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FEBRUARY 2014 ISSUE 11.03
+INSIDE + NEWS A look at whatâ€™s been making headlines P4
PUSHING BEYOND PRECONCEPTIONS Specialist lending stalwart Pepper makes its first foray into prime lending
epper Home Loans has long been synonymous with specialist lending. But with the non-bank making massive strides in the past couple of years, expanding into Europe and growing its Australian capacity, Pepper recently made the move to compete with the majors. FULL STORY PAGE 18
A look at national mortgage sentiment P10
+ OPINION UNDERSTANDING HARDSHIP
How financial hardship rules relate to credit repair P17
How to identify and cultivate leaders P22
+ PEOPLE GOING FOR GOLD IN BUSINESS
Olympic legend Jacqui Cooper on professional success P28
+ CAUGHT ON CAMERA AFM IN BALI P29
WHAT THEY SAID...
MORTGAGE DEMAND: FHBS STILL A NO-SHOW
“Banks recognise they have to be there for customers in the long run, and not just there to ensure they’re making their month-to-month payments” P6
January mortgages sold
The number of dwelling approvals in 2013, a 15.7% rise over the previous year
Source: RP Data
11.8% First home buyers
“Our aim is to help members every step of the way while they grow their businesses” P8
FLOCKING TO FIXING
Fixed rate market share for January
WA 21.39% SA 19.78%
“Many credit providers are not fully aware of their obligations under hardship legislation, and therefore the correct information is not always relayed to their clients” P17
DID YOU KNOW?
The rise in Sydney house prices over 2013, bringing the median house price to a record $763,169 Source: Australian Property Monitors
Source: Mortgage Choice
“Competition continues to be very strong for customers’ mortgage business, and especially among brokers” P26
Complaints against brokers plummeting ■ The MFAA has reported a “substantial drop” in
Top broker taps former St.George exec for GM role ■ A leading mortgage broker has hired a bank’s
former third-party head as general manager. Smartmove, helmed by MPA Top 100 brokers David Brell and Simon Orbell, has tapped former St.George head of mortgage broking services Darren Little for a newly created role as general manager. Little told Australian Broker the brokerage’s growth meant it was the right time for Brell and Orbell to create the role. “The vision here is to constantly evolve and to grow. As a business, these guys have invested really heavily in infrastructure. The reason for putting a general manager in now is they felt it was the right time to have someone come in and run the day-to-day strategy. Simon and David have done an outstanding job over the past 10 years to get the business where they are today,” he said. Little said his previous experience with St.George would help him bring a unique perspective to the role. “What I can bring is the different relationships I’ve formed over the past 25 years in banking. There are a lot of mentoring opportunities,” he said. “My role is day-to-day operational management, but also around recruitment, developing education and training, and developing bank relationships.”
disciplinary matters during 2013, according to the association’s Disciplinary Tribunal’s annual report to the MFAA board. According to the report, six members were expelled or suspended during 2013 as a result of the tribunal investigations, while memberships were also cancelled as they no longer met the MFAA’s stricter membership requirements. The membership cancellations were on top of the 1,100 cancellations in 2013 as a result of mortgage brokers failing to meet the stricter educational standard. Over 400 of these expelled brokers were later readmitted, having satisfied the educational requirements. MFAA CEO Phil Naylor said the organisation was pleased with the results. “We are delighted that the number of complaints against our 10,000 accredited credit advisers are dropping to very low levels as a result of ASIC’s and our stricter controls, educational requirements and disciplinary systems,” said Naylor.
DID YOU KNOW?
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The proportion of mortgages currently provided by brokers Source: MFAA
CLOUSTON’S NEW VENTURE TO COMBAT FRAUD ■
Founding director of Club Financial Services Group Andrew Clouston has announced the release of a new product designed to stamp out mortgage fraud in Australia. Clouston said the product, MOGOcheck, had been so successful in the UK that regulators had mandated a major lender to start using MOGO to toughen up the e-authentication process for punters wanting a quick loan, and he expected Australian regulators to follow suit. MOGOcheck is a tool that gives customers the ability to easily verify and transfer documents back to the lender or broker, in the format they require. “The encryption of the data is direct from the source – being the banking site the user is logged into – and the broker or lender then knows the document is an original sourced document and could not have been tampered with in any way whatsoever,” said Clouston. With positive credit reporting due to come into play soon, MOGOcheck will also help fill the void for banks that currently don’t have the technology to gather, supply and process the extra documentation needed. Increased reports of fraud in the mortgage industry and tighter regulations have helped drive an “almost overwhelming” amount of interest in the product, said Clouston.
New banking code to hold lenders accountable ■ A revised banking code of
practice, which is contractually binding for all subscribing banks, now requires banks to be more responsive when customers are in positions of financial hardship, as well as providing clearer, more in-depth information regarding options, rights and concessions. Steven Münchenberg, chief executive of the Australian Banking Association, says the new code reinforces the banking sector’s commitment to acting fairly, responsibly and transparently. “Banks recognise they have to be there for customers in the long run, and not just there to ensure they’re making their month-to-month payments,” said Münchenberg. “There are times when any one of us can suffer a setback that means we can no longer meet our financial obligations, like paying the mortgage or credit card bill. This can happen because our working hours have been reduced or we’ve even lost our job, because of unexpected illness, because a relationship breaks down, or for a host of other reasons. It’s at times like these that banks can try to help people get through their financial difficulties and back on their feet.”
SIGNIFICANT CHANGES TO THE CODE INCLUDE: New and stronger financial hardship provisions – banks to be more alert to people who may be in financial difficulty when meeting their repayments, staff to respond promptly to requests for assistance, and banks to ensure staff are trained in understanding the bank’s financial hardship commitments. A commitment not to combine accounts or assign the customer’s debt when a bank is actively considering whether the customer is in financial difficulty. A commitment to provide information about no- or low-fee accounts to customers if the bank becomes aware the customer has a Commonwealth concession card, such as a Seniors Health Card, Health Care Card or Pensioner Concession Card. Clarification that chargeback rights exist for disputed transactions on relevant debit cards, including debits under recurrent payment arrangements. New provisions for customers in remote indigenous communities, including making relevant information accessible, providing assistance to customers to meet identification requirements, and appropriately training relevant staff to be culturally aware.
Aggregator expands real estate partnership ■ A partnership between real estate agency
RE/MAX Australia and aggregator Vow Financial has continued its expansion in 2014 with the recruitment of two new brokers in Brisbane and Wagga Wagga. Wagga Wagga mortgage broker and real estate agent Janette Tucker has merged her mortgage broking business Janette Tucker Finance Plus with Australian Property Finance (APF) to work collaboratively in a finance and real estate partnership through RE/MAX Elite. Meanwhile, finance and loan broking specialist Anish Prasad will deliver an expanded quality service for home buyers on Brisbane’s north side, working with RE/MAX Victory and RE/MAX Island Properties. Prasad’s experience includes recognition on the Aussie group’s number one performing Queensland broker team and national top 20. Nathan Swain, CEO of APF, says joining APF means a broker is backed by Vow, one of Australia’s biggest mortgage aggregators, rather than acting independently, and they are also affiliated with RE/MAX, a global real estate company. “These two factors are valued by finance brokers seeking security and longevity,” he said. “The joint venture will provide brokers with a new source of business leads, and the real estate customer is best served by people working together with knowledge of the property itself, the property market, and the real estate and finance industries they specialise in.”
A commitment that banks only sell debts to third parties that agree to comply with the Debt Collection Guideline: for Collectors and Creditors. A commitment to send customers with a mortgage, on a primary place of residence or residential investment property, an annual reminder about their insurance obligations.
DID YOU KNOW?
The number of Australian housing markets ranked as “severely unaffordable” by the Demographia International Housing Affordability Survey Source: Demographia
Major axes low-doc
WORLD NEWS UNITED STATES OF AMERICA
■ A major bank has discontinued a low-doc loan product, citing the
COLD WEATHER FREEZING MORTGAGE VOLUMES
Aggregator touts new appointments, 500% increase in leads
Mortgage origination volumes in the US fell in the fourth quarter of 2013 to their lowest levels in five years. Mortgage production volume has been relatively high in recent years as low rates have made borrowing more attractive and precipitated a refinance boom. But production fell by 19% in the third quarter and a further 34% in the fourth quarter. While mortgage production usually slows during the northern winter months, that tide has been stemmed somewhat in recent years because of the huge increase in refinancing demand. With the end of the refinance boom, winter is once again the slow season.
