Australian Broker 12.22

NEWS Commissions under scrutiny ASIC to investigate remuneration P4

BEST PRACTICE Motivating your team Six tips to incentivise staff P10

ANALYSIS Inside the FSI What the government’s moves mean for you P12

NOVEMBER 2015 ISSUE 12.22

SPECIAL REPORT The Australian Mortgage Awards The brokers who won big at the AMAs P18

MARKET WRAP Robo-advice shut down?

Calls for an end to automated advice P24

FULL SERVICE The AMA winners of Brokerage of the Year Diversification discuss their client offering P16

CAUGHT ON CAMERA Finsure’s annual conference Finsure heads to Shanghai P28

SMSF DEVELOPMENTS 2

NEWS

ASSOCIATIONS

REGULATION

LENDERS

ASIC plans to examine broker pay P4

Canadian brokers face new disclosure rules P6

A lender says APRA has no need for concern P8

BROKERNEWS.COM.AU

SMSF BORROWING BY THE NUMBERS

$8.3bn

2.7%

Assets held under limited recourse borrowing arrangements (LRBAs) increased to $8.3bn between 2009 and 2013

04

EDITORIAL

SALES & MARKETING

Editor Adam Smith

Sales Manager Simon Kerslake

News Editor Julia Corderoy Journalist Maya Breen

Only 2.7% of SMSFs reported assets held under LRBAs

Production Editors Roslyn Meredith

ART & PRODUCTION

01

Design Manager Daniel Williams Designer Lea Valenzuela Traffic Coordinator Lou Gonzales

Account Manager Rajan Khatak Marketing and Communications Manager Lisa Narroway

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

02

1.68%

LRBAs account for 1.68% of total SMSF assets in 2013

$497m

EDITORIAL ENQUIRIES

03

Adam Smith +61 2 8437 4792 adam.smith@keymedia.com.au

SUBSCRIPTION ENQUIRIES

This is an increase of $497m, or 0.15%, from 2009

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

Source: ATO

ADVERTISING ENQUIRIES

Simon Kerslake +61 2 8437 4786 simon.kerslake@keymedia.com.au Rajan Khatak +61 2 8437 4772 rajan.khatak@keymedia.com.au

A MIXED BAG FOR SMSF The big news of recent weeks has been the government’s response to the Murray Inquiry.

While the government chose to adopt the majority of the FSI’s recommendations, it stopped short of a ban on SMSF lending. This was the only one of 44 recommendations not to gain government approval.

The move was heralded as a win by the FBAA. FBAA chief executive Peter White said there was little evidence of the abuse of SMSF borrowing arrangements.

But not all SMSF news has been greeted so warmly.

New regulations set to be introduced by 1 July 2016 will require accountants to hold an AFS licence in order to give advice on SMSFs. Accounting firm William Buck’s chairman, Nick Hatzistergos, has said this change could spell the end for mass uptake of self-managed super. Hatzistergos said the regulations could make running an SMSF cost-prohibitive.

Key Media Pty Ltd Regional head office, Level 1O, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 www.keymedia.com Offices in Sydney, Auckland, Denver, Toronto, Manila This magazine is printed on paper produced from 1OO% sustainable forestry, grown and managed specifically for the paper pulp industry Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Australian Broker magazine can accept no responsibility for loss. Australian Broker is the most-often read industry publication, according to independent research carried out by the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia in December 2008. The research also found that brokers rate Australian Broker as the best for both news content and feature articles, followed by sister publication MPA. Overall, on all categories, Australian Broker ranks top followed by MPA. The results were based on a sample of 405 respondents who were the subject of telephone interviews.

ASSOCIATION HAPPENINGS 4

DID YOU KNOW?

COMMISSIONS IN THE SPOTLIGHT

$453 Housing costs for owners with a mortgage remained steady in real terms between 2011/12 and 2013/14, at $453 a week

Source: ABS

In its various responses to the Murray Financial System Inquiry, the Turnbull Government has cast a critical eye towards the mortgage broking industry. Among the developments that could impact on brokers is a proposed requirement to disclose ownership structures and, perhaps most alarming, a plan to task ASIC with reviewing remuneration structures.

But industry associations have welcomed the review. MFAA chief executive Siobhan Hayden said it would give the industry a chance to educate the regulator.

“I am not concerned and brokers should not be concerned; I think it is a point of education,” she said.

And FBAA CEO Peter White said the review was unlikely to actually impact on commissions.

“I don’t think the outcome is going to change anything, because of competition and transparency

A rundown of the next fortnight’s events

NOVEMBER

12

Siobhan Hayden

in the marketplace. When we have got this style of competition in the marketplace it is unusual to get an imbalance in commission structures – and they are all pretty transparent under the NCCP,” he said.

WHAT THEY SAID...

Mark Woolnough “For ING Direct, our credit policy is extremely transparent.

It is focused purely on the customer’s ability to repay the loan” P8

Greg Pennells “Conversation with an experienced planner is critical to providing clients with education” P24

DATES TO WATCH

Lachlan Heussler “Whether it’s lending to small businesses, whether it’s lending to consumers, whether it’s lending against assets, all of these types of lending are ripe for disruption” P26

What: Victoria MFAA member focus group meeting Where: Mantra Bell City, Preston The particulars: This meeting invites MFAA members in Victoria to network, problem-solve and share industry best practice with their peers, as well as provide feedback to the association.

NOVEMBER

13

What: FBAA National Conference Where: Sea World The particulars: The industry association will hold its annual conference, ‘The Year of Distinction’, at the Sea World Resort Conference Centre. The event will feature MC Max Walker, motivational speaker Debbie Mayo-Smith and a gangster-themed gala dinner.

NOVEMBER

18

What: MFAA NT PD Day and Christmas party Where: DoubleTree Darwin The particulars: This state-based PD Day will feature presentations by representatives from ME Bank, Pepper, NAB Broker and Herron Todd White, as well as MFAA chief Siobhan Hayden. It will be followed by Christmas drinks.

REGULATORY ROUNDUP 6

WORLD NEWS

COMMON COMPLAINTS

Highlights from the Credit and Investment Ombudsman’s annual report

21,800 More than 21,800 enquiries were received

!

Almost 5,000 complaints were made against financial services providers, an increase of 7.4%

?

24%

24%

Financial hardship complaints have decreased to 24% of all complaints received but still feature as one of the largest sources of complaints

Credit reporting complaints have climbed to 24% of all complaints received

CANADA CANADIAN BROKERS MUST DISCLOSE COMPENSATION DETAILS Australian mortgage brokers aren’t the only ones finding their remuneration under scrutiny. Brokers in British Columbia will be required to reveal compensation details to their clients. The regulation change has been met with great protestation from brokers who argue such disclosure is unnecessary.

Many have pointed to the fact that brokers are not compensated by the borrower as an argument against disclosing to clients the fees paid by lenders.

