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ISSUE 7.06 April 2010

Volume hurdles showdown

First homebuyers could be affected A recent Mortgage Choice survey confirms that interest rate rises in the next two years will deter nearly 30% of first-home purchasers Page 8


Satisfied customers

 Brokers called on to

voice their displeasure The FBAA is considering taking strong action against lenders who have put in place volume hurdles that brokers have to meet to remain accredited. Members of the industry body received a call-to-arms in an editorial written by vice president Ron Gunthrie in the latest issue of the FBAA magazine. In the editorial, Gunthrie lays out the argument for why volume hurdles are detrimental, and asks brokers to fill out a questionnaire to allow the FBAA to get all its “ducks in a row”

before it moves forward. The potential outcome, as outlined in the editorial, is a submission to the ACCC. “To look at it logically, the lenders concerned are now forcing brokers to sell their products to remain accredited with them, no matter how good or bad the product is,” Gunthrie wrote. “One of the lenders concerned has now priced their home loans well above the rest of the market and yet we still need to sell this inferior product to the consumer to remain accredited.” He asks whether this will force brokers to recommend products that are not necessarily right for the consumer. He also said that the retraining fee that

banks require from brokers to become re-accredited amounts to little more than a grab for revenue. “There is a virtual third-line forcing situation here where brokers are forced to submit loans to one lender to the detriment of other lenders who may have a more competitive product and superior service and processing standards,” Gunthrie wrote. “Something the ACCC may need to consider.” However, FBAA president Peter White played down suggestions that the FBAA had made up its mind to go to the ACCC.

Page 22 cont.


You can turn an awful customer experience around, by prioritising your customer service and setting better staff performance standards Page 22


Off the cuff CEO of Vow Financial, Jeff Zulman, talks to AB about what it was like growing up in South Africa and his advice to those who are starting out in business Page 28




ACCC: Ormond’s actions “reprehensible”

Wayne Ormond

ACCC chairman Graeme Samuel has labelled Refund Home Loans managing director Wayne Ormond’s actions in relation to his franchisees reprehensible, after Ormond admitted making false and misleading statements. Ormond had dissuaded franchisees from pursuing their legal rights by telling them that he had been given approval from the ACCC, Samuel said. “Mate, I’ve had meetings with Graeme Samuel himself,” Ormond told one franchisee. “I have nothing to worry about.” In another instance, Ormond assured a franchisee that he had acted legally and above board. “Now I’ve spoken to the ACCC,” he said. “I’ve done everything in accordance with the law.” Ormond admitted making

these comments to the Federal Court, which found that he and Refund Home Loans had contravened the Trade Practices Act. The court issued injunctions restraining Refund Home Loans and Ormond from making such representations in the future, ordered corrective statements to be sent to all current and some former franchisees, and implemented a trade practice law compliance program, including training for Ormond. “Using the name of the ACCC or individual ACCC officers as a means of discouraging franchisees from exploring their own legal rights is reprehensible,” Samuel said, adding that Ormond exploited a position of trust. “Franchisors and franchisees have a special business relationship,” he added. “Franchisees trust their franchisor to provide honest and reliable information as to their own business and about franchising generally, and to mislead them in this manner is an abuse of trust.” In October, Ormond told AB the franchise would “vigorously” defend itself against allegations that it breached the Trade Practices Act. At that time, Ormond claimed the action was in relation to a dispute from “some years ago” involving ex-franchisees.

Key points  Ormond admits making false and misleading statements  Statements were made to Refund Home Loans franchisees and contravened the Trade Practices Act  Federal Court ordered Ormond to attend trade practice law compliance training “We have no current disputes. All our franchisees are happy, I believe it is a couple of exfranchisees with an axe to grind,” he said. Despite the censure from the ACCC, Ormond and Refund Home Loans have enjoyed a period of success over the past six months. In November, Refund Home Loans signed up its 300th franchisee in just 67 months of operation – a 163% increase on the 114 franchisees the company had signed up two years prior. Later that month, Ormond picked up a ‘highly commended’ award at Brisbane Business News magazine’s inaugural ‘Young Entrepreneur of the Year Awards’. Since launching Refund Home Loans in April 2004, Ormond has received more than 20 business awards including nine in four categories of BRW magazine’s annual surveys of business and the franchise industry. Publishing director.... Justin Kennedy Managing editor.....George Walmsley Editor............................... Luke Cornish Journalist.............................Tim Neary Production editors......Jennifer Cross ...........................................Carolin Wun Design manager..... Jacqui Alexander Designer...................Jonathan Phillips HR manager.................. Julia Bookallil Marketing coordinator...Anna Keane 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 Luke Cornish t: 02 8437 4773 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

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







Lender of the Year two years in a row. We couldn’t have done it without you. The Commonwealth Bank has been voted MFAA Lender of the Year 2010 by those who know – namely, you. Across a wide variety of criteria, including best product offering, best loan approval process, best overall support and more, we came out on top for the second year in a row. Of course, we couldn’t have done it without you. Thank you for your support and continued business partnership.

Important information: The Commonwealth Bank of Australia is the MFAA Excellence Awards Lender of the Year – 2010. Commonwealth Bank of Australia ABN 48 123 123 124. CBACM1737_C



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Advantedge offers brokers options Advantedge has offered brokers two licensing options to ensure they are able to operate compliant, competitive and efficient businesses under the incoming National Consumer Credit Protection Act (NCCP). CEO Drew Hall said the goal is to help Advantedge’s aligned brokers make the transition into the new regulatory environment as smoothly as possible. Advantedge’s aggregators (PLAN, Choice and FAST) will support both mortgage broking businesses that seek to hold their

own Australian Credit Licence (ACL) and brokers who wish to apply to become the Credit Representative (CR) of an Advantedge ACL holder. Hall said it was important to offer brokers suitable licensing models and support, made possible because of the expertise of NAB and MLC. “We are extremely excited to be able to deliver this market-leading licensing model – made possible through leveraging our relationship with and the expertise of NAB and MLC,” he said.

Hall added that the new regulations were expected to safeguard the long-term sustainability of brokers’ businesses and the industry. Advantedge will hold information sessions in each capital city to provide more detailed information on licensing options and the implications. Advantedge and its aggregators will also offer practical guidance on matters requiring action before 30 June 2010 – including registration with ASIC and responsible lending requirements.

Lender inconsistency prompts Mortgage Choice move The decision by Mortgage Choice CEO Michael Russell to establish a funding line to sit on its panel and offer a range of products was prompted by a problem that brokers around the country have to deal with – inconsistent service by lenders. “Brokers are the champions of introducing new-to-bank customers and we are happy to do anything we can to improve the economics of the broker channel concerning loan life, origination costs, and cross-selling,” Russell said. “The only thing we want in return is consistency of service, consistency of products and policy, and consistency in turnaround times.” Brokers build their businesses and their reputations on their ability to manage client expectations. Russell said that the one thing a broker needs is consistency from the lenders. “Their brand is their relationship with the customer,” Russell said. Mortgage Choice is in discussions with five potential funders but Russell stressed it was still early days and he does not expect to make an announcement on a deal until later this year.

Michael Russell

“This is not a grab for revenue, this is just something we have to do for our franchisees,” Russell said. “Brokers have done such an amazing job working through the dark period and they deserve to be congratulated on that.” Russell pointed to National Mortgage Brokers’ nMB Direct loan funded by The Rock Building Society and Loan Market Group’s Economy Homeloans funded by RESIMAC to show that this is a move that many broking groups are making. Australian banks have been managing dealflow by adjusting LVR, assessment rates and living

allowances. CBA and Westpac, which both boosted their market share last year, are now putting the brakes on by decreasing LVR, increasing the living allowance and increasing the assessment rate. Unfortunately for brokers, these changes make it hard for them to confidently tell clients what product is right for them as changes are made fairly frequently. This turbulence is set to continue until banks are able to source their funds at a predictable price on the international markets. The upshot of this is that brokers will be unable to return to ‘business as normal’ until the rest of the world makes a full recovery.