CANADA CANADIAN GEN Y’S LEANING TOWARDS RENTING?
Like most Australians, Canadians traditionally favour buying over renting, an attitude that has boded well for mortgage brokers across the country who have a large majority of the population looking for mortgages to tap into. But generational shifts in Canada could see this trend changing. The Globe and Mail took a look at one particular university class’s assignment that found these soon-to-be-grads were more partial to renting than buying, even when offered a 20% gift. “Last year, in a class of 29 students, a clear majority said they would buy,” Prof. Richard Harris told the Globe’s Rob Carrick. “I was surprised because I had spent a lot of time speaking about the dangers of price bubbles, and about the opinion of most experts that the markets in many Canadian cities had moved, or were moving, into bubble territory.” This year, Carrick writes, only five of 23 students said they would buy. Millennials will have an increasing amount of buying power in the next few decades and, although the sample size was admittedly small, the results illustrate a generation that is more willing to consider renting over purchasing.
loan’s unpopularity as the reason. NAB has announced it will discontinue its Low Doc Home Loan as part of its strategy to ‘simplify’ its product range. “In line with our ongoing promise of making it easier for our customers to do business with us, we’re simplifying our product range and removing products which are no longer popular,” said the bank. “Given the current take-up of NAB’s Low Doc Home Loan, the removal of it should have limited impact for you and your customers.” Applications for NAB Low Doc loans received prior to 24 January 2014 will continue to be processed, but all applications received on or after this date will not be accepted. Homeside’s Low Doc loan is unaffected by the change. “Your self-employed customers can continue to benefit from the range of NAB and Homeside home loans,” said NAB.
■ Choice Home Loans has appointed ex-Westpac BDM Leith
BY THE NUMBERS
12.3% First home buyer participation declined from 20.2% to 12.3% between November 2012 and November 2013 – the lowest level ever recorded by the ABS
Wickstein as manager of national broker partnerships, and former financial planning head Nathan Windebank as manager of national practice management. Choice CEO Stephen Moore said the new appointments formed part of the new Choice Home Loans support structure. “Our aim is to help members every step of the way while they grow their businesses. Having Nathan and Leith on board provides members with specialised and tailored practice management and recruitment guidance,” said Moore. The appointments come off the back of a strong year for Choice, with the latest figures showing the franchise increased leads to brokers by over 500% in 2013. Moore confirmed the business would continue delivering leads and specialised marketing support for members in the year ahead. “We are committed to providing members with lead support and assistance through our targeted marketing campaigns, which include high-profile online advertising, EDMs, seminars to educate and attract potential members, as well as new sales collateral,” said Moore. Stephen Moore
HOMELOANS LETS BORROWERS SKIRT LMI ■
Non-bank lender Homeloans Ltd has released a new product designed to open up borrowing options to clients that may otherwise struggle to get a loan. Homeloans announced it has launched a new product, Homeloans Accelerate Prime, which it says is “designed to provide a solution for those borrowers who might ordinarily fall outside the mortgage insurance and banking guidelines”. Greg Mitchell, Homeloans general manager sales, says the product opens up “yet another opportunity for home buyers with limited or no savings to get into the property market”. The new product will provide an exemption on LMI of up to 95%, although a Lender Protection Fee will be charged above 80% LVR for full-doc and above 70% for low-doc loans. Non-genuine savings are also allowable up to 95% LVR. The loan also provides no credit scoring, and financial defaults under $500 will be ignored. The product is also available as low-doc (up to 80% LVR).
The brooding Aussie consumer In spite of many positive economic signals, consumer confidence remains subdued
ast year, as consumers seemed pessimistic and wary about loosening their purse strings, economists predicted that the Federal Election would resolve a lot of Australians’ anxieties. Regardless of who won, so long as there was a clear result – or so said the pundits – we could look forward to a renewed boost of optimism, and a return to spending. Now, nearly five months on from the poll that saw the Coalition whitewash the Labor Party, Australian consumers still seem dour. CUA’s National Mortgage Survey has found that Australians remain wary of spending, citing ongoing economic concerns. Australians are showing concerns about job security, a worry that the economy will perform poorly and nervousness about the rising cost of living. CUA general manager of products and marketing Jason Murray said the trend of pessimistic Australian consumers could be set to continue.
WHERE ARE RATES HEADING?
58% 28% 14% STEADY
IT’S ALWAYS BEEN SURPRISING THAT MORE PEOPLE ARE NOT PREPARED TO SWITCH - C ATHERINE HARRIS, CUA “The weakening labour market is clearly having an impact on consumer sentiment and directly affecting spending intentions. Given the outlook for a further softening in jobs growth, this sentiment is one we would expect to continue,” Murray said. CUA head of corporate affairs Catherine Harris said the weak sentiment means consumers will continue to think twice before spending. “People are more pessimistic than expected around the economy, so they’re quite conservative around their saving and spending habits. Even if they expect rates to rise, and a large percentage of them do, they’re still going to pay off more on their mortgage than they need to,” she said.
NO HELP FROM THE RESERVE
Yet, in spite of the expectation that the economy and labour market could weaken, consumers don’t anticipate being thrown a lifeline by the Reserve Bank. Forty-three per cent of those surveyed by CUA said they anticipated a rise in interest rates over the next six months, while only 18% expected them to fall. “With rates so low at the moment, it isn’t surprising to see more Australians believing they will rise in the near future, despite the expectation of some commentators that they will be cut even further,” Murray said. And if consumer expectations are correct and the RBA does enter a tightening phase, Murray said it was likely to further impact spending. “Our research reveals that if rates do rise, the majority of variable rate mortgage holders (61%) say they would look to cut back on recreational activities to meet increased mortgage repayments. However, just over half (52%) said they would actually increase their repayments on top of the interest rate increase to ensure they continue to put extra towards their home loan,” he said. And even as rates have fallen, many borrowers have failed to take full advantage. Murray said the rate of borrowers switching home loan providers had increased, but still remained low. “Whether people are considering fixing or not, they’ve started to be more proactive about shopping around for the best deal. CUA’s survey shows 12% of mortgage holders have switched providers over the past six months – almost double the amount who had switched six months ago (7%). Of those who have made the switch, half (50%) said a lower interest rate was the major reason for switching, followed by lower account fees and charges (34%). Harris said the low proportion of borrowers switching was surprising. “It’s always been surprising that more people are not prepared to switch. Most financial institutions have good retention schemes in place, so when someone is rolling off a mortgage they fight pretty hard to keep it. There’s also probably an element of
good old apathy. Lenders have to fight really hard in terms of awareness to get people to move.”
While it might be easy to dismiss growing financial pessimism as mass hysteria or an unrealistic outlook, there’s evidence that the problem isn’t entirely in consumers’ minds. Consumer financial stress is also forecast to rise during 2014 to its highest level in more than a year. According to the latest Dun & Bradstreet Consumer Financial Stress Index, financial stress is projected to reach a high of 23.4 points by June, after easing from a high of 24.9 points to 14.6 across 2013. “Concerns around unemployment and the potential for inflation will test the manner in which consumers manage their finances,” said the report. Beyond mere hypothetical concerns, Dun & Bradstreet said Australian consumers were facing very tangible financial troubles, with an increase in debt carried over from late last year. “An increase in unmanageable consumer debts during the first quarter of this year, as a consequence of increased spending in the Christmas period, presents a risk to financial stress levels.” And financial difficulties faced by consumers could have an even deeper effect with the advent of positive credit reporting, Dun & Bradstreet said. “Given that new credit reporting laws come into effect in March, including the reporting of late bill payments, consumers will need to stay on top of their repayment obligations.” In spite of tepid consumer spending, goods and services aren’t necessarily set to become cheaper. Looking ahead, D&B’s Business Expectations Survey reveals that 24% of companies intend to raise their prices in the first quarter of this year, with the selling price expectations index rising to 19.5 points – its highest level since Q4 2010. VARIED VIEWPOINTS
25% OF NSW RESIDENTS THINK THE ECONOMY WILL IMPROVE OVER THE NEXT SIX MONTHS
ONLY OF SOUTH AUSTRALIANS AGREE
FRENZY OF FIXING There has been an increase in variable rate mortgage holders looking to fix their interest rate (39%) â€“ up 10% year on year. Younger respondents are more likely to fix their mortgage, with 58% of those under 30 planning to fix their rate, compared to only 27% of those aged over 50. Three quarters (74%) of variable rate mortgage holders would consider fixing at a mortgage rate 0.5% below their current lender and 65% would consider fixing if the majority of industry commentators forecasted rates to rise (65%).