The province’s regulator, FICOM, provided details on what sort of compensation brokers will soon have to disclose to clients.

“The law in British Columbia requires that brokers describe to the borrower any direct or indirect interests the broker, or a related party, has or may acquire in the transaction,” said Chris Carter, FICOM’s deputy registrar of mortgage brokers. “Improved conflict of interest disclosure will include a requirement that brokers disclose the amount of compensation they receive from lenders, including base compensation, volume bonuses, and other rewards.

“It will also require disclosure of compensation paid to another broker in co-brokering situations.”

40.7% 15.4%

debt purchasers and collectors

5,000

!

Sectors attracting the largest number of complaints were debt purchasers and collectors (40.7%), and residential lenders and mortgage managers (15.4%)

residential lenders and mortgage managers

Source: CIO

ASIC EYES PROPERTY MARKET Regulators have taken a hard look at the property market recently, and are engaging in new efforts to educate consumers.

ASIC has warned borrowers to better educate themselves about the risks inherent in interest-only loans, and has launched two new tools to arm consumers with information.

The tools, available at ASIC’s MoneySmart.gov.au website, are designed to show the costs associated with interest-only mortgages and help people make an informed decision

as to whether an interest-only loan is appropriate for their circumstances.

The regulator has also seen a win in its action against SMSF spruikers. ASIC said the Supreme Court of NSW found Park Trent Properties Group Pty Ltd had been unlawfully carrying on a financial services business for more than five years, providing advice to clients to purchase properties through an SMSF. The decision came following an ASIC investigation into the business.

LENDER UPDATE 8

FAST FACT

LENDER NEWS

A rundown of the fortnight’s policy and price changes

RATES Adelaide Bank Cuts 0.05% in the interest rate for all new loans across its SmartSaver, SmartFit, Investment SmartSaver and Investment SmartFit variable products, effective Friday 16 October.

72.46% Mark Woolnough

APRA ON HIGH ALERT APRA has been particularly active of late, making moves to quell investment demand and warning banks on credit standards. The regulator’s moves have seen banks pull back from the investor market, and higher capital requirements have led to a new round of out-of-cycle rate rises. But while APRA seems to have succeeded in cooling the market, the watchdog is still expressing concern over lending.

Appearing before the Senate Economics Legislation Committee, APRA chairman Wayne Byres has said the regulator will be “very alert” to decaying credit standards as competition for owner-occupier home loans heats up. Byres said APRA would ensure that banks identified as needing stronger lending policies made the requisite changes.

But ING Direct head of third party distribution Mark Woolnough said the regulator had nothing to worry about.

“In terms of APRA, for ING Direct our credit policy is extremely transparent. It is focused purely on the customer’s ability to repay the loan. Our policy and our approach to lending standards and guidelines are based on allowing the customer to achieve owning their own home. Our principals haven’t changed and won’t change throughout the cycle,” he said.

Gateway Credit Union’s pre-tax profit has increased 72.46%.

The mutual’s housing portfolio also increased 7% over the 2015 financial year Source: Gateway

BY THE NUMBERS

ANZ Bank Raises standard variable rate for owner-occupiers by 0.18% pa to 5.56% pa and the residential investment property loan index by 0.18% pa to 5.83% pa, effective 20 November.

Auswide Bank Launches 3.98% pa variable home loan rate (comparison rate of 4.37%) on new owneroccupier principal and interest home loans with an LVR of equal to or less than 80%, and also a discounted rate of 4.19% (comparison rate is 4.57%) for owner-occupier loans over 80% and up to 90% LVR. Better Mortgage Management Decreases variable rates by 0.58% across all ABL Alt Doc product suite and drops rates to as low as 4.35% for Credit Power Pack P&I Investment (comparison rate 4.53%).

Commonwealth Bank Increases standard variable rate by 15bp to 5.60% for owner-occupier home loans and to 5.87% for investment home loans, effective from 20 November 2015.

Macquarie Bank Increases variable home loan rates for all products by 20bps. Effective 20 November, the standard variable rate for owner-occupier loans will rise to 5.70% and the investment variable rate will increase to 5.97% for investment loans.

ME Bank Cuts two-year Flexible Home Loan fixed rate for owner-occupiers by 40 basis points to 3.89% pa (comparison rate 4.71% pa).

11.3% According to AFG’s latest mortgage index, fixed rate home loans have been at their lowest level for more than three years, making up 11.3% of total home loans processed in the quarter to September Source: AFG

NAB Broker Hikes rate on all new and existing variable interest rate home loans by 0.17% pa, effective Thursday 12 November.

St.George Increases variable rate home loans by 15bps, also effective 20 November. The standard variable rate for owner-occupier loans will be increased to 5.69%, while the standard variable rate for investment loans will be increased to 5.94%.

Suncorp Bank Drops special offer standard variable rate to 4.14% (comparison rate 4.15%) for new Home Package Plus owner-occupier loans between $150,000 and $499,000, with a maximum LVR of 80% and principal and interest repayments.

Westpac Increases its headline home loan (owner-occupier) variable rate by 20bp to 5.68% pa (comparison rate 5.82% pa). Also increases its headline residential investment property variable rate by 20bp to 5.95% pa (comparison rate 6.09% pa). Both rate changes are effective 20 November 2015.

10

BEST PRACTICE points-based system. Employees build enough points to then pick a tangible reward that is meaningful to them.

6 WAYS TO INCENTIVISE YOUR STAFF Employee incentives are a great way to boost productivity and morale. Here are six steps to getting incentive programs right INCENTIVES EFFECTIVE Sixty per cent of global employers find financial incentives to be ‘very’ or ‘extremely’ effective in motivating employees, according to a McKinsey Quarterly survey.

When implemented well, financial incentives encourage workers to achieve well-defined business goals, and they serve as a valuable tool for retention.

When executed without strategy, however, they can actually negatively impact on performance by causing employees to take shortcuts or become singularly focused on the incentivised targets.

In order to maximise performance through a well-defined incentive program, Trevor Warder, Hays’ head of reward strategies, recommends that monetary bonuses be used for the following: • Customer service and quality-focused issues • Encouraging collaboration and commitment • Rewarding efficiency • Realising short-term objectives • Recognising past performance No matter what the reward structure, though, it’s critical that employers follow through in a transparent and fair manner.

“Trust is a critical issue here: if people don’t trust your plan or the way you run it, they won’t be happy, no matter how much it pays,” said Warder.

FOR AS little as $100–$150 per employee per year, employers can build recognition programs that deliver tangible business results through more engaged and productive workers. Here are six tips for doing it well:

1

Identify values and desired outcomes

Be clear on the desired outcome of a recognition program. Usually, this will be about encouraging desired behaviours – specifically, repetition of desired behaviours that support company values. It’s common sense that if someone does something good, whatever it is, and they get rewarded, they are likely to repeat that behaviour or action.