Key points  Mortgage Choice to establich funding line to sit on its panel  Lenders need to provide consistency in service, products and policy  Mortgage Choice is in discussion with five potential funders

Liberty to become full service lender Liberty is looking to build on its current product offering to become a full service lender and a viable alternative to the banks, the company’s head of business finance said. Winston Nesfield, Liberty’s GM of business finance, said the medium-term goal was to build on the company’s current suite of products to provide brokers with a full service non-bank lender. The commercial lending arm of Liberty already includes mortgage lending against commercial security, cashflow or debtor finance and wholesale floorplan finance “When you add to [our commercial offerings] our residential mortgage offerings and our motor lending then we start to position ourselves as a viable bank alternative offering a full suite of offerings.” Despite the optimistic outlook for his own company, Nesfield said that business borrowers are going to struggle over the next six months to take advantage of opportunities in the market as credit remains tight. “The outlook is going to remain challenging for business borrowers in the short-term because the availability of credit remains tight,” he said. Liberty is demonstrating its commitment to business borrowers with their recent announcement to keep rates on hold despite the RBA increasing the cash rate. Another example is its willingness to look at deals with LVRs up to 80%. As the Australian economy improves at a better rate than other developed countries, Nesfield said many business borrowers will see opportunities but will be somewhat constrained to take advantage of those opportunitites.“Liberty wants to be in a position to provide solutions to those borrowers.”

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Non-bank lenders making a comeback With the banks taking over ownership of its once independent Australian broking houses, home loan borrowers are not receiving the choice and independent service that brokers promise, said Ryan. However, Ryan also noted that while consolidation had caused the industry to lose some of its independence, it had also left behind great opportunities for new players to corner a market share. “The first people hit in the global financial crisis were non-banks,” said Ryan “Customers took flight to the banks when the Australian government stated it would guarantee deposits for them. This made the banks bigger, stronger and more powerful.” Ryan believes that the tough decisions banks are now making on interest rates are driving consumers to challenge their motives and look for alternatives. “Opportune started from scratch

at the worst possible time during the GFC”, said Ryan. “We only started two years ago but we are seeing 60% growth, year-on-year. To go from zero to twelve branches during this time sends a clear message that we’re obviously moving in the right direction.” Ryan said that funding is now stronger and that there is a high degree of concern from both customers and brokers about losing competition from putting too much business in banks. Kendall Mahnken, general manager of personal business at Liberty Financial, agrees. “Consumers have been left feeling cheated by the banks during the economic slowdown,” Mahnken said. “Interest rate hikes, escalating fees, record profits and decreased service levels have left a bad taste.” Mahnken believes that with banks turning their backs on the

broker channel through commission cuts, reductions in product range or product withdrawals, non-bank lenders have been given a great opportunity to attract both consumers and brokers who have lost faith in the banks. “Non-bank lenders provide competition and keep the banks honest. For brokers, that means fast responses, wider solutions and the ability to cater for customers’ individual circumstances,” he said. Ryan expects more brokers to turn to non-banks after the hammering they have received over the past two years. “No trails, time frames blowing out – all this makes it hard for brokers to keep service promises to their clients. It’s a great opportunity for the second coming of the non-bank sector and an increased level of competition in the market,” Ryan said.

Non-banks need to drop rates further to be competitive

not enough to encourage people to make the switch. Cannon said that Westpac’s move to increase home loan rates by more than the increase in the cash rate in December helped bring non-bank lenders back into the market. Despite that gain, he believes that non-bank lenders will continue to struggle while the majors are looking to gain market share. “The non-banks are irrelevant these days against the majors while they have such a big market push on,” Cannon said. “They’re not really worried about anybody except themselves. It’s all about building market share and trying to maintain it.” Cannon said FirstMac intends to survive until a normal market returns when non-bank lenders can

once again provide competition to the majors. “We’ve just got to hang in there and wait for the sensibility to come back,” he said. “There are some banks out there paying deposit rates higher than what they’re lending money. That just doesn’t add up so eventually deposits have to go down or interest rates have to go up because that’s not what banking is.” With the majors fighting over customer deposits, building societies and credit unions are suffering more than non-banks, Cannon said. “It’s just an insane time and this deposit push at the moment that these big banks are on is really hurting the building societies and credit unions, who are even less relevant than the non-banks at the moment,” he said.

Paul Ryan

Despite the recent consolidation of the industry, non-bank lenders are making a comeback, says Opportune Home Loans CEO Paul Ryan. The Opportune chief believes that massive changes in the home loan industry have raised serious questions about the motives of brokers in recommending certain home loan providers to their clients.

Non-bank lenders need to offer rates about half a percentage point lower than the majors to encourage borrowers to make the switch, FirstMac CEO Kim Cannon said. “Most people won’t move lenders for a quarter of a per cent, but they’ll move for half a per cent,” Cannon told AB. He said that although FirstMac is reasonably priced below some of the majors, that’s Kim Cannon


News RAMS eyes investors with Residex deal

After a recent uplift in investor applications from 18% in February 2009 to 28% in February 2010, RAMS Home Loans has partnered with Residex to provide property investors with the information they need to successfully move into the investment property market. RAMS franchisees are now well positioned to take advantage of a growing market hungry for information. Offering potential investors free Residex ‘State of the Market’ and ‘Comparative Market Analysis’ reports, RAMS hopes to take the legwork out of the buying process for new investors. Head of franchise, Clive Kirkpatrick, said that as investors began to return to the market, RAMS was actively looking at how it could better educate both their clients and the

business’ people. “We looked at what issues slowed people from getting into the market. Questions surrounding affordability, tax implications and tenanting were common hurdles that we saw we could remove through providing more information and education,” he said. “Armed with Residex reports, RAMS franchisees can now provide customers with useful information about how to get started, how to select an appropriate property and the main costs involved with owning an investment property,” said Kirkpatrick. He believes the new initiative is a strong proposition and a point of differentiation for RAMS brokers. “This is a good opportunity for franchisees and loan riders to go back through their client base to see where there is the capacity to invest,” he said. “It is time to open the eyes of those clients and help them use the equity in their properties better”. Luke Brown, RAMS principal for Newcastle South, couldn’t agree more. “We are using this new product already and it’s really engaging our clients,” he said. “With investors it can be a long process, but now we can provide them with some fantastic information that’s making them stick around.” Brown said that first-time property investors are hungry for information and want to invest, but may not be sure how. “By providing them with information and showing them step-by-step what they need to do, we’re getting a good commitment from them,” said Brown. “It’s really empowering us to make a difference to our clients.”

First homebuyers aging and under-informed A recent survey has revealed that more than a quarter of Australians who are looking to buy their first home in the next two years will hold off on the purchase if interest rates rise by two or more percentage points. Results from the 2010 Mortgage Choice First Homebuyers Survey also show that 55% of first time buyers are aged over 30, with only 12% claiming to be well informed about the buying process. Mortgage Choice spokesperson Kristy Sheppard said that while a large portion of first-time buyers are prepared for interest rate rises, 28% say they will back out of buying if rates increase. Scott Beattie, business development manager of Cube Home Loans, said that the results of the survey reflect changes in the market. “Increased interest rates, the reduction of the first homebuyers grant and tighter lending criteria are all affecting first homebuyers,” said Beattie. “We have found a lot of clients simply want to know what their options are,” he said. “Unfortunately they’re getting the message that doors have closed. But if younger buyers are made aware of the products that are available to them they might be a bit more active in the market.” David Johnston, Director of Property Planning Australia, agrees with the survey that

first-time buyers are entering the market later. “Ten years ago first homebuyers were generally in the mid-20s age bracket,” said Johnston. “Now they are in their 30s and they need to be prepared to make compromises.” Yet according to the survey, compromises are something first time buyers are prepared to make. Mortgage Choice found that 78% of respondents would make sacrifices to their lifestyle, and more than half would choose to buy an established home over a new one. However, Sarah Eifermann, Mortgage Planner at SFE Loans, said many first-time buyers are finding it hard to come to terms with the new, stringent lending criteria. “The banks have driven the savings pattern by allowing for 100% loans and now they’ve turned around and changed their policy,” she said. “It will take a while for this to filter down to the customer.” Additionally, with both interest rates and house prices increasing, “first homebuyers are having to decide between absorbing the rate rise or covering the cost of a higher house price in 12 months time”, said Eifermann. “It is more difficult for new buyers to enter the current market,” agreed Johnston. “But if they’re educated and willing to compromise, they can use their first purchase as a real stepping stone.”