A GLOOMY OUTLOOK
62% Reduced job security would make almost two thirds (62%) of Australians stop or think twice about making financial decisions over the next six months.
Other factors that would make Australians stop or think twice about making financial decisions are the high cost of living (75%) and doubts about the strength of the Australian economy (64%)
More Australians (37%) think the economy will get worse over the next six months than get better (17%)
Proportion of mortgage holders who have switched providers over the past six months â€“ almost double that of June 2013 (7%). A further 23% have considered switching.
To fee or not to fee The fee-for-service debate has reared its head again
ee for service is a discussion that seems to come and go in the broker world. The debate is always bubbling somewhere near the surface in the industry. As mortgage broking commentators increasingly push the importance of diversification, the issue of charging fees is again coming to the forefront. “The notion of it has died down in the last couple of years,” ING Direct third party distribution head Mark Woolnough has said. But the increasing push to diversify means that charging fees presents a strong opportunity for brokers who choose to go down this path, he said. Woolnough has been vocal about the convergence of financial services. He and the bank’s director of mortgages, Lisa Claes, have both argued that consumers will increasingly come to expect a full-service model from their financial services provider. In fact, in a testament to their belief in convergence, in 2012 the lender combined its mortgage broking and financial planning distribution teams. Woolnough said brokers are becoming more engaged with the idea of convergence.
IF CONSUMERS BECOME MORE EDUCATED AND WE MOVE TOWARDS CONVERGENCE AND INTEGRATION OF FINANCIAL SERVICES, THE FEE FOR SERVICE MODEL MAY START TO COME BACK IN
“I think the conversation of convergence will continue in 2014. What’s been quite interesting is to sit back and watch the last two or three quarters; there’s been a greater level of activity, engagement, willingness and desire to want to have a conversation around convergence,” he said. “I think it’s an area where potentially there has been some resistance from the specialist broker but has generally been embraced by the general broker who wanted to provide a number of options for different customers and to look at diversified business models.” And with convergence, Woolnough said, comes the capacity to charge a fee. “If consumers become more educated and we move towards convergence and integration of financial services, the fee-for-service model may start to come back in.”
THE INDUSTRY NEEDS TO HAVE A SCHEDULE OF FEES SO THAT IT CAN BE MONITORED AND SO THAT THERE’S NO ROGUES IN THE SYSTEM Colin Lamb
But charging a fee means brokers need to be able to provide evidence of added value, Woolnough said. “We saw when we explored the fee-for-service model through our planner network some brokers dipped a toe into the water, but ultimately fee for service is linked to whether or not the consumer sees value in the product and the service provided,” he said. One broker who agrees with Woolnough is Western Australia broker Colin Lamb. Lamb, who was number one in 2013’s MPA Top 100 and AMA Broker of the Year, said he feels comfortable charging a fee to clients when service goes above and beyond general loan writing. “If you’re adding value to the transaction and assisting a client and providing them with additional information then by all means a lot of fees are payable,” said Lamb. Lamb runs his business, Mortgage Solutions Australia, under a diversified business model including a real estate network and a conveyancer, and said fees can also be used to separate serious clients from “time-wasters”. “If clients are mucking around back and forth and you’re spending two or three interviews with clients, by all means the question would be raised, and I’ve raised it numerous times with clients and it’s just a matter of saying ‘Listen, we’ve done three or four of these interviews, the next interview is going to cost you $500, say’. And that’s more to sort out whether the client is going to be doing something or if they’re just time-wasting.” But the structure of fees is an area of the fee-forservice discussion that can cause confusion. To this end, the introduction of a schedule of fees would aid a number of brokers who are looking at charging a fee for service, and ensure consistency within the industry, said Lamb. “The industry needs to have a schedule of fees so that it can be monitored, so that there’s no rogues in the system where they are flippantly charging fees,” he said. Until more brokers start taking up the fee-forservice model or seeing it as an issue, a schedule is unlikely to go ahead, said Lamb.
I THINK THAT WHEN YOU’RE A PROFESSIONAL, YOU CHARGE AS A PROFESSIONAL AND THEREFORE YOU HELP PEOPLE WITH ADDITIONAL SERVICES
THE DEBATE CONTINUES Brokers on the Australian Broker Online forums remain divided about fee for service. Whether pro or con, the issue always inspires passion. Here’s what readers had to say.
BROKER ON 7/02/2014 1:01PM “No Banks – this is not and should not be your area of concern, so please look after your business and we will look after ours!”
SA BROKER ON 7/02/2014 12:38PM Tish Naughton, director of Black Sheep Finance, has also seen success with a fee-for-service model. She told Australian Broker sister publication MPA she feels confident charging fees because she is certain that she offers additional value. “It all depends on what you’re actually delivering. If you’re just going to help someone choose a lender then I don’t think you have the right to charge because you’re not offering additional service.” Naughton said her clients are mostly investors looking to build a portfolio. These types of clients often have complex situations and require multiple loans, said Naughton. She helps them to set up a structure and then will go the extra mile to ensure any other questions they have are answered, often contacting third-parties on their behalf and compiling reports at no extra charge. “I think that when you’re a professional, you charge as a professional and therefore you help people with additional services.” This doesn’t mean that Naughton charges fees for each and every client she sees. For simple, one-off transactions Naughton said she won’t charge a fee, nor for first home buyers. Naughton admitted that some clients will question the fact that she is also paid by the banks by way of commissions, but Naughton said being upfront and explaining her added value eliminates these qualms. “My explanation is if you’re not paying a fee that person is not going to be with you for a lifetime, that person is not going to do what is in your best interest.” Naughton said her model involves a single fee per client, not per loan – almost as a kind of “membership fee”, or an entry into her business. Those clients are then “clients for life” of Black Sheep Finance, and can refer friends and family without the referred clients being charged an additional fee, says Naughton. “I think it actually offers loyalty in the sense that people think if you haven’t paid someone for a service you don’t always feel comfortable asking them for a lot of help or extra things because you don’t want to take advantage. When you’ve paid someone you almost want to take full value on that so it means that customer will come back to you.”
“I can’t see why this issue keeps coming up. If people want to charge a fee, let them. The masses don’t charge, and my business takes plenty of business off companies who do charge. We choose to specialise in lending only and there is no need to charge a fee. Why banks even have an opinion on this subject is odd.”
PAPERY ON 7/02/2014 12:36PM “Back in the olden days when I was a bank lender, I remember the upfront establishment fee being collected at approval and before the approval letter was issued. Then mortgage brokers became quite active with Aussie, Rams and Wizard, and the upfront establishment fee disappeared altogether with the proliferation of competition by brokers and other lenders which started popping up onto the scene. Competition is meant to drive costs down for the customer. I strongly agree with fee for service, and it should start with a minimum fee across the board for a level playing field with the service provided able to exercise discretion to charge higher as they see fit. Our industry bodies need to do more to educate Joe Public as to the value of the service (they currently get for free).”
BETTINA WESTAWAY ON 7/02/2014 12:22PM “Bank staff would need to start charging the fee first and then the rest of the broking industry will follow suit. It’s a hard call. Look at how unsuccessful it was to charge the AMP pre-approval fee. Very high income public servants would become very indignant whenever the fee was mentioned so in the end I would just not go there.”
COUNTRY BROKER ON 7/02/2014 9:43AM “I find these comments concerning about integrating businesses. We have seen a major integrated SA business go into liquidation with high debt levels. Mortgage broking businesses’ clients need certainty about the business they deal with being stable and having a certain future.”