“Turning values into recognisable and repeatable behaviours is the ultimate outcome of a recognition program,” says Mark Robinson, executive general manager EMEA & APAC, Power2Motivate.

Hence, from nomination to reward, each step of the recognition process should be built around demonstrating company values.

2

Avoid putting dollar values on recognition

Robinson recommends separating the recognition strategy from remuneration. “We don’t want people to view recognition as remuneration,” he explains. “Remuneration is being paid for doing your job. Recognition is for going above and beyond. We find small and often works.”

However, instead of saying “That is worthy of $150”, which some people might feel short-changed by (‘I thought I would be worth more than that!’), Power2Motivate favours a

3

Provide a choice of rewards

4

The technology exists – use it!

5

Don’t forget to refresh your program

6

Don’t panic – it doesn’t cost a lot

Offering movie tickets or a $50 Myer voucher is great, but it will only motivate some people. “You pigeonhole them – you as an organisation are dictating what will motivate the employee,” says Robinson.

Instead, offer something for everyone.

Power2Motivate offers 35,000 different items.

From practical items like a juicer, a blender or an iPad, through to charitable donations or experiences, Robinson says it’s important to offer a wide range of rewards that tap into all possible motivational drivers of employees.

It’s worth noting that physical items that people use every day also have ‘trophy value’.

That is, every time the person uses the item, they think of the organisation and what they’ve done to deserve it.

“You’ve ordered a new iPad from the fully customised, branded recognition program that ANZ Bank has implemented. It’s then delivered to you at your office. In your mind, that gift is associated with work. I was recently talking to someone who was given a record player from IBM 25 years ago, and he still tells the story of when IBM gave him that record player,” Robinson says.

Peer-to-peer social recognition has now become de rigueur. Ensuring recognition is easily shared among employees takes recognition to the next level. Best practice for this strategy includes intranet updates, regular emails, announcements in staff meetings, and a recognition platform that collectively stores all program data. The benefit of making recognition public and sharable is seeing company values and recognition embedded into the daily lives of employees.

Recognition should also be instant, or as close to the event as possible. Technology can help to automate the process.

Recognition programs tend to be launched in a blaze of excitement, only to fizzle out a short time later. Robinson recommends employers review their program every two to three years.

“You probably won’t be refreshing or changing your values, but you might refresh the branding of the program, to give it a fresh new look,” he says.

“A key to the success of recognition programs is good communication, so if you’ve changed it up, tell people about it.”

Budget control is critical to the success of a recognition strategy; a lack of budget insight is a sign of an antiquated program. Allocating budgets gives oversight and allows ROI to be calculated in a clearer way. According to WorldatWork, the average for recognition spend is 2% plus of payroll, being the benchmark for top-performing companies.

“We recommend $100–150 per employee per year. It’s not a lot – and remember, virtual e-cards and virtual high-fives cost nothing,” Robinson concludes.

12

ANALYSIS

SMSF BORROWING TO STAY PUT In its response to the David Murray Financial System Inquiry, the federal government argued that direct borrowing arrangements through SMSFs should stay. This was the only recommendation, out of the 44 recommendations that David Murray’s FSI put forward, that the government rejected.

The final FSI report recommended that the government should restore the general prohibition on direct borrowing for limited recourse borrowing arrangements (LRBA) by superannuation funds, by removing Section 67A of the Superannuation Industry (Supervision) Act 1993.

According to the Inquiry, there is an emerging trend of superannuation funds using LRBAs to purchase assets. Although the level of borrowing is still relatively small, if direct borrowing by funds continues to grow at high rates, Murray warned it could pose a risk to the financial system over time.

“Borrowing, even with LRBAs, magnifies the gains and losses from fluctuations in the prices of assets held in funds and increases the probability of large losses within a fund. Because of the higher risks associated with limited recourse lending, lenders can charge higher interest rates and frequently require personal guarantees from trustees,” the report stated.

“In a scenario where there has been a significant reduction in the valuation of an asset that was purchased using a loan, trustees are likely to sell other assets of the fund to repay a lender, particularly if a personal guarantee is involved.”

But in its response to the report, the Treasury said the government did not agree with the Inquiry’s recommendation to prohibit limited recourse borrowing arrangements by superannuation funds.

“While the Government notes that there are anecdotal concerns about limited recourse borrowing arrangements, at this time the Government does not consider the data sufficient to justify significant policy intervention,” the response stated.

“The Government will however commission the Council of Financial Regulators and the Australian Taxation Office (ATO) to monitor leverage and risk in the superannuation system and report back to Government after three years.

“This timing allows recent improvements in ATO data collection to wash through the system.

The agencies’ analysis will be used to inform any consideration of whether changes to the borrowing regulations might be appropriate.”

TURNBULL TURNS EYE TO FSI The federal government has released its response to David Murray’s Financial System Inquiry. What does this mean for the mortgage and finance broking industry?

BUILDING TRANSPARENCY and trust in the financial services industry is of key importance to the Turnbull Government, judging by its response to the Financial System Inquiry. In its much-anticipated response to the final report of David Murray’s FSI, which included

44 recommendations on how to strengthen Australia’s financial system, the government agreed with all but one recommendation.

So, as Turnbull sets his sights on transparency, mortgage and finance brokers should buckle themselves in for another year of scrutiny and change.

However, according to industry leaders and experts, the spotlight could be a positive opportunity for the industry.

Narrowing in on vertical integration In its response to Recommendation 40, which states that mortgage brokers

COMMISSION FRENZY

Both banks and non-banks have announced a range of new commission incentives since the beginning of 2014 JANUARY 2014

AUGUST 2014

Westpac increased upfront commission by 10bps

SEPTEMBER 2014

Bankwest announced trail commission increase of between 5bps and 15bps ME Bank increased upfront commission by 5bps JUNE 2014

CBA introduced year one trail commission of 15bps

AMP announced a special offer 20bps commission incentive AUGUST 2014

13

CONNECT WITH US Got a story, suggestion, or just want to find out some more information?

directly by a bank, I think the consumer has the right to be aware and to question the recommendation that is made if it is a product that is promoted by the bank that owns the broking group.

I think it is all about keeping consumers informed,” McKeon said.

But he said it would be interesting to see the limits of the legislation.

“It would be interesting to see if the legislation extends to the broking groups that have banks with a reasonable ownership, but not complete control. Also, where some banks may even supply a line of debt to an aggregator, rather than equity.

“If it is tantamount to control, or equates to control – ie a large shareholder, or if the aggregator has a line of debt or funding in place that doesn’t meet normal commercial lending terms – then I think it should be disclosed. That might be a hard one for a regulator but it is something they should look to address,” he said.

and financial advisers should be required to disclose ownership structures, the Treasury promised to develop legislation to ensure transparency and complete disclosure on vertical integration.

Speaking to Australian Broker, Brett McKeon, managing director of ASX-listed aggregator AFG, said the government was right – there should be legislation governing vertical integration.