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ING looking for slice of $145bn pie

ING has its sights set firmly on gaining a share of the $145bn offset home loan market after officially launching its Orange Advantage product, after a soft launch last year. Lisa Claes, executive director of direct sales at ING, introduced the product to a select group of brokers during a breakfast at Sydney’s exclusive Quay Restaurant. She said that ING had developed the 100% offset product after receiving feedback from brokers and aggregators. It is estimated that 15% of Australia’s $970bn worth of home loans are held in offset accounts

and Claes said the Orange Advantage would help ING grow its $36.5bn home loan portfolio. “We are proud of that fifth spot, we’re going to defend it rigorously and we really see ourselves as the fresh alternative to banking for Australian borrowers,” Claes said, adding that 90% of ING mortgages are sourced through the broker channel. “As a branchless bank we are very heavily reliant on [brokers] to bring this business in,” she said. “We’ve built our portfolio off the back of our intermediary business and we intend to continue to grow that portfolio

larger through that channel.” The Orange Advantage currently has an interest rate of 6.24% compared with ING’s Mortgage Simplifier, which is at 5.94%. Richard Kirby, principal of North Shore Mortgages who attended the breakfast, said that the $199 annual fee meant that the product would be more attractive to dual income earners than mortgage holders with a single income. “It’s just a numbers game. You just have to crunch the numbers and see if it adds up for the client,” Kirby said, adding that he just explains the products to his customers and presents them with a range of options, rather than advising they take a particular product. Claes said that ING research showed there was strong demand for offset products in Australia. “It’s not a product that’s going away,” she said. “There’s a very solid and potentially growing appetite for it.”

Key points  Australian’s have $145bn in offset products  Represents 15% of the home loan market  Orange Advantage is ING’s first offset product The home loan is coupled with an ING Everyday transaction account. The account comes with a visa debit card that borrowers can use to access their funds. All the funds that are in the account are offset against the mortgage, Claes said. Kirby pointed out that it depends on how customers manage their money as to whether that set-up would work for them. “Some people like to have multiple accounts that they use for different things and others are content having all their money in one place,” he said. “You’ve just got to see what works for the customer.”



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Reid aims to improve Sydney broker service to brokers in celebrating year in new role the pink Mark Reid, BankWest’s former head of retail who has moved over to business banking, said he would bring his relationship with the broking industry to the new role to help improve BankWest’s offering to third-party originators. “I think one of the key things that I’ll be working on and it is going to take some time is strengthening those relationships [with the broking channel],” Reid said. “I don’t think the relationships are as strong as they should be and I’m looking to fix that.” Reid identified a lack of coherence between the banking divisions as an area that could be improved, and said he would work closely with his successor Aaron Milburn to provide brokers with the same quality on the business side as they have come to expect from the retail side. “What we’re going to try and do, particularly with the business side, is work more with retail and develop stronger relationships with the brokers and aggregators directly,” Reid said. “One of the key things is that we strengthen that within the business bank.” While Reid expects business lending activity to pick up going forward, he said his focus was

Key points  Mark Reid takes over as head of business and private banking at BankWest  Former retail head says relationship with broking industry is a priority  Reid leaves his post after four years in retail banking

Pink Finance founder, Nicole Cannon, with chairman of the McGrath Foundation, Glenn McGrath, at the McGrath Foundation Lunch at the Golden Slipper Festival in March 2009

Mark Reid

going to be on quality not quantity. “As soon as you start talking about volume increases it could be inferred that we’re talking about growth at all costs,” Reid said. “What I’m going to be looking at is improving the quality of our lending.” Reid said he agreed to take on the role of head of business and private banking after four years in BankWest’s retail arm, because he was ready for a new challenge and thought his experience would help improve the lender’s business arm. “What this allows me to do – all this experience I’ve gained in the retail bank – is hopefully transfer a little bit of that over to the business side,” he said.

Nicole Cannon woke up in the middle of the night last year and had an epiphany – to build a business based on giving back to the community. Having worked as a broker for Loans, Leases and Lifestyle, Cannon decided to set up her own business, Pink Finance, and align it with the McGrath Foundation, which would receive 10% of her trail commissions. “I registered the company, set-up the website and developed the business plan so I had the whole idea ready to go,” Cannon said. “Then I approached the McGrath Foundation and told them what I wanted to do and that I wanted them to be the charity of choice.” Cannon made her pitch a year ago during a networking function at the McGrath Foundation races day. Apart from being a selfdescribed “cricket tragic”, one of the reasons that Cannon wanted to work with the McGrath

Foundation is because of their involvement in helping the families of breast cancer patients. “When I was growing up my mum was very sick and the support from family and friends around us was crucial for our family moving forward,” Cannon, whose mum suffered from a different ailment, said. “My dad was in hospital all the time and having friends and family to look after me meant a lot.” Fortunately, Cannon’s mum is still alive, but the lessons learned from that dark period of her life remain with her to this day. The sense of giving back to the community is not confined just to Cannon but extends to her referrers and customers also. “My referral partners and existing clients just love it because, at no cost to them, they are actually contributing to a wonderful charity,” she said. Cannon is easily recognised at industry events as she is always wearing pink.



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First homebuyers drop out of the WA market First homebuyer activity in WA has fallen dramatically following the removal of the federal cash boost in December last year, according to a new data. The latest figures from the Office of State Revenue in WA showed first homeowner grant application numbers for established dwellings in January fell to just 695 and in February to 692. These numbers are now equivalent to those of the historic low points of June 2004 (679) and February 2007 (691). Alan Bourke, president of the Real Estate Institute of Western Australia said the results were concerning and probably suggest that the federal boost pulled forward many first home buyers who might otherwise have waited

– which means current would-be buyers are fewer in number and will be for a while. “It also suggests that the recent climb in interest rates has seen some potential first homebuyers reconsider and withdraw from the market,” Bourke said. “It was unclear how long the lull in first homebuyer activity would last, but if it was sustained it may adversely impact on the established housing market. A lack of first homebuyers makes it harder for investors and trade-up buyers to sell their existing stock and move on. This situation can create a domino effect and we may see some slowdown in the regular market later in the year if first home buyers are still thin on the ground,” he said.

UK mortgage offerings start to grow – but still little choice, and fewer brokers to deal with At the depth of the crash in the UK mortgage market, the number of products available to borrowers dropped to a low of 1209. Since last April, however, the numbers have increased, giving a choice of more than double that amount. So the surprising question that consumers have been asking their broker is "Given that there are so many mortgages, why can't I get one?" according to The reality is, however that many of these products are just variations; three fixed threeyear rate offerings for example, all with slightly different fees. There is also the issue of loan-tovalue rates when UK brokers try to find a suitable product for their clients and few lenders are prepared to go past 75%. With the UK's median dwelling price at A$375,000 it means first-time buyers have to front up

with nearly $100,000 to get into the market at that level. And while some may be unhappy that it's tough they can't get a mortgage, there are still many thousands who wish they didn't have one, with 46,000 property repossessions last year and 188,300 borrowers in arrears. The net effect of all this is that brokers are doing it incredibly tough -– home lending has collapsed from a high of £364bn to just £144bn. Many hundreds of brokerages have folded, with one of the best known, Charcol, collapsing and being rescued just a few weeks ago. The number of brokers in the business has fallen by 60% from its peak of 30,000 to just 12,000. So maybe despite all the hard times here, we are still ‘The Lucky Country’.