JOHN SMITH ON 7/02/2014 9:43AM “Unless it’s compulsory for all brokers, then many will not do it. I also explored fees for extra service, but as soon as you mention it some clients disappear. Yes some of you may claim that maybe I am not offering the service, but that’s not true, and have many clients based on reputation and service. So it has to be compulsory, it has to be across the board and include bank staff. Until then I will continue to give that service away for free, and keep the ongoing business.”
Financial hardship and credit restoration John Dickinson of Clean Credit looks at how hardship provisions relate to credit repair
ew people understand financial hardship legislation, even fewer understand how financial hardship can be applied to credit restoration. Let’s first cover what financial hardship actually means to a credit provider. In today’s world it is common for people to have a number of debts such as home loans, vehicle finance, credit cards and personal loans. In order to approve an application for finance a credit provider will consider many things including the applicant’s ability to service the debt.
THE MOMENT A BORROWER EVEN HINTS THAT THEY ARE EXPERIENCING FINANCIAL DIFFICULTY, A CREDIT PROVIDER IS UNDER A LEGAL OBLIGATION TO OFFER ASSISTANCE A borrower’s ability to service a debt is based on their current situation such as their employment or the income derived from a business, in other words a credit provider can only take the applicant’s current financial situation into consideration; after all, we can’t expect a credit provider to predict the future. The reality is, however, that things change. People lose their jobs, business’ fail, marriages separate and people get sick, all of which can have a profound impact on someone’s ability to make payments on a loan. Let’s say a bank approved a home loan with a 25-year term – the reality is a person’s income source is almost certainly going to change during this period. It would be normal for someone to have a number of careers or business’ during this period and the chances of someone having an event that will affect their ability to service their debts during this term is high. Credit providers are well aware of this fact and for the most part have established financial hardship policies in place to accommodate for these situations. The moment a borrower even hints that they are experiencing financial difficulty, a credit provider is under a legal obligation to offer assistance. In fact, in some cases the borrower doesn’t need to say
a thing; if their repayment history changes for the worse there is a solid argument that the credit provider should have picked up on this and made contact with their client to see what was wrong and offer assistance. As most people know little about financial hardship legislation or a credit provider’s obligations to assist, credit providers are expected to take the initiative and explain what options are available to their clients, even if they may not have asked directly for financial assistance. What should happen and what does happen are often two different things. The truth is many credit providers are not fully aware of their obligations under hardship legislation, and therefore the correct information is not always relayed to their clients. There have been many examples of borrowers contacting credit providers to tell them they will not be able to meet their payments due to financial hardship and the credit provider offering no assistance at all. We have even witnessed situations where credit providers have said that they don’t care and “recovery action will commence if they don’t pay” or words to that effect. This attitude displays either an inexcusable lack of understanding of their legal obligations or a complete disregard for them, both of which are equally disturbing.
HOW DOES ALL THIS RELATE TO CREDIT RESTORATION?
If a borrower contacted a credit provider and told them they were unable to pay due to financial distress and the credit provider did not offer the correct level of financial assistance, which is common, then there is a genuine argument that recovery action should never have commenced and in turn a payment default or court action should have not been recorded on the client’s credit file. It’s important to note that financial hardship legislation is there to help people during difficult times and while it is a credit provider’s legal obligation to help it should also be their moral obligation.
DID YOU KNOW? A recently revised Banking Code of Practice contains new and stronger financial hardship provisions, requiring staff to respond promptly to requests for assistance, and banks to ensure staff are trained in understanding the bank’s financial hardship commitments
YOU’VE GOT TO HAVE A CONSISTENT MESSAGE, AND THAT IS BEING KNOWN FOR GREAT SERVICE AND GREAT PEOPLE ON THE GROUND
PUSHING BEYOND PRECONCEPTIONS Specialist lending stalwart Pepper Home Loans makes its first foray into prime lending
CONTINUED FROM PAGE 1
epper recently announced the launch of its first prime product, Pepper Essential, and the lender’s head of third party, Mario Rehayem, said Pepper’s move into the space had been years in the making. “For us it’s been in excess of 14 years developing and pretty much perfecting a great specialist product for the Australian market. We’ve constantly received feedback from our advocate brokers and from our customers that they would prefer for us to develop a prime product which can cater for more customers, and for customers that are actually with us already they’re after a product that if they stay with us they can get off the specialist rates and go onto a prime rate when they’re ready to go,” he said. The move, Rehayem said, made sense given Pepper’s positioning as a specialist lender. While many Pepper borrowers came to the lender with impaired credit and then subsequently moved on to another lender, Rehayem said the push into prime lending would open up options to keep those borrowers in place. “So first and foremost the idea was to take on a transitional product for our existing clients that we have on our books that brokers have introduced, instead of taking our clients to another lender for a prime deal … after they have done their time with our specialist product they usually leave us to go to a prime lender, so this is a way brokers can just transfer them to another prime product that we have to offer,” Rehayem said. Rehayem said the move was also spurred by the lender’s relationship with the broker channel. He said brokers who did business with Pepper gave feedback that prime products would be a welcome option. “We’ve got good advocate brokers that have been asking us for a prime product because they really appreciate and understand the way we do business; we call it pretty much old-school assessment. Every deal is manually assessed. We don’t do credit scoring, we’re not
dependent on any mortgage insurer, so everything is done in-house and brokers really appreciate that style of credit assessment. So by coming out with a client product that emulates pretty much what we do with our specialist lending, it gives brokers that upper hand because applications are individually assessed, and we’ve been more or less overwhelmed with the response we’ve received so far.” In its move into prime lending, Pepper now puts itself in a position to compete more directly with traditional banks. Rehayem said this kind of competition provided a boost to the entire industry. “Competition is good because when all the lenders start to compete for market share they really start to get competitive in not only commissions; they actually look for ways to better their competitors. And so I always believe for the industry itself, competition is always great,” he said. Rehayem said an improving funding market meant it was also easier for other lenders to compete. “For non-banks now to get a really good lease of life, the RMBS market is very strong, and it allows non-banks who rely on the RMBS market such as ourselves to become more competitive, because we know that we can get good corporate funding and be able to deliver value in what we have to offer,” he said. While the increasingly competitive landscape means Pepper can now offer a challenge to larger lenders, it also opens the possibility of smaller lenders moving into the non-conforming space. But Rehayem said Pepper welcomed the possibility. “Competition is good and we always welcome new entrants who might want to come in and play in our space. We really welcome that, because at the end of the day if you’ve got more people flying the flag of specialist lending it’s going to make our job a little bit easier to get the message out.” Indicative of the newly competitive landscape, Rehayem said, are some of the inducements being offered to brokers. Lenders are competing harder for brokers’ business, with some recently announcing commission hikes. While Rehayem said he could foresee this trend continuing, he argued that brokers would ultimately choose lenders based on service. “Yes, some people are raising commissions, but it’s a strongly held belief of ours that it doesn’t matter how much you pay someone, if your service doesn’t cut it then you’re only going to get that deal once or twice from that particular broker. You’ve got to have a consistent message, and that is being known for great service and great people on the ground. And not only do lenders need to be mindful of the service they provide to the broker, they also have another client which they need to provide for too, which is the actual borrower; they need to make sure their service levels are not only great to their customers being the broker but also into post-settlement for the borrower,” he said.
Rehayem said Pepper also sought to be competitive in the commissions it offered to brokers, but that its focus was first and foremost on product and service offerings.
WE DROP THE ARROGANCE AT THE DOOR AND ALWAYS BELIEVE THAT BROKERS KNOW WHAT IS BEST AND WHAT IS NEEDED IN THE INDUSTRY
DID YOU KNOW? Late last year, Pepper signed on for a three-year sponsorship deal with the Western Sydney Wanderers
“For us, we’ve played that card. We were the first one to come out with our Pepper Essential prime product, which pays 85 upfront and 15 trail from day one. But we’ve never highlighted that we’re paying the highest commissions in the industry with regard to a product that matches that kind of rate, because that’s not what this is about. This is about high-quality service which is day one service, having a product that is a basic of what a client needs to get the job done and get a home loan with no credit scoring, no mortgage insurer attachment. So it’s real innovative in that way and it’s also backed with the best service available in the market and high commissions. But high commissions for us have never been the focus point.” And in focusing on service and product innovation, Rehayem said the lender would continue to push boundaries beyond its foray into prime. But as it seeks to innovate, Rehayem said Pepper would do so based upon feedback from the third party. “For us, we’re forever challenging ourselves to come up with something new and something that brokers are asking for. We constantly have feedback from our broker focus groups and we frequently have think tanks either in a group atmosphere or on an industry basis, and these brokers would be brokers that are new to the industry or some real heavy-duty stalwarts of the industry,” Rehayem said. “We’ve discovered there’s no use trying to come up with your own ideas, because you get the best advice and best direction from the actual brokers themselves. They know what frustrations there are in the industry with regard to lack of products or gaps, and that’s why we’re a very strong believer in trying to listen to brokers and then putting those thoughts into practice and see if they’re compliant and we can make economic sense for the business and we’re in good position there to implement a product. So we drop the arrogance at the door and always believe that brokers know what is best and what is needed in the industry, so why not listen to them?”
