: LIXI CEO Erik Fenna hits back at JP Morgan report for calling the industry body irrelevant AB: Wendy Higgins named Australia’s top broker in MPA Top 100 survey Off the cuff: ING Direct’s Lisa Claes camped outside the Park Royal in Queensland as a teenager just to catch a glimpse of the band Queen


One year on What a difference 12 months can make … or maybe not. Australian Broker reflects on the stories that made headlines in the magazine one year ago

Issue: Australian Broker issue 5.24 Headline: ‘St.George: No broker changes… for now’ (Page 1) What we reported: Following its merger with Westpac, St.George’s head of intermediary business, Steven Heavey promised brokers that it would continue to be run as a separate brand and business with its own commission model. He also promised that with 47% of its mortgage distribution through brokers, the channel would remain uncompromised. “We’re not about to put in another 100 branches; our distribution will continue to be the same,” he said at the time.

Steven Heavey

What has happened since? Heavey has kept true to his promise. Though St.George did ‘simplify’ its remuneration model on 1 October with a base rate of 0.5% upfront commission and 0.15% trail (equivalent to Westpac), brokers can earn an extra upfront payment of 0.10% for a conversion ratio greater than 70% and extra trail of 0.05% where run-off is less than 15% – rewards not on offer at Westpac. Furthermore, the broker channel remained as important to St.George as it did a year ago, accounting for 48% of all loans at last count. At a strategic level, St.George has remained a separate and distinct identity, with Westpac CEO Gail Kelly commenting following recent annual results that it finished the year with “a set of clearly positioned and strong brands”. Headline: ‘Mortgage Choice profit expectation fails to shock’ (Page 1) What we reported: As an ASX-listed business, Mortgage Choice was forced to disclose to investors that it was forecasting a massive 45% drop in profits for the 2009 financial year due to commission changes and the effects of the slowing economy. Despite the size of the predicted slump, the news did not catch the industry off guard, with Connective’s Mark Haron saying that the figure was “indicative of a lot of broker and aggregator businesses”.

Smartline Milperra after the blast last year

What has happened since? A lot has happened to Mortgage Choice since this warning was issued, with a new CEO in the form of Michael Russell on board since April, a better than expected economic performance in Australia and new diversification initiatives at the franchise business. As for the predicted decline, the improved lending and economic conditions helped Russell deliver better than expected profits of $13m, a decline of 23.9%, just over half of what was predicted at the start of the year. Headline: ‘Paperless policy saves files in Smartline ATM blast’ (Page 8) What we reported: The Smartline Milperra branch was thankful for its paperless policy after the office was ripped apart by an attack on a St.George Bank ATM attached to it. Smartline Milperra partner Malcolm Drummond told AB the blast destroyed half the office, but its paperless policy ensured that not a single file was lost.

Drummond said he and his partners would continue to operate via laptops, a second office in Oatley and what was left of the Milperra branch What has happened since? One year on and it’s business as usual at the Milperra branch. Drummond tells AB it took about a month to six weeks to get everything back to normal. “…Working with no ceiling for a few weeks is certainly a conversation point. We had a lot of people drop in just to have a look,” he says. As for the ATM machine, Drummond says St.George wasted no time in installing a new machine and repairing the room in which it was housed. Much stronger reinforced walls were added. “… we had to wait for insurance assessments and claims to take their normal course before we saw any action,” he says. Drummond says it’s hard to believe a year has passed since the blast, but even so, the staff quite often mention it when describing the location to new clients or prospects, “and people remember seeing it on the news”.



Got any juicy gossip, or a funny story that you’d like to share with Insider, drop us a line at

Things fall apart


till at the same function, Mortgage Choice’s Neill Rose-Innes told a room packed with fellow CIOs of his dismay at having received an old-fashioned Rubik’s cube from Google, only to find the “whole thing completely fell apart” when he handled it. The Rubik’s cube (older brokers please explain what this is to your younger colleagues) was a gift from Google and had been sent over along with pens and USB drives. “I had my concerns with deployment,” he said jokingly, inferring of course that the cube falling apart wasn’t a very promising sign. Thankfully though, he reported, there were no Rubik’s cube disasters when it came to actually implementing the new solution.