Brokers get new equity release product In a move that has been welcomed by industry representatives and brokers alike, Homesafe Solutions has become the newest member of the senior’s equity release industry body, SEQUAL. Responding to continued market growth in the equity release industry, Homesafe Solutions is offering seniors a new debt-free equity release product that provides an upfront cash sum to help fund retirement. Peter Szabo, managing director of Homesafe Solutions said that Homesafe is the only industry member to offer a non-reverse mortgage product for the senior's equity release market. “There is naturally a very long lead time but because of the aging population and the trend for seniors to be asset-rich and cash-poor, the market is definitely growing,” he said. Szabo suggests that the product is something brokers should be aware of to help maintain prime relationships. “You might have a 40-year-old client who mentions mum and dad are struggling. This is a great opportunity for a broker to say they're aware of a good product that may help,” he said. “You can place one call that protects your relationship, and you pick up a referral fee for doing very little.” Kevin Conlon, CEO of SEQUAL, said that it is a foregone conclusion that Australia will face challenges when developing appropriate and innovative solutions to fund the Baby Boomer generation into retirement. “One thing is quite certain; demand for retirement solutions are growing as the population ages,” said Conlon. Delighted to have Homesafe Solutions as a member, SEQUAL has only recently extended its reach beyond reverse mortgage providers, said Conlon. “It sends a strong message to senior Australians that there are other solutions available and that they have a choice” he said. “Demand for products is likely to grow significantly and it is important that there be a robust equity release market at the time senior Australians need it,” he said. Darren Moffatt, managing director of Seniors First, said that the market has been showing signs of growth in recent months. “There is heightened demand in this sector due to the fallout from the GFC,” he said. “Many self-funded retirees have turned to this as either a temporary or permanent solution to reductions in their share portfolios or frozen investments”. Despite the consolidation of lenders and a drop of almost 70% of brokers specialising in senior's products, Moffatt remains optimistic. “It's a growth market that holds a lot of attractions but it's not for everyone,” he said.



New tool aims to cut turnaround times for lender Hometrack Australia has launched an assisted valuation tool designed to speed up mortgage processing, minimise the necessity for onsite inspections and reduce lender risk. This should lead to better service for brokers and a faster turnaround time for loans. The ‘Hometrack Valuer’ (HTV) enables valuers to search and review properties and compare with similar properties from the comfort of their own office. Valuers can view a property from

multiple angles, measure the dwelling dimensions, compare sales history and complete a report, in a fraction of the time it takes to physically visit a property. “It represents a significant leap forward in the application of technology to speed up the processing of residential property valuations and mortgage applications,” said CEO Brendan Darcy. He said that brokers can expect faster processing times as a result

of this new technology, which can be used for any property in Australia. “A continual challenge for lenders is the need to undertake costly and time-consuming onsite property valuations when there is a lack of available information on a property,” Darcy said. “With HTV, a valuer can check out a property through our online service without needing to go onsite and hold up the mortgage process.” Hometrack developed HTV in conjunction with Opteon Property Group to reduce processing times and cut down on the possibility of fraud. “All of the imagery and database information presented in Hometrack Valuer is from independent sources, and cannot be manipulated by the mortgage applicant, valuer or lender,” Darcy said.

Club Financial wants to double in size Club Financial Services has announced the launch of a new recruitment and training initiative with the goal of doubling the size of its broker network before the end of the year. Club's director of sales and marketing, Simon Norris, said the

latest recruitment drive – named the Club Academy – would provide an ongoing commitment to compliance and best practice. “Compliance really is the cornerstone of our business and we want to ensure that anyone joining the Club network has the necessary tools and resources to

support this,” he said. The first two-week course kicks off at the end of April, from Club's South Australian headquarters. It is open to recent Club recruits, current brokers and anyone wanting to enter the industry. The first week will facilitate Certificate IV in mortgage

Brendan Darcy

Automated valuation models (AVMs) are starting to catch on in Australia and have long been popular in the UK and US property markets. The computerbased systems reduce administration expenses and speed up processing times.

broking; while the second will cover accreditations, business management, marketing and loan applications and processing. “The Club Academy will become a regular feature on the Club Financial Services calendar, and we are excited to see the impact the training will have on the continued growth and success of the business,” said Norris.

Harcourts targets 25 more brokers in next 12 months Harcourts Financial Services CEO Andy Graham wants to grow his broker ranks from 45 to 70 by March 2011 as a way to capture complete value from the real estate group’s customer relationship. “I’m going around and talking to Harcourts business owners and asking them which broker they are using if they’re not using one of ours,” Graham said. “We then approach that broker and see if they’re interested in swapping

over to us.” As well as directly approaching independent brokers, Graham said he plans to grow HFS organically with existing brokers building teams and bringing on more loan writers. His target is to have one broker for every four Harcourts Real Estate offices in Australia. Graham said the benefit to brokers comes from being part of the Harcourt brand and having leads hand-delivered. “In this day

and age there are a lot of brokers,” he said. “Where is your next deal coming from?” Harcourts is New Zealand’s largest real estate group and started building a presence in Australia 11 years ago. The company now has 280 offices around the country and is continuing to build its real estate business. Graham wants HFS to grow alongside that and the chief executive is bullish on the outlook

for the next year. “I’m pretty positive about the next 12 months,” Graham said. “I think regulation will assist our business given that a lot of the part-timers and cowboys will be removed from the industry and we’ll be seen as a more professional industry.” He said that banks are starting to ease lending criteria and brokers are finding it easier to obtain funding for their clients than it was six months ago.


industry NEWS IN BRIEF Mortgage stress down

Australians are more prosperous than ever, according to a new report published by CommSec, and home loan affordability is at levels not seen since 2005. The National Performance Gauge, a measure of the purchasing power of Australian workers, showed that it now took a worker 1.58 weeks of average income to make the monthly repayment on an average mortgage. This was similar to levels seen five years ago. Craig James, chief economist, noted that average property prices had risen 13.6% in 2009, 40% over the past five years and 138% over the decade, The Age reported today. However, rising interest rates in 2010 were likely to put a temporary dampener on economic prosperity this year.

Banks have risen rates by 0.22% more than the RBA

A look at more than 200 standard variable mortgages has shown that home loans have risen, on average, 1.22% since July – 22 basis points more than the RBA’s 1% increase in the cash rate. The research, conducted by financial comparison site RateCity, found that the average standard variable rate mortgage sat at 2.31% above the RBA’s cash rate of 3.75% in February. Over the past two years the gap between the two was just 1.75%.

Macquarie launches low doc supported RMBS

RBA wants change to CPI calculations

ANZ wins agribusiness award

MFAA expels Freedom Finance

Macquarie has provided evidence that investors’ appetite for low doc loans is returning, after its securitisation arm arranged a $1.2bn bond containing $500m of low doc loans. In the first test of low doc loans since the onset of the financial crisis, Macquarie successfully sold the bond that was backed by a pool of mortgages – at least 46% of which are low doc. The rest were fully verified income loans and were rated AAA by Standard & Poor’s. The average LVR was 72% and are expected to be repaid within four years. Although a number of lenders have returned to the RMBS market, Macquarie’s is significant for the large amount of low doc loans. It will be an encouraging development to a number of non-bank lenders who have been frozen out of the market over the past 18 months. The Reserve Bank has written a damning critique of how Australia determines its consumer price index (CPI) – a key driver of interest rates. A major concern to the central bank is the so-called D&L component (deposits and loans) which is the fourth-largest contributer to the CPI. Because a high CPI signals inflationary pressures, the RBA often reacts by increasing the cash rate. This in turn leads to lenders increasing their lending interest rates which feeds into the CPI, making it seem like inflation is still a problem. The RBA said if a better formula for assessing D&L cannot be found, then it should be dropped from the index. Banking products and services designed specifically for brokers servicing the agribusiness sector have been put under the microscope in a rural sector survey conducted recently by CANSTAR CANNEX. The financial services research group compared 15 major agribusiness banks, credit unions and building societies to come up with the bank that offered the best value to agribusiness. “ANZ was ahead by a country mile again this year,” CANSTAR CANNEX financial analyst Peter Arnold said. The bank stood out for a number of reasons, but particularly for its products that provide working capital, seasonal finance and risk management. ANZ currently has around 600 agribusiness managers with additional sector-specific and economic experts to provide industry expertise alongside banking expertise. The MFAA has expelled mortgage consultant Anh- Tuan Pham and his company, Freedom Finance & Property Group, for misconduct. “Pham engaged in dishonest conduct by manufacturing, and then submitting to a lender, income supporting documentation from a company of which he was a director, for two individuals who were not in his employ, to enable those individuals to obtain finance,” the industry body’s disciplinary tribunal said.