Go west, young buyers First home buyer participation is down across the country, except for one bright spot
ast year was a particularly good year for property, with dwelling approvals up 15.7% and nationwide median house prices up 9.8%. But in spite of the sunny outlook for Australian property, first home buyer participation has remained anaemic. Over the two years from November 2011 to November 2013, first home buyer participation declined from 20.2% to 12.3%, the lowest level ever recorded by the ABS. The first home buyer market looks positively dour, but there’s a bright spot: as first home buyer levels continue to sit at record lows in most states, WA has continued to buck the trend. Low home prices and generous government concessions have combined to drive growth in the area, says Homeloans general manager sales Greg Mitchell. “We have seen a definite trend of first home buyer levels remaining relatively high in WA. In particular, we have noticed this in new builds and at the lower end of the market up to $500,000,” says Mitchell. Perth is 20% cheaper at this end of the market compared to other capital cities, he says, and WA is also the third most generous state for first home buyer concessions. Stamp duty is waived in WA for purchases up to $500,000 and is then phased out on a sliding scale from $500,000 to $600,000. The WA government also grants $7,000 to first home buyers for purchases up to $750,000, and it grants a further
Stamp duty is waived in WA for purchases up to $500,000 and is then phased out on a sliding scale from $500,000 to $600,000
DID YOU KNOW?
The increase in Perth’s median house prices in 2013 Source: APM
$2,000 to those who are eligible (for a purchase up to $400,000) for incidentals such as costs/fees etc. “This makes owning your first home more affordable, as the majority of lenders need 5% genuine savings as part of the deposit,” says Mitchell. The median dwelling price in Perth is currently $500,000 – higher than that of Brisbane ($430,000), Adelaide ($380,000) and Hobart ($320,000) but far below Sydney’s $640,000 median dwelling price. While Melbourne, Canberra and Darwin’s median dwelling prices also sit in the $500,000 range, the fees paid by first home buyers in Perth are significantly lower than in the other three capital cities. A first home buyer purchasing an established home at the median dwelling price in Melbourne will pay approximately $44,000 in fees for a 5% deposit and $18,000 for a 20% deposit. Canberra first home buyers will pay a similar amount for a 5% deposit, and slightly less for a 20% deposit ($40,000), while first home buyers in Darwin will pay around $42,000 for a 5% deposit and approximately $26,000 for a 20% deposit – the highest level of fees for any capital city with a 20% deposit. A Perth first home buyer, in comparison, will pay just $16,000 if they can secure a 5% deposit, and a tiny $410 for a 20% deposit. According to the latest ABS Housing Finance figures, home buyers fell to a record low 12.35% in November 2013. Lowering stamp duties and fees in other states is likely to entice first home buyers back into the market, says Michelle Hutchison of finder.com.au. “Despite the fact that interest rates are among the lowest levels ever, we’re still seeing fewer numbers of first home buyers entering the market. For instance, there were 86 fewer first home buyer loans financed in November 2013 compared with the previous month, and 1,045 less or 13% fewer than November 2012,” says Hutchison. “It’s because many first home buyers need so much capital before they can even begin their property hunt. In fact, for a 5% deposit and purchasing an established home at the median dwelling price, the upfront cost is up to double the size of the deposit.” With the national median dwelling price of $484,563 for an established home where stamp duty concessions are exempt, it would cost first home buyers $24,228 for a 5% deposit, plus another $22,000–50,000 for stamp duty and LMI, depending on the state. And this doesn’t include about $1,000 in upfront home loan fees. A strong economy and high population growth have also helped keep first home buyer levels high in WA, says Mitchell. Its annual population growth rate of 3.32% is the country’s strongest and is nearly 33% higher than the decade average. “There is a steady stream of jobs in the mining sector and construction industry, plus low employment has also helped to draw people to Perth.”
MARKET TALK brokernews.com.au
List of demands
The real estate industry is calling on the government to help potential home buyers
re-budget submissions have called on the government to tackle low levels of first home buyers, and soaring house prices. Real Estate Institute of Australia president Peter Bushby said the 10 proposals put forward by the lobby group aimed to stem the rapid decline of first home buyers. “We want to see a marked improvement in the standards of delivery of vocational education, and adequate data on the supply/demand imbalance of housing, for informed decision-making by policy-makers and stakeholders,” said Bushby. The group’s proposals include allowing first home buyers access to their superannuation for the purchase of a home, and reviewing the amount of the First Home Owner Grant annually to maintain relativity to house price movements. Abolishing stamp duty, retention of current negative-gearing arrangements for investment properties, and no increase in capital gains tax were among other key proposals. “Availability of affordable housing is a goal that is shared by governments and all sectors of the community,” said the submission. “Availability of affordable housing impacts on the functioning of the economy as well as the well-being of individuals and the cohesiveness of communities and society.” The report cited statistics showing that the number of home loans issued increased by 20.5% over the two years from November 2011 to November 2013, while during the same period first home buyer participation declined from 20.2% to 12.3% – the lowest level ever recorded by the ABS. “This decline is despite eight cuts in the official interest rate since November 2011.
FAST FACT In the month of December 2013, sales of private detached houses increased by 22.5% in SA, 7.3% in WA, 5.8% in NSW and 1.5% in Queensland. Sales of detached houses fell by 13.4% in Victoria Source: HIA
“Providing a stimulus to economic activity outside the mining sector was amongst the main reasons for the RBA to cut the official cash rate during 2011–13. “Declines in returns to term deposits prompted substitution towards other assets, including housing however the full effect of the rate cut is yet to be felt.” Home ownership levels fell by 4.5% in the decade to 2011, said the submission. That fall was most pronounced in the 35–44 age group. The National Housing Supply Council, in its 2012–13 report, seemed certain that the rate of home ownership would drop further. The submission by the Housing Industry Association (HIA) called on the government to leverage off the expanding housing sector in order to restore growth in Budget 2014/15. The HIA chief executive of industry policy and media, Graham Wolfe, highlighted the imperative for May’s budget to contain measures that would promote growth in new home building. “It is important that the Commonwealth removes impediments to growth in the sector, invests in training for the future workforce and ensures that it improves the return that it is currently getting from investments in affordable housing programs,” said Wolfe.
KEY MEASURES PROPOSED BY THE INDUSTRY FOR THE 2014/15 BUDGET INCLUDE: • A Productivity Commission inquiry into the cost of housing, including taxation and its impact on affordability, productivity and economic activity • Increasing incentives for employers of apprentices, and improved commencement and completion incentives for apprentices • Continued funding for the National Rental Affordability Scheme, with greater accountability measures and the tying of Commonwealth housing programs to performance incentive benchmarks targeting improvements in the supply of new housing
BUSINESS INTELLIGENCE 22
Seven steps for effective LEADERSHIP Want to grow new leadership in your business? John Hansen shares top tips to identify and nurture strong leaders
business is a collection of people working for the same cause, and a leader is required to define that cause. Growth of a business will only come through the time and talents of others. To identify, attract, fill and retain corporate leadership talent, companies need leadership development programs focused on hiring strategies, employee development, and career and succession planning. Companies face two major challenges in finding and developing leaders. They need to identify qualified candidates to fill current and future leadership roles, and they need to develop a comprehensive leadership program to cultivate and develop the leaders of tomorrow. In the past, leadership development was focused on only a few individuals in the organisation. First-generation systems to assist with leadership development were siloed and/or hard to use and were not widely adopted. Companies need a system-enabled way to unify methods of assessing and selecting leaders, executing programs to develop skills, and measuring the success of these programs. Now technology can be deployed to extend these practices across the enterprise and down into all levels of the workforce. Human resource development then becomes an enterprise-wide effort across the management team and not just the job of the HR department.