“I think it is important for consumers to be aware where beneficial ownership lies. If a broking group is owned

Reviewing remuneration The government also agreed with the Inquiry’s scepticism around remuneration of mortgage brokers, stating that it would address “misalignment of incentives”.

In its response, the Treasury said it planned to address misaligned remuneration incentives by “reducing and improving the disclosure of conflicted remuneration in life insurance, stockbroking and mortgage broking”.

More specifically, the government said it would task ASIC with reviewing remuneration structures in the mortgage broking

FEBRUARY 2014

APRIL 2014

Suncorp increased trail commission from year four onwards by 5bps NAB introduced year one trail commission of 15bps OCTOBER 2014

industry by the end of 2016.

Siobhan Hayden, chief executive of the MFAA, told Australian Broker she welcomed this review as an opportunity for the industry.

“To be honest with you, I welcome the opportunity to work closer with ASIC to inform them about how remuneration works and how it doesn’t negatively impact the choices our brokers make for consumers,” she said.

“I am not concerned, and brokers should not be concerned; I think it is a point of education.”

FBAA chief executive Peter White agreed, adding that the review was unlikely to change anything anyway.

“I don’t think the outcome is going to change anything, because of competition and transparency in the marketplace. When we have got this style of competition in the marketplace it is unusual to get an imbalance in commission structures – and they are all pretty transparent under the NCCP,” he told Australian Broker.

“Where the market evolves to in the coming five to 10 years, and whether or not fee-for-service becomes more prevalent in the marketplace, that is a whole different discussion.

However, from a regulator actually looking to review something, and reviewing commissions, I would expect that to be a normal course of action anyhow.

That is just a part of what the regulator does, and any regulator does, for any industry. It is a matter of process.”

Homeloans increased upfront commissions by 10bps

Mortgage Ezy increased upfront commission to 1.3% APRIL 2014

Suncorp increased upfront commissions by 10bps OCTOBER 2014

14

OPINION

Joseph Trimarchi is a solicitor who specialises in Australian credit reporting law

CHECK YOUR CLIENT’S CREDIT FILE Solicitor Joseph Trimarchi of Joseph Trimarchi & Associates says brokers need to keep regular tabs on their clients’ credit CHECKING THE authenticity of information on your client’s credit file on a regular basis is imperative to their financial wellbeing.

As a finance professional you have a responsibility to your clients to ensure their financial wellbeing is monitored regularly.

Inherent within this concept is ensuring clients are versed in the skills required to maintain creditworthiness.

It comes as no surprise that thousands of Australians have a creditworthiness problem that stems from a black mark on their credit file.

Credit reporting in Australia has evolved considerably in the last two years. We have seen the introduction of a new credit reporting agency, Esperion, which adds the additional burden of having to check with all three credit reporting agencies to insure information recording is accurate and up to date.

Further, the laws surrounding credit reporting have changed significantly.

The Privacy Amendment (Enhancing Privacy Protection) Act 2012 (Cth), which implements reforms to the Privacy Act 1988 (Cth), took effect on 12 March 2014; of significance is the move towards comprehensive credit reporting.

With additional information being added to credit files comes the need for finance professionals to adopt a more proactive approach in dealing with and advising clients. This includes educating clients as to creditworthiness, and assistance by way of guidance in the event a problem on their credit file is discovered.

A possible means of assisting clients is to conduct credit checks every six months so that any black marks appearing on their credit reports may be identified and dealt with immediately.

Under no circumstances should finance be applied for without conducting a credit check.

The reforms to credit reporting have done little to change the reporting format. Credit reporting agencies still rely on credit providers listing information with them, and they assume the information listed is correct. Accordingly, it is up

to the individual to check its accuracy and identify any mistakes.

Identity fraud is sweeping Australia in epidemic proportions. By conducting a credit check on your clients every six months you will be well positioned to pick up fraudulent activity if and when it occurs.

The credit report agencies offer (for a fee) a subscription service that alerts individuals to activity on their credit file. This should be recommended to clients as a means of self-regulation and a means of managing creditworthiness.

By way of good practice, clients should be encouraged to always pay bills on time. To protect themselves from being at risk of identity fraud, they should subscribe to a credit alert activity service, as offered by all credit reporting bureaus, and check their credit reports held by all the major listing agencies, not just one or two of them. If a problem is detected they must act swiftly and with sufficient

A possible means of assisting clients is to conduct credit checks every six months so that any black marks appearing on their credit reports may be identified and dealt with immediately record so that the problem may be rectified.

Finance professionals should avoid falling into the trap of thinking that all adverse listings must be removed. The smaller the default the less impact it has on creditworthiness; accordingly, it would be worthwhile to check with lenders prior to the lodgement of an application for finance in order to determine the weight placed on the listing.

Preventative measures are the key to financial wellbeing and creditworthiness. If a problem occurs that cannot be resolved by the client, then finance professionals should refer their clients to credit repair professionals who have an understanding of the system and laws surrounding credit reporting, and who charge all of their fees on a no-win no-fee basis.

GOVERNMENT ON BOARD WITH CREDIT REPORTING The government recently released its response to the Murray Financial System Inquiry, and expressed its support for measures to expand data sharing under the new comprehensive credit reporting regime. The Australian Retail Credit Association (ARCA) welcomed the move.

“ARCA is pleased that government has reaffirmed the position of the Financial System Inquiry Final Report which supports industry efforts to expand voluntary credit data sharing under the comprehensive credit reporting regime. More complete information sharing increases the availability and affordability of credit to borrowers and allows lenders to make better credit risk decisions, factors which underpin a strong economy,” ARCA chief executive Damian Paull said.

“In addition, the government has said that it supports the industry approach to credit data sharing. We also acknowledge that the government is keeping a watchful eye and will consider legislating mandatory participation if industry fails to act.”

Paull said ARCA had been instrumental in developing the industry approach to comprehensive credit reporting.

“We are encouraged that government recognises and supports industry efforts to expand data sharing. One of ARCA’s key achievements in recent years has been to facilitate the development of this system, known as the Principles of Reciprocity and Data Exchange [PRDE]. The PRDE will enable comprehensive credit reporting to fully function in Australia,” he said.

16

COVER CONSUMERS OPEN TO CHANGE

MPA’s Consumers on Brokers survey found borrowers are open to diversified offerings

84%

A TEAM OF EXPERTS The 500 Group’s Martin Vidakovic explains how the brokerage has built a full-service offering

84% would feel confident using their broker for a non-mortgage related product or service

25% 25% of these clients said they would consider financial planning services from a broker

20% 20% said they would consider insurance

19% 19% said they would consider vehicle loans

19% 19% said they would consider business loans Source: MPA

DIVERSIFICATION IS one of those industry buzzwords that has been tossed about so often it can lose all meaning. Brokers are told they need to add new revenue streams and service offerings to their business, but they are rarely told how or why. For those looking to expand to a full-service offering, however, it would be hard to go wrong by emulating the success of this year’s AMA winner of the Brokerage of the Year – Diversification award, The 500 Group.