For all the latest mortgage industry news, visit

Airport alert issued after broker flees the country Kate Thompson, the former owner of Mortgage Miracles who is under investigation for alleged fraud, has traveled to Hong Kong – prompting the major fraud squad to place Australian airports and ports on alert. Thompson settled $110m worth of loans in 2007 securing her fourth place in MPA’s Top 100 broker list. In 2008, after more than 30 borrowers owing an estimated $15m claimed they had been victims of fraud, the offices of her Perth-based company were raided and an enquiry ensued. While no charges have been laid against Thompson and she has not faced any travel restrictions, authorities are concerned that she will not be available for questioning if required. Major fraud squad detective Ken Foster said airports and ports had been put on alert to contact the WA police if Thompson returns to Australia. Thompson, a British citizen, had maintained her innocence throughout the investigation but said she would be unlikely to return to the business if her name is cleared.

AMP trims rates AMP has cut its introductory variable mortgage rate by 45 basis points and its basic variable mortgage rate by 22 basis points thanks to the Federal Government’s support of the RMBS market. CEO Craig Dunn wrote to treasurer Wayne Swan to tell him that AMP “have been able to achieve these reductions in a large part due to the Government's recent initiative

Firstfolio still looking to grow

Kate Thompson

The investigation centres on claims that Thompson falsely inflated the incomes of Mortgage Miracles customers in order to originate bigger loans. Those customers say they only found out about the inflated income when they were unable to pay their loans and contacted their lenders. The investigation into Thompson started at the beginning of 2009 and is expected to be concluded in July or August this year. Thompson’s Mortgage Miracles was liquidated in November 2008 and has no remaining assets. through the Australian Office of Financial Management (AOFM) in the Australian securitisation market. This, coupled with the AOFM's stated ongoing program of support, gives AMP the capacity to implement these reductions.” Swan said that the decision by AMP provides more evidence that the investment in RMBS is enabling smaller lenders to lend at competitive mortgage rates. “This is helping to put more competitive pressure on the big banks and downward pressure on mortgage rates over time – a really important objective.”

Mark Forsyth

Mortgage and financial services distribution group, Firstfolio, is looking to purchase loan books from brokers wishing to exit the industry. Firstfolio CEO Mark Forsyth said the aggregator was looking to increase its $20bn loan book to $25bn-$30bn by the end of the year. “We see opportunities in buying books from businesses which have gone to the wall, or by increasing geographic presence through groups that survived the crisis,” he said. Firstfolio recently acquired Xplore Capital, Loan Services Australia and First Chartered Capital, which added $6bn to its loan book. The push to expand comes as the company defied turbulent conditions in the mortgage sector

to deliver strong growth in its December-half revenue and underlying earnings. In a further sign of the group’s turnaround, the ASX-listed company reported EBITDA of $4.5m for the six-month period – up from just over $1m one year earlier. On the strength of that first-half result Firstfolio reaffirmed guidance for full-year underlying EBITDA in the range of $10m to $11m. Forsyth has now set his sights on further increasing shareholder value having successfully turned the business around. “Having turned the business around we are now accelerating growth across multiple fronts, based on a strategy of building distribution and leveraging scale in mortgages and financial services,” he said.



From awful to awesome

and delegated to all service providers. Communication channels need to be optimised and transparent to be conspicuous, to ensure heightened accountability and responsiveness throughout the supply chain. Spoken and text communication needs to be complemented, confirmed and reinforced by the full use of all available multimedia, including emails, sms texts, faxes, letters and personal representations. Keeping people informed is an early phase to achieving and sustaining commitment, energy and a sense of fulfilment.

True measure

Barry Urquhart, managing director of Marketing Focus in Perth, believes that it is possible to turn an awful customer experience into an awesome one. Here he shows you how


oss of customers and business do occur because of awful customer service. Too many business leaders, it seems, address these leakages with limited allocations of time, people and resources. Some rationalise with reference to the global financial crisis and its fallout. The immediate consequence can be a reduction of business and customer loss or an elimination of such in the short term. Overall, the outcome and newly-applied customer service standards are, well, ordinary. The benefits are inevitably short term and marginal. Who wants to be ordinary? It wins very few plaudits – or, indeed, new customers and business. Being “no worse than competitors” is not a goal that will stretch or motivate staff members.

The never-ending journey

For customer service the ideal is to set standards for all staff members to strive towards cont. from cover

Pursuit and attainment of quality customer service is repeatedly referred to as a journey, not a destination. Changing, evolving and increasing customer demands ensures service excellence will be an eternal stretching goal. Many journeys can be characterised by the phrase: from awful to ordinary to awesome. Awful service should be transformed so that it goes from being a business loss factor to being a defensive mechanism to retain customers, and then ultimately to be a new customer generator.


Where customer service is identified as an issue, the very best resources and people complemented by a liberal provision of time and infrastructure support, need to be allocated and focussed on the initiatives. There are no short cuts and, yes, it will cost money. Authority to resolve issues needs to be decentralised


“I don’t know if it’s appropriate that the end result of that will be a submission to the ACCC,” he told AB. “It’s more of an understanding of the total market position so whatever action we decide to take after that is fully supported by our members.” Many FBAA members have contacted White and other

industry leaders, expressing their concern over the volume hurdles. White said that as the momentum behind the issue continues to grow, he thought it was time to get some more up-to-date market feedback from its members and others in the industry. “The ultimate result of this survey is to get a focused direction for the next steps forward – it’s really hard to

The time and appropriate measure of customer servicerelated key performance indicators (KPIs) centre on quality, not quantity. Many people know what needs to be done. They simply need guidance, reassurance and assistance in how to best deliver the service promise, consistently. There is a lot to be said about style: it is seldom expressed in customer service training and workshops. A touch of theatre and flair makes a statement and can make a lasting impression on existing, prospective and past customers. Such endeavours are seldom ordinary.

Celebrate success

To some, providing quality customer service is considered to be just part of the job. So too are kicking goals, winning matches, making movies, creating innovations and breaking records. Many such milestones would go unnoticed and be unappreciated if it were not for the celebrations. Therefore, in business and with service it is important to create heroes, applaud their successes, endorse their personal initiatives and reward their achievements. If customer service is a journey, then achieving excellence in service is an ongoing process which responds promptly to attainments. It sounds fun and it should be. Fun is the missing quotient in many business relationships.

Setting the standard

Optimal performance for engineers and other “scientific management” disciplines can – and often does – centre on processes like Six-Sigma and world-best practice. In both instances standards are set and strict adherence to such standards is the hallmark of excellence. For customer service, the ideal is to set standards for all staff members to strive towards. That is very different to advertising and promoting to customers and clients that their expectations will be exceeded. The latter cases typically end in disappointment. Integral to achieving the status of “awesome” in customer service is that some risk must be taken, trust must be extended to staff members, authority must be delegated, errors need to be tolerated and successes should be celebrated.

speculate what action we will take until we get the results,” White said. “Ultimately, I’d like to see a long-term commitment from the lenders saying that they will not further erode our upfront and trail commissions.” White said that the issue had prompted “enormous” gains in the organisation’s membership in the past few weeks – something he attributed to the

FBAA’s position as being a sole representative of brokers.