ELEMENTS OF LEADERSHIP DEVELOPMENT PROGRAMS Major talent management functions all play a part in a comprehensive leadership development program and can be well supported by a unified talent management technology platform. These functions include recruitment, assessment, performance management, succession planning and career planning. A successful leadership development program begins with the alignment of leadership development with company strategy and an understanding of the type of leadership style(s) needed to execute that strategy.
DETERMINE THE BEST LEADERSHIP STYLE FOR YOUR ORGANISATION
There are many theories about and techniques for determining the right leadership styles for an organisation. The leadership style, for instance, that is required by a head of corporate security would obviously be vastly different from the leadership style of an art museum director. Company culture will also play a major role in determining leadership style.
One of the main reasons for the high failure rate of new CEOs – more than half never make it past the four-year mark – is poor organisational fit. Here are two ways to assess leaders’ fit. • Get to know them better. Psychological and behavioural assessments have been statistically linked to current and future success in leadership roles. • Understand the culture better. Ask your board, employees, vendors, consultants for insight into what makes an effective leader in the company. Use both sets of information to find alignments or disparities. If there is a glaring cultural conflict, be ready to find a better candidate who possesses the unique skills your organisation requires.
IDENTIFY CURRENT AND POTENTIAL LEADERS WITHIN OR OUTSIDE THE COMPANY
Leaders can be found both internally and externally. Companies must weigh the cost and timing of developing internal leadership against the cost and availability of hiring from the outside. Research has shown that one of the key advantages of developing leaders internally is that they achieve productivity almost 50% faster than external candidates. To evaluate potential leaders in the organisation, a leadership program needs to identify the expected leadership skills and competencies. Whether companies develop a competence model of their own or use a model, they need to define the success measurements and build them into their performance management system. When leadership positions cannot be filled from within the company, recruitment should use the same measurements to test the existing competencies of future potential candidates. Online pre-assessments and full assessment testing can help ensure that the right candidates are on the short list. Unqualified candidates are automatically filtered out, not on the basis of their resumes but, rather, on the basis of a selfadministered online test or questionnaire.
IDENTIFY LEADERSHIP GAPS
To fully recognise leadership gaps, companies should determine current and future leadership requirements and compare those with the current leadership team. Then look at the leadership
development pipeline and identify gaps in skills and the time required to fill those gaps either via succession plan or recruitment.
DEVELOP SUCCESSION PLANS FOR CRITICAL ROLES
Succession planning avoids disruption and employee trauma when the CEO leaves, whether the departure is anticipated or not. But a succession plan should not be confined to executive roles. As part of the leadership program, companies should evaluate critical roles throughout the organisation. For the greatest efficacy, succession planning should be supported by technology systems that provide the ability to: • Create backfill strategies that use data captured in the recruiting and performance review processes, coupled with individual career plans • Add multiple candidates to a succession short list and view all the best options • Display multiple talent profiles – from C-level executives to individual contributors –side by side to quickly identify the best fit • Track candidate readiness based on skills, competencies and performance; promote top candidates based on relative ranking and composite feedback scores
5 6 7
DEVELOP CAREER PLANNING GOALS FOR POTENTIAL LEADERS
Companies that support career planning for their employees gain in retention, engagement and protection of the leadership pipeline. Combining employee development with self-service career planning enables employees to not only explore potential career paths but also to select the development activities necessary to attain them.
DEVELOP A SKILLS ROADMAP FOR FUTURE LEADERS
Once the high-potential employees have been identified, a skills roadmap should be developed for the future leaders. In today’s connected world, development programs need to support both traditional and non-traditional learning such as incorporating social networking tools into the development process.
DEVELOP RETENTION PROGRAMS FOR CURRENT AND FUTURE LEADERS
Linking pay to performance can be a motivator for an employee, but goal alignment helps potential leaders stay focused on what is important to the company. Recognise excellent performance, and base the upside of bonus potential on the success of both the employee and the company. Leadership retention is critically important for all organisations, for two main reasons: turnover is expensive and top performers drive optimum business performance.
CONCLUSION John Hansen is vice president, HCM product management, JAPAC at Oracle. Oracle is the Human Capital Management solution of choice for more than 14,000 Oracle customers in over 140 countries, including 8 of the top 10 Fortune 500 companies and 30 of the top 40 innovative companies.
A well-designed leadership development program is the key to identifying, attracting, filling and retaining corporate leadership. Technology applications can provide the enabling platform, including recruitment, assessments, performance management, succession and career planning, and development programs. Talent management practices implemented with robust technology applications can effectively identify and develop – from all levels of the workforce – the leaders who will best drive business performance.
FINANCIAL SERVICES 24
INSURANCE AND SUPER JOBS SEE TOP PAY INCREASES
A look at ASIC’s crackdowns
SIC has been busy over the past six months cracking down on those in the financial services industry, its half-yearly enforcement report shows. The regulatory body recently released its fifth six-monthly enforcement report, showing that it cracked down 340 times on criminal, civil and administrative misdemeanours between 1 July 2013 and 31 December 2013. There were 112 outcomes achieved in the market integrity, corporate governance and financial services areas, and 228 in the small business area. A notable prosecution ASIC helped with was that of Clestus Weerappah, a former director of Dollarforce Financial Services, who was jailed for four years over his role in the collapse of the property development group. “The sentence sends a clear message to corporate Australia that ASIC, the community and the courts will not tolerate criminal BY THE NUMBERS behaviour,” ASIC said. In the financial services sector, Other outcomes that ASIC ASIC conducted 12 successful contributed to include the criminal prosecutions, Federal Court finding five former five civil, 34 administrative directors of Australian Property remedies (such as banning Custodian Holdings liable for or disqualification), and breaching their duties, and 23 enforceable undertakings, the Full Court of the Federal and four warnings were issued. Court of Australia upholding ASIC’s appeal against the court-approved $82.5m settlement between former Storm Financial investors and Macquarie Bank. ASIC’s work will also see more than $15m refunded to consumers, it said. The regulator is currently cracking down on misleading advertising of products and services, market misconduct, including insider trading, and the responsibility of gatekeepers. “Future areas of focus include loan fraud, false accounting, and takeovers and shareholder disclosure, as well as the ongoing focus on advertising,” commissioner Greg Tanzer said. “ASIC’s crackdown on brokers submitting fraudulent loan applications, and similar behaviour, has seen several individuals criminally charged or banned. We currently have more than 20 investigations underway involving falsification of loan documents and loan applications.” ASIC also secured enforceable undertakings (EUs) with a number of high-profile companies, including NAB, UBS, Wealthsure, BT, and CommSec. “Negotiated outcomes, such as EUs, can offer a faster, more flexible and effective regulatory outcome than could otherwise be achieved through administrative or civil action,” Tanzer said. “Since 1 July 2011, ASIC has entered into 63 EUs with entities and individuals. Many of these enforceable undertakings have required entities to pay compensation to consumers, improve internal compliance arrangements, appoint an independent expert to oversee elements of the entity’s business, and report back to ASIC on performance.”
$81,055 The average salary advertised on SEEK in 2013, a slight decrease from $84,458 in 2012 Source: SEEK
The insurance and superannuation sector has seen the highest salary growth over the past year, according to the results of job search website SEEK’s national salary survey. The sector experienced 6% growth, sharing top place for salary growth with the sport and recreation sector. Job role breakdowns within the sector show those working in superannuation experienced the highest salary change, with 11% growth. Those working in claims experienced 8% growth, and brokerage and underwriting 6% and 5% respectively. Unfortunately for risk consultants and advisers, there was no percentage change, with the average salary decreasing very slightly from $97,300 in 2012 to $96,951 last year. In other bad news, financial planners also experienced 0% growth, with the average salary moving slightly from $80,165 in 2012 to $80,353 last year. SEEK spokesperson Sarah Macartney said that while there was no in-depth analysis of why each job role’s salary had risen or declined, the superannuation sector was continuing to grow and employ more people, which would contribute to salary growth. “I suspect the [superannuation sector] will continue to need more people to support it, and this makes the job market more competitive. That means a hike to salaries as better-quality workers compete for jobs.” The challenging economy of the past couple of years would likely have affected financial planners’ salaries, Macartney said. The SEEK salary review compared the salary information from all jobs posted on SEEK during 2012 and 2013, and surveyed more than 1,000 working Australians. NSW offered the best chance in 2013 for jobseekers to secure a pay increase, with 63% of industries offering higher salaries, followed by Victoria (60%), WA (58%), Queensland (53%) and SA (52%).