The 500 Group’s Martin Vidakovic said the decision to diversify was primarily driven by the brokerage’s client base.

“I think the client dictates the market. We were dealing with a lot of home loan type clients but a lot of self-employed clients as well. So for us to have commercial lending was a natural progression. What we found is it had a massive effect, because not only were we

“Our aim was always to be the masters of our trade, so we get really top-quality specialists in each area, and we don’t really cross areas. We just have go-to people within the group, but the client gets to build the relationship within the group. Then whatever their needs are, we can direct them to the right specialist. We find that’s what they want. They want to come to one place that can meet all their needs,” Vidakovic said.

The journey to diversification The 500 Group’s service offering didn’t come into being overnight. Vidakovic said he started as a purely residential broker but soon saw the need for expanding into commercial finance.

“I thought that the business clients weren’t really being looked after by the banks. They felt very

“Clients like to come to one place and know they’re taken care of. Maybe they just don’t want to be disjointed into different areas for different solutions” looking at more business loans, but that filtered down to doing home loans not only for those business clients but also the employees of those clients,” he said.

Clients are increasingly coming to finance professionals with the expectation of having all their financial needs met in one place, Vidakovic said.

“I think it’s a time thing. I think the client demands the market. We saw that as an opportunity. Clients like to come to one place and know they’re taken care of. Maybe they just don’t want to be disjointed into different areas for different solutions.”

The 500 Group believes the best way to accomplish this is with a team of experts rather than a simple spot and refer model.

“We always had the image of the client sitting at the table with like four experts in different areas listening to the conversation and then delivering on what was required,” Vidakovic said.

Expertise is key to success in diversification, he said.

With this in mind, The 500 Group has added new service offerings by bringing in top experts in different fields of finance.

threatened and very scared to shop anywhere else or to see what was out there, because they felt if their business banker didn’t support them they would be very vulnerable,” he said.

With this in mind, he said the business took on commercial finance to help advocate for its business clients.

“What we’ve done is empower the client to have a finance professional on their side to best represent their business to the banks. We come in and write 40- or 50- page reports, do all the analysis work and then make the business banker’s role easier as well in regard to processing the opportunity,” he said.

With the disparity in customer satisfaction between banks’ retail and business customers, Vidakovic said business brokers could also serve as a valuable asset for banks.

“I think the way we position it is working together as a team. The client still has to feel that not only the product and opportunity is a match, but so is the business banker. That relationship is built by us,” he said.

17

Martin Vidakovic

The 500 Group

Vidakovic said the company only added commercial broking to its offering in 2012, but that it had already grown to 60% of The 500 Group’s business. Around the same time, the company added financial advice.

“We brought in financial planning as well with Wealth 500, so we can take care of insurance needs and superannuation needs,” he said. “It gives us great diversification with The 500 Group as an asset overall that then intertwines into each other.”

Six months ago, the company rounded out its offering with Lease 500.

“We got, once again, one of the best leasing experts within the banks to come across. She’s already shooting the lights out, so we’re expecting big things next year.”

18

SPECIAL REPORT

19

THE AUSTRALIAN MORTGAGE AWARDS

ON THE NIGHT The Australian Mortgage Awards saw MC duties handled by sports commentating legend Andrew Voss. The night also featured a surprise performance

by Japanese taiko ensemble Taikoz, and musical interludes by singer Tash Steger.

The industry’s premier awards event has lauded mortgage broking’s finest performers THE 14TH annual AMAs, held recently at The Star Sydney, have awarded the industry’s finest brokers, brokerages, lenders and service providers.

The event, which was sponsored by Westpac for the eighth consecutive year, was emceed by sports commentator Andrew Voss and honoured brokers and brokerages across a variety of categories. The 670-strong crowd were

also treated to a surprise performance

by Japanese taiko ensemble Taikoz at the black-tie event.

A full run-down of all the evening’s winners can be seen in MPA 15.12, hitting desks later this month. In the meantime, Australian Broker offers a look at some of the brokers who won big at this year’s Australian Mortgage Awards.

CLICK LOANS QUALITY YOUNG GUN OF THE YEAR – FRANCHISE

CITIBANK QUALITY YOUNG GUN OF THE YEAR – INDEPENDENT

MARSHALL CONDON MORTGAGE CHOICE SOUTH YARRA

RACHELLE EYNDHOVEN SPHERE FINANCE

“It’s a great result not only for me personally, but for the office and the team I’ve got back there. I’ve got a great team, and without them I probably wouldn’t be here today.”

“Starting a business, probably the biggest challenge is managing a staff. But it’s been great, and I’m very proud of the people I have working for me.”

SPECIAL REPORT 20

BROKER OF THE YEAR – FINANCE

PEPPER BROKER OF THE YEAR – NON-CONFORMING

GEORGE KARAM BYBLOS FINANCE

GIULIO AVIAN FUNDSNATIONAL

“We’ve got a very core service proposition. We know exactly what our client looks like as soon as he walks into the office.

If they’ve got good character and good credibility, we fight for the deal.”

“In many ways, the process of selling a non-conforming or specialised product can be considerably more complicated than a normal product.

Sometimes you’re making an enormous impact on an individual, and assisting someone who doesn’t meet general lending criteria of a bank.”

ALI GROUP BROKER OF THE YEAR – INSURANCE

BROKER OF THE YEAR – FRANCHISE

PEITA DAVIES CHOICE HOME LOANS BLUE MOUNTAINS

JOSH BARTLETT LOAN MARKET BAYSIDE

“To win an award outside of what your core business is and to know that you’re protecting your clients is just awesome.”

“Since joining the group five years ago, I’ve built a business based on real estate referral relationships, and Loan Market has supported this model wholeheartedly. I now have 89 referral partnerships and my lead management app, eBroker, has allowed me to service each and every one of them at the highest level.”

21

FBAA BROKER OF THE YEAR – INDEPENDENT

COMMONWEALTH BANK BROKER OF THE YEAR – PRODUCTIVITY

JUSTIN DOOBOV INTELLIGENT FINANCE

DAMIEN ROYLANCE ENTOURAGE FINANCE

“All our business comes from referral and repeat business from existing clients. We don’t spend any money on advertising, so it’s existing clients being happy with our service [and] the advice that we offer.”

“We take great pride in making sure we get the deal pretty much approved before we submit it.”

COMMONWEALTH BANK AUSTRALIAN YOUNG GUN OF THE YEAR

WESTPAC WESTPACAUSTRALIAN AUSTRALIANBROKER BROKEROF OFTHE THEYEAR YEAR

RACHELLE EYNDHOVEN SPHERE FINANCE

JUSTIN DOOBOV INTELLIGENT FINANCE

“I’m absolutely ecstatic [to win the AMA]. It’s great.”