Key points  FBAA gathering market information ahead of a possible ACCC submission  White looking for commitment on commissions from lenders  Issue of volume hurdles has led to a spike in FBAA membership



Customers would reject Postbank mortgages Since the appointment of former NAB chief Ahmed Fahour as managing director of Australia Post, speculation has been mounting that the organisation will take advantage of its distribution network to launch a Postbank to rival the majors. Having a post office double as a deposit taking institution is far from unique and is commonly seen in various guises around the world. Whether or not Fahour will take Australia Post in that direction is a matter of debate but expectations are that he will make some major changes to improve the profitability of the organisation. The logic is that most people live within close proximity to a post office and those people would be able to take advantage of the convenience of having their banking needs met locally. Rismark International head Christopher Joye has taken that proposition one step further and suggested that Postbank would be able to offer customers home loans either by becoming a third-party introducer or providing white-label products. Joye said that selling home loans really isn’t that difficult and that it would be relatively easy to train a loan officer in each branch to be able to meet a customer’s mortgage needs. Yet the assertion that Australia Post would enjoy success as a mortgage broker simply because of its brand and geographical reach completely misses the value proposition that mortgage brokers bring to customers. Certainly, the convenience of being able to talk to one person about all the products on offer out there is a contributing factor as to why a borrower chooses to go to a mortgage broker in the first place. There are some 12,000 brokers in Australia at the moment so Australia Post would have to distinguish itself from others offering a similar service. The Australia Post brand and branch network may carry some weight and it certainly will be a recognisable name to pretty much all Australians but ultimately what separates the good brokers from the bad is customer service. This is where brokers shine and this is where Australia Post would surely fall. Joye’s idea that one of the tellers could be trained up to be able to offer home loan products implies that, when they aren’t introducing mortgages, the broker would be taking care of the other functions of a post office. How long would one of your clients wait around if, on a Saturday morning, they found themselves a dozen people back in a queue and had to wait for those in front of them to haggle over misplaced parcels, booklets of commemorative stamps, and long-lost mail? If Fahour wants to launch a transaction bank in competition to the majors, all I can say is good luck to him. But if he intends to try and break into the mortgage broking business, I’ve got one piece of advice – leave it to the experts.

Government action spurs construction The number of new home buildings surged ahead in the December 2009 quarter according to the Australian Bureau of Statistics, which said housing starts increased by 15.1%. Housing Industry Association chief economist, Harley Dale, said that the result confirmed the success of targeted fiscal stimulus and very low variable mortgage rates in driving the first stage of a housing recovery. “The strong recovery in housing starts to date highlights the success of targeting policy towards new home building, which happened with the tripling of the First Home Owner Grant for new dwellings,” he said. “Furthermore, the Social Housing Initiative is clearly supporting growth in other residential building, which is recovering from an awfully low base.” Dale believes that there will be a healthy recovery in housing starts in the 2009/10 financial year, but that the

question remains as to whether that recovery can be sustained once the impact from fiscal and monetary policy stimulus comes to an end. “The prospect for a second stage to the recovery is threatened by underlying supply-side issues, including a widespread lack of available finance and re-emerging land and labour shortages,” Dale said. “The positive impact from stimulus measures is masking the constraining impact these supply-side obstacles are having on the residential construction sector.” Dale said that leading housing indicators are already sending mixed signals as to whether the new home building recovery is sustainable. “That sounds a note of caution to ensure that interest rates are not raised too quickly, something that would, perversely, increase the chances that the recovery petered out,” he said.



Roger La Salle is the creator of the “Matrix Thinking”™ technique and is widely sought after as an international speaker on innovation, opportunity and business development. Matrix Thinking is now used in more than 26 countries.

Marketing guru Change is the order of the day What’s the difference between innovation and invention? Roger La Salle looks at why innovation is good for business – even for products and services that already work There would be little doubt that businesses, whether large or small, realise that in order to stay ahead of the game it is essential to be constantly renewing their offerings. Whether it is products, processes, services or simply the way you do business, change is essential. Long gone are the days when we could be complacent and expect things to continue as usual. If it’s not the Internet and the rise of e-commerce, ever-changing government regulation, the growth of credit cards, new technologies and materials, things are constantly changing. Further, the pace of change is accelerating. Many businesses challenged by the need to change have embraced “creativity” as a change medium. But what does this really mean – and can it be systematically applied to a business? I believe that “creativity” seen as a tool that endeavours to identify new opportunities is a little too generic. Just asking somebody to “be creative” really has no starting point. This is where the more focused approaches of ‘invention’, ‘innovation’ and ‘opportunity capture’ come to the fore. These are “hard tools” that are immediately applicable to any business. So what’s the difference? Invention An invention, by definition, requires an element of novelty in that there needs to be some part of the idea for which no “prior art” exists. Perhaps a good simple definition of inventions is: “products without precedent” Game changing inventions are often the result of ‘pure research’, such as the development of the semiconductor transistor, the laser, the early day vaccines that completely revolutionised medicine – or new materials such as nylon, plastics and Teflon. Applied research is work done to develop an invention with a clear target market in mind and is vigorously pursued by many large companies. But in this case, the outcomes are possibly best described as ‘innovations’, as their starting point was the knowledge of a real need if a solution to a particular problem could be found. The flat screen television is a classic example. Though the technology it embodies includes many inventions, the clear market aim was to “innovate” the large square box TV with the sure knowledge that a market success would be the result. How right they were.

Innovation Innovation is best defined as “change that adds value” and this is a call to action. This definition is founded on two important principles: there is nothing that cannot be changed in some way to add value, whether it is a product, process or a service, or simply the way you do business. Changing something that is already well accepted in the marketplace and making it even better is a sure way of almost risk-free new business. Simply find any product, process or service that is in widespread use and make it better. In doing so you can almost guarantee that you will have removed the single biggest risk in business, that of market failure. Of course the flat screen TV is a classic example. The principles of innovation are extremely simple – all that is needed are some simple tools and some people willing to explore anything you perceive to be in widespread demand. The outcome will be a clear winner in all but a few cases. Opportunity Capture This is what I like to refer to as the ‘big picture’ as it encompasses both innovation and invention. Ideally, with both invention and innovation we require a starting point, something on which to focus our attention. “Opportunity capture” offers just that – it’s the seed we need to spawn both invention and innovation. Opportunity, defined as “an observed fortunate set of circumstances” can easily be taught to people. Systematic opportunity search methodologies can be put in place that not only teach your people to understand what an opportunity looks like, but moreover inspires them and provides the tools with which to search. Opportunity is the real game-changer and is perhaps a better term to describe what is presently referred to as “open innovation, though even in that case the open innovation model still fails to put in place a systematic opportunity search mechanism. Where to from here? It goes without saying that the need to change is always on us; research-based invention is both expensive, risky and has in many cases has an extraordinarily long timeto-market. Innovation is both simple and relatively risk free, if done properly. The real secret that should underpin all change endeavours is that of structured opportunity capture, that’s the big picture.