INVESTOR CONFIDENCE ON THE UP The world’s economy seems to be looking good, with investor confidence flying up in January, according to an index released by State Street Global Exchange. The Global Investor Confidence Index rose to 114.4 in January, up 18.6 points from December’s revised reading of 95.8. The increase was the largest in over four years and was driven by a sharp increase in North American sentiment from 92.1 to 113.6, along with sentiment increases in both Europe and Asia, in which Australia is included. European sentiment rose to 112.6 from December’s revised reading of 107.5. Sentiment in Asia – including Australia – rose to 103.5 from 97.7.
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ONE YEAR ON 26
ONE YEAR ON What a difference a year makes … or not. Australian Broker reflects on the punditry, news and trends that made headlines 12 months ago Australian Broker Online, Feb 2013
Franchise head departs
LJ Hooker head Peter Bromley last year left the franchise business to pursue other opportunities. The move, Bromley said, was spurred by the desire to try his hand at building something new. Bromley said he intended to “take what I’ve learned and apply it again” in a new role, but didn’t elaborate on what role he was seeking. He did, however, say the move was also “a good opportunity to take a break”.
What’s happened since?
Bromley has since taken on the role of RP Data’s national general manager of sales for SME business. RP Data CEO Graham Mirabito praised Bromley’s 30-year career in finance and real estate, and said he would aid the company’s strategy to expand its business. “As RP Data expands its business into the finance, banking and mortgage sectors, we are committed to ensuring we reinforce our position as the market leader by employing experienced professionals such as Peter.”
MFAA applauds strict broker discipline
In response to an ASIC spokesperson claiming the regulator was witnessing a “continuing trend” of fraud in mortgage broking, MFAA CEO Phil Naylor said the association was doing its part to clean up the industry. Naylor said the MFAA had expelled 31 members over the last eight years, with the “majority” of those members found by the MFAA’s Disciplinary Tribunal to have engaged in “serious misconduct”, submitting fraudulent loan applications to lenders.
What’s happened since?
The MFAA has again lauded ASIC after the regulator took recent action against a string of fraudulent brokers. Naylor said the association was pleased that ASIC had stepped up its oversight, and that of eight brokers dealt ASIC bans recently, the MFAA had previously cancelled the memberships of six, and the other two had never been members.
Major launches raft of broker incentives
estpac general manager mortgage distribution Tony MacRae has announced that the bank will make permanent a 10bp volume incentive it has had in place for the past six months. MacRae said the lender would also add a 5bp conversion incentive, with the changes due to take effect from 1 March, and that the volume targets were ones that many brokers had already attained. “We’re looking at a 70% conversion target, which we see a good proportion of our broker and aggregator partners already achieve, but we also want to ensure we lift that by putting this incentive in place,” he said. With the market growing more competitive, MacRae said banks were working harder to strengthen their relationship with the third-party channel. “Competition continues to be very strong for customers’ mortgage business, and especially among brokers, but this is about showing Westpac’s commitment to the broker market, and that we’re in it for the long haul and recognise the valuable part that brokers play in introducing new-to-bank customers and all-of-wallet customers.” MacRae said the bank would also launch a new referral program for brokers. “I think this is an industry first. We’ve been looking at our portfolio of mortgage customers, and particularly the broker-introduced customers, and there’s a whole heap of customers who have been with us for some time now. Those customers have run down the size of their debt, and are now eligible to be able to get top-ups if they want to do renovations, or might be able to do another loan. In February we’re going to start passing out leads to brokers so that they can talk to those customers, knowing that they’re able to get additional lending from Westpac,” he said. MacRae said the housing market was “buoyant”, and competition between lenders had increased, for the business of brokers as well as borrowers. With this in mind, he said the bank would also unveil additional discounts for borrowers. “That’s why from Monday 3 February we’ll be looking to introduce some new discounts off our SVR on our Premium Advantage Package. So for deals between $250,000 and $750,000, it will be an automatic discount of 0.9%, and then for deals over $750,000 there will be a 1% discount for customers for new lending.”
Good year for FHBs? Not so fast Brokers question whether government incentives could truly help first home buyers
eal Estate Institute of NSW CEO Tim McKibbin has rubbished claims by the state government that 2013 was a “bumper year for first home buyers of new homes” in NSW, and called for more to be done to help first home buyers enter the market. Patrick McMenamin said government handouts would do little to help first home buyers.
BROKER COMPLAINTS PLUMMETING When the MFAA revealed its statistics showing complaints against brokers had fallen “substantially” in the past year, many readers had some opinions to share.
“MFAA does not have a regulatory role and should not be linked with ASIC’s role. While the MFAA’s comment could have been more timely to follow Peter Kell’s assertions, the real issue is ASIC’s unsubstantiated claims about escalating problems with credit intermediaries. As MFAA has to deal with ASIC on policy and operational issues, it has a delicate balancing act in deciding whether or when to flex its muscle and directly attack ASIC; I believe this ‘soft’ approach sends a message to ASIC without prejudicing the professional relationship. There is an old adage: it is extremely difficult to win a debate with the government or, in this case, ASIC who can hide behind legislation and privilege. The key is for the media to become more active and to question ASIC’s assertions and force some level of accountability for unsubstantiated statements (if any).”
ALL THAT’S HAPPENED IS THAT THE PRICE OF NEW PROPERTIES HAS SKY-ROCKETED SO THAT THE ‘INCENTIVE’ PROVIDED BY THIS NARROWMINDED GOVERNMENT ISN’T EVEN A DROP IN THE OCEAN “In my experience as both mortgage broker and financial planner, first home buyers predominantly range from 25 to 35 with mean, mode, median around 30. They aspire to own a home but have saved nothing and complain that government handouts do not cover the required deposit. Typically they have never heard of a First Home Saver Account. I am suggesting self-help for motivated aspirants with both family and government sponsorship. This solution can be distributed by a readymade network of professionals who would be eager even for nominal commission as it would be a new client who will need finance and probably insurance when a purchase proceeds. First home buyers are not entitled to instant gratification, no one is!” Zealous agreed, and said government incentives could
actually hurt the cause of first home buyers. “All that’s happened is that the price of new properties has sky-rocketed so that the ‘incentive’ provided by this narrow-minded government isn’t even a drop in the ocean.” Tim H said the government should focus on helping people save deposits rather than handing out deposit money. “The government should be doing more about educating young people about savings, budgeting and planning for their future and not giving handouts for instant gratification.” But George shared some perspective as a prospective first home buyer. “As a first home buyer with a deposit well into six-figures I’d like to chime in and say that it isn’t poor saving habits that have kept first home buyers out of the market. We are simply outbid time and time again by cashed up investors and overseas buyers who pay top dollar for what should otherwise be entry level properties – many of which are borderline derelict. The bottom of the market simply does not exist anymore unless you are willing to move out West where there is little evidence that any tax dollars have been spent to make living so remotely from the CBD a justifiable prospect. We have just recently been warned by our mortgage broker to avoid auctions as buyers are simply paying too much, banks are refusing to issue loans and many struggling first home buyers are losing deposits. Mr McKibbin has so far voiced the only opinion I can see that truly reflects the current situation faced by first home buyers.”
Wombat on 29/01/2014 at 8:48PM
What do you think? Leave your comments at brokernews. com.au
MAJOR FRANCHISE CALLS FOR FAIR RATE ADVERTS
Yellow Brick Road has called on the government to require clearer disclosures from lenders. One commenter pointed to a bit of industry history. Old Joe on 4/02/2014 9:35AM “Hang on a sec, didn’t Wizard Home Loans advertise a teaser rate all those years ago so that they could stay on the top of tables? And also didn’t someone lobby hard to have the LMI not included in the true rate comparison because the cash flow cover component on the premium blasted the non-bank lenders by being sometimes almost 30% higher than the bank loans LMI premium? Don’t you love history? The GFC was so much fun.”