“I love the AMA awards! To add another trophy to my cabinet is fantastic. It’s great to get recognition again from the industry for being the top broker in the country.”

22

MARKET WRAP MARKET TALK

ARE YOUR CLIENTS’ TENANTS BREAKING BAD? Signs tenants could be using a property as a drug lab

BY THEIR very nature drug labs are designed to be clandestine, but one landlord insurance provider believes there are still some things that can give away whether a property is being used for something illegal.

According to Terri Scheer Insurance, there are a handful of relatively obvious signs that landlords and property managers should keep an eye out for.

“There are definitely some obvious things you should take note of, and if you’re doing regular inspections you’re likely to notice them,” said Terri Scheer Insurance distribution manager Belinda Butler.

“They can be sort of major differences or they could be something as small as tenants refusing to unlock a door and allow rooms to be inspected,” Butler said.

Other things people should look for include unauthorised modifications, such as the rewiring of meter boards or holes in walls or ceilings used to run cables or hoses.

Visible damage such as paintwork or carpet faded from intense light sources can point to a hydroponic set-up, as can water damage.

Landlords should also be wary of tenants who try to pay rent months in advance and those who try to avoid background checks, as well as those who come and go from the property at strange hours.

The presence of items such as glass flasks, beakers, rubber tubing, gas cylinders, chemical containers,

drums, drain cleaner, garden fertiliser, and cough, cold or allergy medicine can also be an indicator of drug manufacturing.

While the signs can be obvious, Butler said issues such as drug labs are often another reason why landlords should employ a property manager.

“If someone’s refusing to allow an inspection to take place, or a certain room to be inspected, a property manager is usually more familiar with the legislation that covers rental inspections and is probably going to be better equipped to carry out a full and proper inspection,” she said.

“Property managers are also usually well across what type of insurance a landlord should have and what it covers, and if you’ve got a drug lab in your property then you definitely want the right insurance.”

Butler said reclaiming a house after it has been used as a drug lab is not as simple as just removing the offending tenants and their set-up.

“These operations can cause extensive damage and we’ve had insurance claims that have run into tens of thousands of dollars. Things like making sure the house is clean and safe to live in can get really expensive.

“It can sometimes take a while for the process to take place, so owners can easily be in for a long period where they’re not going to be able to rent the house out and make any income from it.”

PROPERTY PRICE GROWTH TO SLOW IN 2016 2016 will see Australia’s property prices grow at their slowest rate since 2012, according to research released today.

According to SQM Research’s 2016 Housing Boom and Bust Report, the average capital city dwelling price is predicted to rise by between 3% and 8% during 2016.

That level is below the 9.8% capital growth experienced by capital city dwellings in the 12 months to the end of June 2015, with the predicted slowdown to be driven by a change in the fortunes of the Sydney property market.

APRA’s actions on investor lending and the slowing national economy will also play a part.

While there will be no nationwide price correction during 2016, SQM Research managing director Louis Christopher says there are still some dangers present.

“One of the key risks to the housing market over the medium to long term is the looming threat of global deflation and this is quite a danger to our markets here given the level of debt in the housing market right now, which we note has risen again against incomes over the course of 2014/2015 to be at all-time highs,” Christopher said.

“This threat became all too apparent [last] week when Westpac lifted their variable home loan lending rate. In a global deflationary environment the risk premiums banks would require on their lending book would most likely skyrocket due to the greater threat of defaults and falling asset prices,” he said.

“For 2016 we believe the RBA has some ammunition to offset this looming risk however we are concerned of their ability to handle the issue over the medium to long term.”

SQM’S PREDICTIONS

Capital growth for 2016 Darwin

Brisbane

Perth

Sydney Adelaide

Canberra Melbourne

Sydney: 4–9% Melbourne: 8–13% Brisbane: 5–8% Hobart: 4–7%

Canberra: 2–5% Adelaide: 2–5% Perth: -7% Darwin: -7%

Hobart Source: SQM Research

23

STORM BREWING?

Major bank home loan satisfaction prior to the recent round of rate hikes

MARKET TALK

82%

80.8%

78.9%

SYDNEY HOUSING COOLS New figures continue to reinforce a cooling property market in Sydney A PROMINENT economist believes

77.5% Source: Roy Morgan Research

PICK LAND OVER LOCATION Location, location, location is a phrase often used by people to justify the purchase of a property, but one professional believes it often clouds a buyer’s judgment.

John Fitzgerald, CEO of property investment firm Custodian, believes too many people only have location at the forefront of their minds when looking at properties to purchase.

“Location is important, but it shouldn’t be the thing that makes you choose where to buy,” Fitzgerald said.

“People get hung up on it and that’s how they end up letting their emotions get the better of them, and buying due to emotion isn’t a smart thing to do,” he said.

Fitzgerald has three things he takes into consideration when buying, and location comes third on the list.

“What people should be considering is land content, timing and then location,” he said. “If you consider those three factors you’re likely to buy a property that is going to be a sound investment.”

Land content comes first for Fitzgerald as that’s where he believes the best returns come from.

“It’s the land that’s important; land appreciates in value while buildings depreciate.

“If you buy an inner-city apartment for $1m, then 90% of that value is for the building, but if you buy a house in the suburbs, then 40% to 50% of the price is in the land.

“We were buying in Sydney and the land was probably $400 per square metre, and it’s tripled in price to $1,200 per square metre now. You’re not going to see an apartment give you similar returns.”

Timing is simply understanding market cycles, which Fitzgerald says run in roughly 10-year periods.

Currently Sydney is nearing the end of its cycle, which is why Fitzgerald is targeting Brisbane and Melbourne right now.

Fitzgerald’s idea of good may be a little different to other people’s.

“A lot of people think they need to be close to the city, but that’s just their emotion taking over. You need to take a step back and look for other things.

“I use a rough template to find good locations. I’m looking for high population growth, near train stations, shops and good job opportunities.”

a new report confirms Sydney’s house price boom has come to an end.

According to the latest Domain House Price Growth report, Sydney’s median house price grew by only 3.2% over the September quarter, the slowest rate of quarterly growth since March 2014.

According to the report, the median price for a house in Sydney is $1,032,433, while the median unit price is now $673,182 after it grew at just 1.5% over the quarter – well down on the 7.4% growth seen during the June quarter.

“It’s still a good result for owners in Sydney, but I think it’s clear now that the boom in price growth we’ve been seeing is receding,” Domain Group senior economist Andrew Wilson said.

“House price growth over the September quarter was well below what we saw in June. It’s actually less than half the June quarter growth and it looks like growth will be lower again over the December quarter,” Wilson said.

There have been a number of signs recently pointing to a slowdown in price growth, according to Wilson.

“We’ve seen a sharp decline in auction clearance rates recently which is a pretty good forward indicator, and also we’re starting to see interest rate increases that will offset any decreases by the RBA,” he said.

“Look, prices will continue to grow and it’s quite rational to say they will be higher this time next year, but it’s not going to be at the same level we’ve seen in recent years.