A tale of two industry bodies

I Head in the clouds


et it be said that Insider is not usually one for early morning business breakfasts. However, the opportunity to attend a presentation by Google had Insider seated in a chair on the 37th floor of the Shangri-La Hotel just before 8am, digesting a bacon roll and listening to the internet giant’s global head of enterprise Dave Girouard make what must go down as one of the greatest understatements of all time. With no apparent hint of irony, cont. from cover

Girouard began his talk on ‘cloud computing’ by explaining that Google was 11 years old and had had… wait for it…“a degree of success in the search engine space”. Insider wonders if it truly was just a case of extreme modesty on Girouard’s part (something virtually unheard of in the self-promotional world of banking and finance) or perhaps was a result of the lack of oxygen at such giddy heights! Either way Dave… you’ve got to be kidding!

t appears that temper tantrums, threats and accusations were flying left, right and centre between members of the MFAA board, just prior to the AGM on 26 November. While none of the involved parties were willing to make any public statements on the matter, Insider has it on good authority that two big-hitters recently came to blows over board representation, with one party apparently storming out of a meeting demanding the other resign. Indeed, Insider received a number of calls testifying to what was clearly a very unpleasant exchange. Contrast this for a moment with the apparent calm (we’ve been told) of the FBAA AGM, where the entire board was recently re-elected unopposed, and where the talk was all about


the continuity of its directors. Given the ‘high standing’ these two industry bodies hold each other in, Insider suspects the FBAA executive must have enjoyed some of the industry tales emanating from Neutral Bay.

Michael Russell’s hit parade


his year, the Mortgage Choice Christmas media party had a distinctly musical flavour, led by CEO Michael Russell, who, during the course of his presentation, mentioned both Aussie rockers AC/DC and 1970s legends Supertramp. Insider unfortunately missed the joke, but Russell was happy to explain the connection. He said that the franchise group’s ‘paid the same’ philosophy was “indelibly stamped” in the way our franchisees conduct their business. Indelibly Stamped, he explained, was “a terrific album released by Supertramp in 1971”. And what of the AC/DC reference? Russell said when speaking at the AGM, he mentioned that “notwithstanding our decline in approvals and cash NPAT in 2009, we’re cautiously confident that we’ll be ‘back in black’ in 2010”. But wait, there’s more – at the same lunch, Russell raised eyebrows by revealing the name of Macquarie’s new aggregator as ‘Wonderland’ (later confirmed as only a project name). “Wasn’t there a song called “Boogie Wonderland by 10cc? ” Insider asked Russell. Indeed there was, he replied: “But it wasn’t by 10cc. You’ll find that Earth, Wind and Fire wrote and performed it…” You’ve got to hand it him: the man certainly knows his music!

Key points

Rod Lange

Geoff Smith

Michael Nicholson

Russell, though, was unaware that it was only a project name. He also claimed Macquarie had a 20% stake in the new venture.

A spokesperson for Macquarie Bank expressed “surprise” at the comments made by Russell since, she said (prior to the official

statement) that “nothing has been signed yet, and negotiations are still underway”. She continued to say, “we may take a minority stake

 The Mortgage Professionals, National Brokers Group and The Brokerage announce merger plans  Macquarie Bank signatory to the new merged entity  Launch planned for early 2010  New entity led by Jeff Zulman  Will have 900 brokers and loan book of $16bn  Name and branding to be revealed next year in it moving forward, but the business is not even set up… who knows how things will turn out down the track.”


Caught on camera ING Direct hosted media drinks at its headquarters in Sydney. Besides some wellknown media personalities in attendance, special guest ‘Kevin Rudd’ entertained with talk about his economic stimulus ‘package’ 3





6 8 Photo 1: Carson Scott – Sky Business News, Celina Edmonds – Sky News, Glenn Baker – head of treasury, ING DIRECT Photo 2: Don Koch – CEO, ING DIRECT, Karen Tso – CNBC Photo 3: Matt Sinnamon – ING DIRECT, head of legal, Brett Mason – Network Ten, Eddie Meyer – Network Ten, John Hill – Network Ten Photo 4: Carson Scott – Sky Business News, Amber Higlett – Channel Nine, Terry Willesee – Sky News, Celina Edmonds – Sky News, Nick Gardner – Sunday Telegraph Photo 5: Brett Morgan – executive director, savings, ING DIRECT, Shaun Cornelius – CEO, InfoChoice, Don Koch – CEO, ING DIRECT Photo 6: Brett Morgan – executive director, savings, ING DIRECT, Damien Smith – CEO, Rate City, Anne Myers – COO, ING DIRECT, Don Koch – CEO, ING DIRECT Photo 7: Special guest, the honourable PM ‘Kevin Rudd’ addresses guests