Whether it is products, processes, services or simply the way you do business, change is essential


Reviews Lunching at the Hilton Hilton Sydney’s Glass Brasserie and Wine Bar is a hidden gem that’s sure to impress any client or business partner. Agnes Gajewska finds out what’s on offer


otel restaurants are often treated like an undesirable member of the family: the unattractive inbred cousin who is a little unsettling to look at, has the conversational ability of a toad, shares genes with strange parts of the hotel and smells vaguely like carpet cleaner. Like the family’s dirty secret, these restaurants are hidden away from everyone except the guests who stay at the hotel. There is an unspoken understanding that if a person doesn’t go out to find more desirable company, they won’t mind their chairs being constructed from leftover carpet or bathrobe material or the buffet sharing genes with the bathroom – or taking out a loan to settle the bill, for that matter. Luckily for the Sydney dining public, several hotels have chosen to deviate from this trend and set their restaurants up as stylish places with fancy menus, extensive wine lists and superstar Restaurant: Glass Brasserie Cuisine: modern Australian Address: Level 2, 488 George Street, Sydney Phone: (02) 9265-6068 Entrees: $24-$30 Mains: $41-$67 Desserts: $14-$20 Web:

chefs. Glass Brasserie and Wine Bar at the Hilton Sydney is one of these places. Like the supermodel cousin whose genes you’re proud to share, it flaunts its attractiveness through a 13-metre glass facade. And in one of life’s little injustices (though in this case, it’s a good thing for you), the personality is as attractive as the exterior. The venue radiates a sophisticated ambience with white-set tables and narrow light features, but diffuses any discomfort with restful curved brown booths, large clothed chandeliers and (what won me over) soaring wine towers that hint at good taste and boozy times to come. When it comes to food, Glass is a brown-nosing people-pleaser. The a la carte menu, created by food guru Luke Mangan, is divided into nine sections (“canapes”, “caviar” , “oysters and raw”, “entrees”, “off the grill”, “mains”, “mains to share”, “cheeses” and “dessert”) instead of the customary three or four. There is no confusion about the size of the meals or about flexibility of selection – it is very attentive to whims and appetites. Naturally Glass also offers a six-course degustation menu, but since I went there at lunchtime, I decided to execute my selfrestraint and order a la carte,

Setting the sale Keith Rowe believes that good salespeople aren’t born, they are made. In his book, ‘The Knack of Selling’, he looks at the formula for a face-to-face sale

Title: The Knack of Selling Author: Keith Rowe Price: $24.95 Available: now


s a profession, mortgage brokers must be among the top salespeople in the world. True, they act as advisers to clients and steer them to products that are right for them rather than sell a particular product, but they have to convince borrowers that it is better to deal with a

with a couple of wines to boot. My dining acquaintance with Glass started with Mangan’s signature Hiramasa kingfish sashimi with ginger, eschalot and Persian fetta, which was delightfully light with a pleasant sweet garnish. My knees go weak at the thought of swimmer crab, so I couldn’t go past an organic swimmer crab omelette as a follow-up. It came topped with enoki mushroom and herb salad and was finished off (at the table) with a miso mustard broth – and met each of my flavour/texture/ swimmer crab requirements. For mains the assiette of rabbit involved some mastery of design

and execution and made the rabbit loin, chorizo mushroom duxelle, leg in brick pastry, herbed rack, apricot and creamed spinach look like they’d hung around in neat portions on white crockery for years. I finished with a dessert comprising violet ice-cream, peach, white chocolate cream, honeycomb, then left the restaurant feeling giddy, a little drunk and just a tad selfconscious about the way the tiles cracked under the weight of my feet. Which is, coincidentally, exactly how I feel whenever I visit my attractive, multilingual, “pride-of-the-family” cousins.

broker than a bank – despite all the effort banks take to get customers into their branches. However, even for the best salesperson, Keith Rowe’s book ‘The Knack of Selling (Face to Face)’ is worth a read. Olympic divers may be born with the ability to control their body in such a way as to get the best scores out of judges, but reading up on technique isn’t exactly going to hurt their gold medal hopes. In the book, Rowe breaks down the anatomy of a sale and examines the sales process, selling attitudes, understanding customers, and communication skills. For the more experienced salespeople, it may help identify just what you’ve been doing right

all these years – for the younger ones it may help provide some new ideas on how to go about your business. Rowe also avoids the trappings of many books in this genre and manages to write intelligently without making the reader think they are studying ancient languages. He also avoids the other extreme and doesn’t talk down to the reader in the patronising way that is too often associated with books aimed at self-improvement. Probably those who would get the most out of this book would be people who find the sales process incomprehensible. ‘The Knack of Selling’ has diagrams and explanations and even includes exercises to build up that allimportant selling skill.

“To be recognised as Australian Broker of the Year was a real win considering we were up against much larger broker groups and from a regional location. It justifies all the hard work and long hours myself and our team put in, in what was a very trying year in the mortgage industry…..I certainly recommend other brokers enter the awards. Our business received lots of press coverage and gave credibility to the business and my work.”



September 24, 2010 The Westin Hotel, Sydney

Online nominations open April 1, 2010 Official event partner

Award sponsor

Official publications

Organised by


Feature off the cuff Jeff Zulman

Chief executive officer, Vow Financial What was the first job you ever had? When I was a young boy of six or seven my grandparents had a women’s clothing business. I used to go there after school with my sisters and pick up any pins lying on the floor which had been dropped by the alteration ladies. My job was to stick them in a pin cushion until the pin cushion was full. The last thing my grandparents wanted was a customer in stockinged feet standing on a pin! For my efforts I was given some money that inevitably found its way into the till of the owner of the sweet shop next door. What do you do to unwind? I enjoy physically demanding sports such as cycling and waterskiing. The more intense it gets the more it forces me to focus on the event (or at least on blocking out the pain), and then I soon forget about work. What’s the most extravagant gift you ever bought yourself? My folly was a little blue Maserati. I bought it a few years ago but only kept it for six months. I spent more time cleaning and polishing it than I did behind the wheel. It also kept the NRMA pretty busy – whenever it rained it had a nasty habit of breaking down.

What was the last book you read? I have just finished reading two books, both with very different messages. The first is Johan Bruyneel’s ‘We Might as Well Win’, which tells how this former Belgian professional bike rider masterminded eight Tour de France victories, including seven victories by the legendary Lance Armstrong. The second, Ken Blanchard’s ‘Raving Fans: A Revolutionary Approach to Customer Service’, is an essential read for anyone who wants to rethink putting their customers at the centre of their world. If you did not live in Australia, where would you like to live? My choice would be Jerusalem, Israel. It’s a spiritual and religious city that sits at the crossroads of three major religions – Judaism, Christianity and Islam. To be in Jerusalem when the sun sets and to experience that orange crimson glow that slowly settles on the city is possibly one of the most spiritually uplifting sights I have ever experienced. If you could sit down to lunch with anyone you like, who would it be? As someone who grew up in South Africa, this is easy to answer – Nelson Mandela. As a child I was told that he was a terrorist dedicated to the destruction of white South Africa. As history shows, nothing could be further from the truth. He emerged from nearly three decades in jail to preach a message of reconciliation between all South Africans. The human spirit that allowed him to forgive and inspire as a leader is truly inspirational.

What CD is currently playing in your car stereo? My music tastes are pretty eclectic. In my CD stacker I currently have Simon and Garfunkel’s Greatest Hits, an instrumental piece called An Hour of the Golden Trumpets, a CD by the Royal Philharmonic Orchestra boasting Mozart, Tchaikovski and Grieg (I have to admit to some ignorance about Grieg), and The Carpenters. My children will tell you I have no taste in music! If you could give anyone starting out in business one piece of advice, what would it be? Quite simply, go and learn your chosen trade or profession in a highly reputable and well-regarded organisation. Don’t worry about the salary – that will take care of itself in the future. Instead, regard your time there as being paid to get an education. This will lay the foundations for the rest of your working life. And, finally, choose a good mentor. If I was not working in the mortgage industry, I would like to be...? A hands-on property developer. It gives me an enormous amount of satisfaction to take an idea, concept, or vision, and oversee it to become a reality. Years later I could take my grandchildren to see it, and share the vision with them so that they could understand what was there before and what stands today. It’s the same opportunity to change the “landscape” that drew me to my role at Vow. Where was the last place you went on holiday? I took two weeks off over Christmas and took the family to South Stradbroke Island (off Brisbane), the sixth-largest sand island in the world, and then crossed the border to spend the last week in northern New South Wales at a resort on Casuarina Beach, just next to Salt at Kingscliff.