“A lot of the energy that came from the February and May rate cuts has now washed through the market and people simply don’t have the capacity to keep buying.”

In Melbourne, a similar slowing of capital growth rates appears to be occurring.

The Melbourne median house price increased by 2.8% over the September quarter, pushing the median house price above $700,000 for the first time, but that level of growth is well below the 6% recorded over the June quarter.

While investors can no longer expect the same strong levels of capital growth they have been experiencing in Sydney and Melbourne, Wilson said there was also some worry for Brisbane, which has been touted by many as the next investment hotspot.

“Brisbane has been disappointing; it was predicted to grow just behind Melbourne but that’s just not happening.

“It’s doing nothing like it was predicted. Growth looks like it could be below last year’s level and it’s just really going sideways with no direction or momentum.”

24

MARKET WRAP FINANCIAL SERVICES

WEALTH FIRM WANTS ROBO-ADVICE OUTLAWED The head of a wealth management company is calling for a ban on automated advice models The managing director of a financial advice firm has slammed the emerging concept of robo-advice, and has called on ASIC to ban the practice.

Wealth Today managing director Greg Pennells took aim at robo-advice, calling the concept “outrageous” and saying ASIC should disallow the practice.

“It amuses me that financial planners operating at major banks continue to get themselves into trouble and give our industry a bad name.Their response is to push the barrow for robo-advice and its one-size-fits-all approach to no-advice financial planning. It’s outrageous,” Pennells said.

Pennells said the idea of a “one-size-fitsall DIY approach” to financial planning was opposed to the core concept of Wealth Today and its network of advisers.

“Every family and their circumstances are as unique as their thumbprints, so to suggest that a one-size-fits-all advice model will be beneficial to everyone and work to achieve each individual’s financial challenges and goals is ridiculous,” he said.

Pennells said it would be impossible for everyday investors to undestand the myriad financial instruments available in the marketplace.

“To leave them to their own devices when it comes to something as crucial as planning and securing their financial futures is ludicrous,” he said.

“Conversation with an experienced planner is critical to providing clients with education. It expands their understanding, and in most cases their awareness, of a myriad of aspects of finance. Just by having a preliminary conversation, an experienced planner can cast light on needs that a client hadn’t even considered.

By contrast, the robo-advice advocates are saying ‘Do it yourself, mate’. That’s not service at all. It’s a complete cop-out.

“I hope ASIC do the right thing and outlaw this ridiculous new ‘innovation’ in financial planning. It threatens to undo all of the work they have done over the past decade to regulate and change the industry for the better,” Pennells said.

NAB UNDERTAKES ADVICE REMEDIATION PROGRAM NAB will be contacting customers who may have received non-compliant advice since 2009, ASIC has said. The regulator said affected clients would have their files reviewed to determine if they should receive compensation.

“NAB will also provide affected customers with financial assistance to seek professional independent advice where appropriate,” ASIC said in a release.

ASIC worked with the bank to develop their Financial Advice Customer Response Initiative, which is a large-scale review and remediation program for customers affected by non-compliant advice. The initiative will be subject to scrutiny by an external consultant, which will report to ASIC on its findings.

The regulator acknowledged NAB’s cooperation in the matter.

WORKING HARD

Employees’ work habits and preferences

62%

of employees believe they’re more productive working outside the office

61%

of employees prefer working the equivalent of an eight-hour workday broken up over a longer day, rather than in a single 9-to-5 block

57%

of employees work remotely on personal or sick days, and 44% of employees worked on their last vacation Source: Softchoice

MEN RISKIER INVESTORS THAN WOMEN New data suggests that men are more risk tolerant investors than women, but the company behind the data has urged advisers to objectively measure risk tolerance for all clients.

Data from FinaMetrica shows the average risk tolerance level for males is 53.44, compared to 46.82 for females. Within couples the tolerance gap is similar. Men score 52.75 for risk tolerance, while women score 47.26.

But FinaMetrica co-founder Paul Resnik has warned advisers to objectively test the risk tolerance of all investors rather than superimposing their own preferences.

“It’s also very important that financial advisers don’t superimpose their own risk preferences onto clients, whether male or female, and there is a risk this will happen if advisers don’t scientifically test a client’s risk tolerance in an objective way,” he said.

Resnik suggested that the discrepancy in risk tolerance could even point to evolutionary differences.

“Part of the reason we believe for males’ greater propensity to take financial risk could be buried in Darwin’s views of successful and adaptive behaviour. Nature enabled aggressive males to flourish. They were successful hunters and gatherers and the more aggressive males flourished while the passive males never got to eat. So, over time, this has transferred over the males’ behaviour generally, including their appetite for financial risk.”

But Resnik said the gap in risk appetite isn’t as great as some might think.

“Both men and women on average sit in the same risk group, so what we are seeing are slight differences. Individually, however, males and females may vary widely in their risk tolerance levels. Either way, before they make financial decisions, each person should have their risk tolerance objectively measured, which is possible through scientific testing. Ultimately, how a person feels about financial risk will affect which type of investments suit their needs and those with which they can sleep well at night.”

THE CHOICE IS YOURS WITH

MAGAZINE The only independent magazine dedicated to mortgage industry news, opinion and analysis

WEBSITE Breaking news, in-depth profiles, features, online forum and Australian Broker TV

ENEWSLETTER Daily news service delivered straight to your inbox every morning

FOR MORE INFORMATION, PLEASE EMAIL EDITOR@BROKERNEWS.COM.AU

26

SPOTLIGHT VIDEO SPOTLIGHT

ONE YEAR ON

VERTICAL INTEGRATION FACES INVESTIGATION What a difference a year makes ... or not.

Australian Broker reflects on the punditry, news and trends that made headlines 12 months ago

27 OCTOBER 2014

ASIC issues a warning about vertical integration in financial planning in its strategic outlook for 2014/15 27 MARCH 2015

The Customer Owned Banking Association (COBA) says brokers need to be more transparent about their aggregator’s or franchisor’s ownership structure 21 OCTOBER 2015

The Turnbull Government says it will draft legislation requiring brokers and financial advisers to disclose ownership structures

9 DECEMBER 2014

Non-major lenders say the Murray Inquiry should do more to address vertical integration and disclosure of bank ownership

16 JULY 2015

COBA again takes aim at brokers, saying the industry falls short when it comes to disclosing vertical integration

Lachlan Heussler

SME MARKET RIPE FOR DISRUPTION Online lending has the potential to be a major disruptor in the financial services industry. As APRA imposes new capital rules on banks, challenger and non-traditional lenders are seeing an opportunity to take market share. Lachlan Heussler, the managing director of new online lender Spotcap, recently told Australian Broker TV that small business lending is an area ripe for disruption. But Heussler said it was not the only area in which online lenders were likely to have an impact.