Photo 8: Andrea Cornish – MPA, Lisa Claes – executive director, mortgages, ING DIRECT, Genavieve Zoeller – Broker News TV


Caught on camera Citibank Mortgages ARIA dinner: Citibank is the presenting partner of The Sydney International Food Festival. The Citibank Mortgages team invited key brokers, suppliers and customers to the ARIA Restaurant. The highlight of the event was the apperance of head chef and Master Chef Australia TV personality, Matt Moran.

Citibank supports female brokers: Citibank Mortgages has supported its female brokers by initiating the Women's Networking campaign and hosting several events across Australia. Events included discussions on market and current issues by key speakers and leveraging the Pink Ribbon campaign for breast cancer research.

1 7







10 Western Australia: Pink Ribbon breakfast 35 women attended, all in the spirit of ‘Pretty in Pink’. Through a combination of online donations, merchandise sold on the day and cash and cheque donations at the breakfast, in excess of $2,000 was raised Photo 7: Petra Heberle, Yvonne Austin-Wootten Photo 8: Angela Hanflit and Caroline Bradshaw Queensland: Thai Cooking Classes at Mons Bansai Thai Restaurant

6 Photo 1: Matt Moran, Peter Hayward Photo 2: Martin Rambow, Hilal Aydemir, Vicki James Photo 3: Sam Zammit, Pietro Tantillo, Matthew Wood, Tony Weir

Creating teamwork and everyone had to work together to cook the four course Thai meal. This event was thoroughly enjoyed by all who attended. Everyone felt relaxed and comfortable with each other and the conversation flowed. Photo 9: From left to right (seated) - Pier Wernigk, Karen Le Comte, Elizabeth Fa'agase, Belinda Ramke, Jo Marrable and Kym Wiggins. From left to right (standing) - Instructors: Raymund and Kesinee, Lorna Rakich NSW: Women’s Network Australia Business Networking

Photo 5: John Ewens, Julie Adams, Dan Heylbut

This was held at the Vibe Hotel and had over 60 business women from all sort of industries. It was hosted by motivational speaker Kirsty Spraggon. Citibank had over 20 participants with business development managers, key brokers and mortgage specialists.

Photo 6: Matt Moran, talking to the brokers.

Photo 10: Michelle Ewens, Wafa Elmol, Hilal Aydemir, Amanda Swann

Photo 4: Michael Nicholson, Nicole Laupretre, Jeff Wong


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AGGREGATOR / WHOLESALE BROKER AMB Origination 1300 55 1118 page 31

LENDER Eurofinance 02 9252 8311 page 13

Choice Aggregation 1300 135 389 page 21

Homeloans Ltd 1300 787 866 page 22

Firstfolion One 1300 722 752 page 14

MKM Capital 1300 762 151 page 8

PLAN Australia 1300 78 78 14 page 5

Banks St. George Bank 1300 137 532 page 3

COMMERCIAL Banksia Financial Group 1800 333 114 page 9

DEBTOR finance Cashflow Finance Australia 1300 788 945 page 4


RAMS Home Loans 1300 130 769 page 23

MORTGAGE MANAGER / NON-BANK Mango Media 02 9555 7073 page 1

Mortgage House 133 144 pages 16 & 17

NON-CONFORMING Liberty Financial 13 11 80 page 7

OTHER SERVICES Financial Services Online page 32 The House Price Information People

Residex 1300 139 775 page 29

Trailerhomes 0417 392 132 page 27

SHORT TERM LENDER Crown & Gleeson 1800 735 626 page 2

Interim Finance 02 9971 6650 page 6

NCF Financial Services Pty Ltd 1300 550 707 page 20

Wholesale Advantedge Financial Services Pty Ltd 03 8616 1600 pages 11,15 & 19

Australian Broker magazine Issue 6.24  

The no. 1 news magazine for Australian brokers.