Panel discussion with the Olympians
To celebrate the 2014 Sochi Olympic Games, La Trobe Financial brought the Olympic launch party to Australia, inviting some of the world’s best Olympians to share their Olympic stories. Olympians included JACQUI COOPER - La Trobe Financial’s Company Ambassador, 5 x Olympian and 5 x World No.1 Champion aerial skier, KERRI POTTHARST - Olympic Champion for Beach Volleyball, MALCOLM PAGE - 2 x Olympic Champion for Sailing, TOM KING - Olympic Champion for Sailing, MURRAY STEWART - Olympic Champion for K4 1000, MARGUERITE HOUSTON - World Champion for Rowing, JESSICA FOX – Olympian for Slalom- Canoe, BEN ST LAWRENCE - Olympian for 10,000 metre track, JOANNE BRIGDEN-JONES - Olympian for K4-500
EMILY ESPOSITO, JACQUI COOPER (La Trobe Financial and 5 x Olympian and 5 x No.1 World Champion), JESSICA FOX (Olympian for Slalom-Canoe), CATERINA NESCI (La Trobe Financial) and KERRI POTTHARST Olympic Champion for Beach Volleyball
GOING FOR GOLD in business and in life
Five-time Olympian Jacqui Cooper shares how sporting success translates to business success
DID YOU KNOW? Jacqui Cooper was on the Australian Olympic teams for: 2010 - Vancouver, Canada 2006 - Torino, Italy 2002 - Salt Lake City, USA 1998 - Nagano, Japan 1994 - Lillehammer, Norway
acqui Cooper is a true Australian sporting icon. The first Australian woman in history to represent Australia at five Olympic games, her career in aerial skiing spanned 20 years and included five world titles, 39 World Cup medals, 24 World Cup wins and three major World Championship medals. Cooper says many of the lessons she learned as an athlete have helped her succeed in her newer role as company ambassador for La Trobe Financial. “I think the biggest thing that transfers is building relationships. As an athlete, you have to have a wonderful relationship with your coach, and you have to have a great relationship with your team management and your teammates,” she says. And the best way to build relationships – be they with business colleagues, sporting colleagues or clients – is the old fashioned way, Cooper says. She urges mortgage brokers not to forget the power of face-to-face meetings. “These days, I think what’s more important than ever is to get that face-to-face time with people. If you can actually get face-to-face, you connect and you’re halfway to actually getting their business,” she says. In addition to her role with La Trobe, Cooper also travels as a motivational speaker. She says when companies are considering hiring her, she would prefer they meet her in person rather than sending through press materials or testimonies. She argues that brokers would find that many clients feel the same way. “If I’m going to do business with someone, I prefer that they come and see me. Come and see what I do, and then meet me. It’s different from
hearing a testimonial or reading it on a website. It’s different to say, ‘Why don’t you sit down and have coffee with me and then decide if you want me to be your mortgage broker?’” she says. It was this kind of face-to-face relationship that led Cooper to her role as company ambassador for La Trobe. She says the role grew from her face-toface meetings with company CEO Greg O’Neill. Upon initially meeting while Cooper was still competing in aerial skiing, she says O’Neill had already taken an interest in she and the company forming a partnership. “After spending an hour getting to know each other, he offered to sponsor me to get to my fifth Olympic games. I could see that we had common values,” she says. And after her aerial skiing career came to a conclusion, Cooper says her partnership with La Trobe deepened. “I finished competing and then Greg offered me a job as company ambassador. When they finish competing, most athletes don’t have anything to go to, but Greg offered me a lifeline. It’s been unexpected, but I have an amazing career with La Trobe. The main thing is I get to travel around Australia and connect and communicate with people.” She puts her success in aerial skiing and in business down to a simple precept: loving one’s work. “I was so in love with what I did that I wanted to do it as much as I could. I wanted to put myself in the best position to win, and if that meant doing extra jumps or living overseas or personal sacrifices, it was just easy because I loved it. I didn’t just love winning. I loved all of it,” Cooper says. And Cooper offered brokers the same advice in seeing their businesses prosper. “You have to love what you do. You have to be passionate. If you’re passionate about something, or something keeps you awake at night, you end up doing it a lot and if you do it more than anyone else, you’ll be great at it. You don’t have to be the most talented, but if you do what you love more than anyone else, you’ll be the best.”
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FM recently held its annual Innovate and Refresh management conference at the grand Pullman Bali Legian Nirwana, an upscale beach-front hotel in Bali. Delegates were treated to a range of activities; from the directorâ€™s strategic vision for the business to a keynote address on how to use energy, mindset and the family dynamic to boost performance.
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DIRECTORY AGGREGATOR / WHOLESALE BROKER FAST 02 9233 8222 www.fastgroup.com.au Page 25
FINANCE Semper Capital Pty Ltd 1 800 SEMPER (1 800 736737) www.semper.com.au email@example.com Page 21
Realtor sponsors homeless man
ust before Christmas, Joe Manzaneres, an American RE/MAX realtor, decided to sponsor a homeless man by paying him to hold up a sign in the hope of drumming up business. “No need for your cash! I’m sponsored by Joe Manzanares,” reads the sign held by Chris Rezac, the homeless man in Denver, Colorado. It has replaced his original placard, which read, “I’m cold. I’m homeless. I’m hungry. Spare Anything”. And in what some may view as a classic case of exploitation, Rezac sees a chance to turn his life around. “I’m actually a certified welder, certified forklift operator,” Rezac told Fox News in Denver. “To have the chance to get back on my feet is something that I’ve been begging for for a long time.” Whichever side you fall on in the ethical debate, there is no arguing the level of creativity of such an out-of-the-box marketing initiative. And it’s been effective: at press time more than 4,000 people have shared the original news article with their Facebook followers, 28 have linked to the site through LinkedIn, and 48 have tweeted about it – not to mention the thousands of viewers who tuned in to see the original broadcast. Either way, Rezac is thankful for the help Manzanares has provided. “This is a guaranteed paycheque every day,” Rezac said. “Joe is the nicest person I think I have ever met in my entire life. He’s the only one that ever showed up and said, ‘Hey, instead of just giving you a dollar, how about a job?’” And it doesn’t stop there. Manzaneras has been working with the Homeless Coalition of Denver to hopefully bring his initiative to people in similar situations.
TO HAVE THE CHANCE TO GET BACK ON MY FEET IS SOMETHING THAT I’VE BEEN BEGGING FOR FOR A LONG TIME
IT EVEN HAS A WATERMARK A touch of exaggeration in a CV is one thing, but one Chinese tycoon has taken beefed-up self-promotion to a whole new level. He may be successful, wealthy beyond measure and known for his charity, but evidently modesty isn’t on Chen Guangbiao’s list of attributes. “China earthquake rescue hero”, “China moral leader” and “most influential person in China”, however, are. Guangbiao’s business card, which has gone viral on Twitter, reveals the tycoon is also the country’s “most charismatic philanthropist” and makes the list of China’s top 10 most honourable volunteers. Oh, and did we mention he is also the “most well-known and beloved Chinese role model”? As for his business skills, he is a top advocate for environmental protection and China’s foremost “environmental preservation demolition expert”.
First Title 1300 362 178 www.firsttitle.com.au Page 7
Homeloans Ltd 13 38 39 www.homeloans.com.au Page 13 Liberty Financial 13 11 33 www.liberty.com.au Page 3 MKM Capital 1300 762 151 www.mkmcapital.com.au Page 6 National Australia Bank www.nabbroker.com.au Page 5 Pepper Homeloans 1800 737 737 www.pepperonline.com.au Page 9
Interim Finance 02 9982 2222 www.interimfinance.com.au Page 2 Mango Credit 02 9555 7073 www.mangocredit.com.au Page 1
Resimac 1300 764 447 www.resimac.com.au Page 32
RP Data 1300 734 318 Page 23 Trailerhomes 0417 392 132 Page 26
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