“Whether it’s lending to small businesses, whether it’s lending to consumers, whether it’s lending against assets, all of these types of lending are ripe for disruption because the process traditionally has been cumbersome, time-consuming and often doesn’t come with the right outcome for the client,” he said.

Heussler said this was where companies like his could concentrate on making the user experience better for the client.

“We provide unsecured lines of credit to small businesses. We try to make it easy.

We’ve got an application process that takes five to seven minutes for the small business or the broker to complete, and we usually have a decision back to them within eight to 24 hours,” he said.

Heussler said the most convenient part of the process for consumers and brokers was the lack of paperwork.

“Literally, the entire application process happens online; no signatures, no running around to get things you shouldn’t have to.

Basically, it allows us to collect data in the most efficient way possible and use that data to our and the client’s advantage in terms of being able to score the credit rapidly,” he said.

27

FORUM

BROKER PAY IN THE SPOTLIGHT ASIC will be examining broker commissions at the government’s behest

FOLLOWING THE findings of the Murray Inquiry, the government has tasked ASIC with reviewing remuneration structures in the mortgage broking industry by the end of 2016. The government said it planned to address misaligned remuneration incentives by “reducing and improving the disclosure of conflicted remuneration in life insurance, stockbroking and mortgage broking”.

Mountains Broker said any ban on commissions would see consumers bearing its effects.

“Banning commissions and going to a fee for service will only cost the consumers more in the long run and further line the already overflowing pockets of the banks.”

SEQ Broker said bumps in commission weren’t enough to entice brokers to suggest a lender.

“Every now and then I see a lender try to entice us brokers into giving clients recommendations of that lender based on a tiny commission bump. To me the commission bump is far less important than the timely processing of a loan and the

correct product structure to meet the client’s needs. If you don’t get this you could likely end up with a claw. I don’t believe commissions change anything.”

Papery said an optimistic view of the investigation would be that it would show brokers are actually underpaid.

“This might reveal that commissions are actually not keeping up with the broker’s workload to meet the already cumbersome compliance requirements, especially around the issues of actual affordability vs minimum servicing test and the unfairness of a two-year clawback.

Oh, wait. Now I’m dreaming!”

And Bottom Line said a ban on commissions would only end up benefiting the big banks.

“Commissions are paid at a lower rate than they were pre 2007. Trail in 2007 was 0.25%. In 2015 [it was] 0.15%. Fee-for-service would see 80% of the market drop out and a return to the big 4 having total control of the market. The high interest rates of yesteryear (late 80’s) will again have the potential to return.”

BEST COMMENT ONLINE DISCLOSURE GETTING OUT OF HAND The Turnbull Government has backed a recommendation by the Murray Inquiry for brokers to disclose ownership structures. The government said it would develop legislation to ensure disclosure occurred. One commenter said disclosure was beginning to miss the point.

“This is ridiculous! I’m not owned by any bank!

My aggregator has financial associations with lenders, but I don’t know if that’s as debt or equity, and whether the bank has any right to influence the management and business decisions made by the aggregator (which don’t flow through to me as a lowly broker anyway). If a lender is offering a preferential product or pricing to one group of brokers this needs to be disclosed, and let’s not confuse this with white label products on offer from the likes of Advantedge like FAST-Lend, PLAN-Lend and others. And what about lenders that aren’t on your aggregator’s panel? Do we need to disclose why they aren’t? Will we have to disclose the detail as to why certain lenders aren’t recommended because of accreditation and volume hurdles? This is getting out of control and away from what we do and why we do it. Does a client bloody well care after or even during the event anyway? They have their not unsuitable finance which has met their goals and objectives, and most likely got a great deal from the broker as well as ongoing post-settlement service and a long-term relationship irrespective of the lender.”

Papery on 21/10/2015 at 3:17PM SUPREME COURT PUNISHES SPRUIKER The Supreme Court of NSW recently found that Park Trent Properties Group had been unlawfully carrying on a financial services business for over five years.

“It makes me laugh that our business worries about missing one signature on a credit guide, concerned about the implications if audited. And yet, there are so many people doing dodgy deals who when caught are told, ‘You cannot be a broker for one or two years.’

Just a joke.”

Honest Broker on 20/10/2015 at 10:49AM AUSTRALIAN BROKER POLL

Are non-bank lenders a viable alternative to the banks in an increasingly changing and complex market?

56% 16% Yes

No

28% Undecided

28

PEOPLE CAUGHT ON CAMERA Finsure recently held its annual conference in Shanghai. The aggregator celebrated hitting a milestone of 800 brokers, along with being named BRW’s second-fastest growing company in the magazine’s 100 Fast Starters.

Photography by Simon Kerslake

29

30

PEOPLE HOT SEAT

DOMINIQUE BERGEL-GRANT Dominique Bergel-Grant of Leapfrog Financial on the biggest lesson she has learnt in her career as a mortgage broker, what three people (dead or alive) she would love to have dinner with, and why empowering women financially is so important to her You are particularly passionate about empowering women. Why is financial literacy for women so important?

My mother was a doctor and very professionally capable; however, when it came to money A and her divorce there was no one for her to turn to for advice or education. Thirty years down the track many women still feel this way – intimidated by the male-dominated sales world of financial services. Time after time I meet with clients who I ask why they haven’t taken the step to get help earlier, and the answer is the same.

Q

As a mortgage broker turned financial planner, do you think it is important to be able to offer both services?

I believe it is an inevitable transition – the merger of the financial planner who specialises A in clients in the 30–45-year-old age bracket and mortgage broking. After all, how is it possible to provide a client financial planning advice without truly understanding their biggest cash flow expense, their mortgage? The ability to offer both services, or have a key business partner that can complement your skills, is vital to the longevity of any mortgage broking business.

Q

What is the most satisfying client experience you’ve had?

It is actually one where I had to tell a client that they could no A longer afford the home that they lived in. I was with them at their side as they sold the property, and then still there as I put them back on financial track. Five years down the track, they are now in a stronger financial position than they were and are now on a clear and comfortable path to retirement. A fantastic benefit of the combined skills of financial planning and mortgage broking brought together.

Q

If you could have dinner with any three people (dead or alive) who would they be and why?

Margaret Thatcher – whether you love or hate her she A was a pioneer. She was a woman who stood her ground and was never afraid to speak her mind.

Lisa Messenger – an amazing inspiration to so many thought leaders and entrepreneurs. She has bucked trends, set trends, yet at the same time shares her vulnerability. After all, no one is perfect.

Steve Jobs – he revolutionised the world we live in today, had a pure and very driven focus, and was not afraid to be unconventional. Most of all I would love to hear what he envisioned for the future.

Q

If you could be PM for a day, what would be your first priority?

What a question! The list would be very, very long, A but it is the human side to us all that really matters, and getting rid of inequality is important to me. We live in an amazing country and I do not think we stop to appreciate this sometimes. It is for this reason that the law today not allowing gay marriage simply does not make sense. This is the change I would make.

Q