One year on

ISSUE 6.6 April 2009




page 26


Manage your cholesterol

Banks leave brokers on hold

How compliant are you?

page 25

page 20

policy ion? N8: Credit FHOG boost extens

2% changes N 12:


rates prediction


of a flat DEFs” in favourTo offer al non-bank it calls “traditionin line with the major banks., but only in launched a bold fee rate to keep clawbacks will be introduced lenders have banks. banks, with the low DEFs, adopted by the major commissions, Australia’s non-bankshare from the majors. to market line with policies have taken a knife campaign e bid to regain forefront of their with an upfront one of And while banks Mortgage, Nationwid brokers at the in year will reward brokers Australian First of the non-banks and Homeloans a trail starting Homeloans Ltd, just some through of 65bps and onwards. Resimac are to the banks commission year two and they’ll Lending and taking the fight service for both brokers 15bps, rising to 20bps in commission what managers exactly better of mortgage find out,” know and promises wait weeks to of sales, “Brokers will new products won’t have to manager launched by be earning and s Ltd general and their clients. exciting is a new product the explained Homeloan s Ltd offering paying Perhaps most a real alternative lender Homeloan loan but Tony Carn. the new product will be spoken listed mortgagelity of a major bank home top brokers we’ve “We believe the functiona ns to brokers. One’, it Carn said. “The being sent to higher commissio s All in to the banks,” at the level of business al Called the ‘Homeloan to are concerned functioning transaction AFM had identified includes a fully a nil interest visa account. major banks. Iain Forbes said should in banks. account and director which weakness move AFM a major And in back to that times as the We’ve gone turnaround have far too long. remove the stigma high l approval and “Banks are taking non-banks charge ent 24-hour conditiona deferred establishm our brokers with internal credit teams.” our Forbes said, fees (DEFs), has drilled it into on full-doc products, and increased Homeloans margins Besides focusing lowered its own also removed what had AFM ns. Page 28 broker commissio

ket is on the mortgage mar Tony Carn

Smile… the

market to at least one That’s accordingsays the market started researcher, who as the December 2008 turning as earlyis only going to get better. out by quarter… and research carried Consistent withce Strategy Centre (MISC), both Market Intelligenaccount a wide pool of the into lenders, which takes and mortgage mortgage lendingmortgage market rebounded total AustralianDecember 2008 quarter, the in new in 12% by er negative slide ending a five-quart mortgage business.

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

up and up

upier reported owner-occ ABS data, whichby just 1.7% in December mortgages grewNovember, and shrank by 2008, 0.4% in (having shrunk by 1.2% 0.3% in October r). industry in Septembe ABS and other they did not But MISC said misleading because of an additional e of better one. statistics were was the result the “confluenc “anecdotal settled by or The 12% rise take into account forcing demand mortgages being months of 2008. 21,000 new circumstances” home discounting by manyand in the last three borrowers in g were excluded, the jump evidence of new as better housing demand well 28 as If refinancin would be even higher (at as builders t in rural Australia”. Page ts new settlemen said. The statistics, pleasing investmen 19%), the report correlate well with official not they are, do

son said, a MISC spokesper Importantly, not the result of the First was this upswing Grant initiatives (FHOG), even could be an Home Owner March quarter meaning the


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Issue: Australian Broker issue 6.6

been doing well in recent times, but for most it is a matter of surviving until the markets normalise.

Headline: “Non-banks fight back” (cover page) What we reported: Australia’s non-bank lenders launched a bold bid to regain market share from the major banks, with brokers at the forefront of their campaigns. Homeloans Ltd, Australian First Mortgage, Nationwide Lending and Resimac were just some of the non-banks and mortgage managers taking the fight to the banks through new products and the promise of better service for both brokers and their clients. Commissions and turnaround times were identified as key areas where the nonbanks could compete with the Big Four, as the non-banks reasserted their relevance. What has happened since? One year on and the major lenders still dominate the home loans space. The Big Four banks still have the lion’s share of mortgage broker’s business but non-bank lenders and regional banks are starting to get their share of the market back. In the December quarter, business to the major banks dropped for the first time in more than a year, and regional banks picked up business from brokers. Non-banks are still struggling to gain a real foothold in the market with FirstMac CEO Kim Cannon saying that pricing on the securitisation markets needs to fall before non-banks can really compete on price with the majors. There are some non-bank lenders – namely Liberty and Homeloans – who have

under its umbrella – but that is not to be mistaken for any lack of ambition from the iconic company. John Symond is in the midst of securing a billion-dollar funding program for a renewed assault on the mortgage market, to provide some competition to the major lenders. Aussie currently writes only about 5% of its own mortgages but Symond aims to increase that to 20% or more, to fill a void left by mid-tier lenders being gobbled up by the Big Four. Headline: “CBA at odds with industry over grant boost extension” (page 4)

John Symond

Headline: “Aussie eyeing next acquisition” (page 2) What we reported: John Symond set industry tongues wagging when he casually floated the idea of buying LJ Hooker while at coffee with real estate mogul John McGrath. While a company spokesperson played down any likelihood of a real play for the real estate group, industry insiders said it demonstrated that Aussie was still on the acquisition trail after the company bought Wizard. Suncorp, the then-owner of LJ Hooker, dismissed any speculation that it would be willing to part with the real estate group. “We have no interest in divesting the operations,” the financial group said, adding that LJ Hooker remained an important and performing asset of Suncorp. What has happened since? In October, the grandson of the man who founded LJ Hooker managed to raise the $82m necessary to prise the company from Suncorp. Aussie, on the other hand, resisted the temptation to bring any more companies

What we reported: Commonwealth Bank boss Ralph Norris warned the government not to extend the boosted First Home Owner Grant (FHOG) beyond its 30 June expiry date. Norris said that making the enlarged grant open-ended could allow people to buy houses they cannot afford. He likened the situation with the sub-prime issues that occurred earlier in the decade which “were largely brought about by people being encouraged to borrow who couldn’t afford to borrow.” The MFAA disagreed with the CBA chief and called on the government to extend the grant boost saying that the added incentive was attracting additional first-time buyers to the market, buoying the housing sector. What has happened since? The FHOG was extended, but only until December 31. By that time, it was clear that the Australian economy had dodged a recession and there were enough ‘green shoots’ around for the federal government to believe that the housing market would not collapse. Since the removal of the grant, there has been a drop-off in first-time homebuyers but there has been renewed interest among investors, and property markets in the country’s capitals remain strong.

Suncorp, the thenowner of LJ Hooker, dismissed any speculation that it would be willing to part with the real estate group Kim Cannon

Ralph Norris


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AGGREGATOR / WHOLESALE BROKER Choice Aggregation 1300 135 389 page 19 Mortgage House Aggregation Services 1300 664 774 pages 16 & 17 PLAN Australia 1300 78 78 14 page 5 Banks Commonwealth Bank 13 20 15 page 3 COMMERCIAL Banksia Financial Group 1800 333 114 page 9 Think Tank Property Finance 1300 781 043 page 31 Debtor finance Oxford Funding Pty Ltd 1800 850 509 page 23 LENDER Citibank Mortgages 1300 651 059 page 32


Eurofinance 02 9252 8311 page 15 Homeloans Ltd 1300 787 866 page 21 ING DIRECT page 13 MKM Capital 1300 762 151 page 8 Vanilla Loans 1300 710729 page 12

OTHER SERVICES Financial Service Online page 29 The House Price Information People

Residex 1300 139 775 page 24 Trailerhomes 0417 392 132 page 28 SHORT TERM LENDER Crown & Gleeson 1800 735 626 page 2 Interim Finance 02 9971 6650 page 4

MORTGAGE MANAGER / NON-BANK Australian First Mortgage 1300 727 972 page 25

NCF Financial Services Pty Ltd 1300 550 707 page 10

Mango Media 02 9555 7073 page 1

Quantum Credit 08 9325 6255 page 14

NON-CONFORMING Liberty Financial 13 11 80 page 7 Pepper Homeloans 1800 737 737 page 18

Rapid Capital 07 5562 2485 page 6 Wholesale Advantedge Financial Services Pty Ltd 03 8616 1600 page 11

To advertise in Australian Broker, Call Simon Kerslake on +61 2 8437 4786

Australian Broker magazine Issue 7.6  

The no. 1 news magazine for Australian brokers.

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