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June 2012

“Through all, Australian Broker has helped to shape and inform an industry through a decade of change”

After close to a decade of providing the industry’s best quality news, opinion and analyses – with a touch of attitude – Australian Broker has reached a 200-issue milestone.

I was fortunate enough to be news editor when Australian Broker was in its infancy – almost 200 issues ago –at a time when the publication went fortnightly for the first time.

Until then, the paper had been in pilot mode; an experimental dive into a new unproven news format, designed to appeal in a different way to both industry readers and advertisers.

Built to complement and compete with its formidable Key Media stable mate, MPA magazine, Australian Broker quickly became the industry’s favourite page-turner.

At the time, the mortgage and finance industry was a very different place, almost unrecognisable when compared with today’s consolidated landscape. It was populated by ambitious entrepreneurial non-banks and mortgage managers, many of whom have since disappeared or been swallowed up by a larger contingent of voraciously busy and well-remunerated mortgage brokers, all eager to partake of the heady appetite for cheap credit, and a larger number of banks, drunk on the boom and more than happy to lend.

Australian Broker’s first issue cover story is a case in point. The story featured AFG’s Kevin Matthews calling on the government to bring in national uniform legislation to regulate brokers, to counter rogues who were tarnishing a fast-professionalising industry. With eight years of water under the bridge, brokers are of course now sitting within that very same regulatory regime, and would remember many other things that have transpired over that period – such as the GFC – that have dramatically changed the way we think about our industry.

It was in those heady early years that Australian Broker found its place. Until then, brokers had no true dedicated source of industry-specific news and analysis. Australian Broker filled that gap. Early on, it become a staple of the industry’s brokers, aggregators, and lenders, and in contrast to competing monthly feature-based magazines, it blazed a unique trail for news – with a touch of entertainment – executing a 200-issue chain of unbroken

success in providing timely, controversial, thought-provoking and influential coverage.

Much like your businesses, Australian Broker has had to rationalise, become more efficient, focus on its strengths, and experiment, expand and innovate in new areas. For example, Key Media has only recently launched two brand new titles in related financial services spaces – Wealth Professional Online, and Insurance Business Online – a move to diversify within the ever-converging worlds of financial services advice and service. We have also moved more online, pioneering cutting-edge multimedia content to meet the technological age. Through all, Australian Broker has helped to shape and inform an industry through a decade of change.

In this special celebratory supplement, we commemorate an achievement unmatched by any other publication in the mortgage and finance industry. Australian Broker’s 200th issue will take loyal readers on a breaking news history tour, giving the industry a taste of the news stories and headlines that tantalised, titillated and provoked more than any other magazine or newspaper operating in the same space – all with the benefit of 20/20 hindsight. Will you remember where you were when these stories happened? No doubt many of our loyal broker readers will.

I would like to thank both readers and advertisers on behalf of Australian Broker and the Key Media team for supporting the publication through 200 issues. It is your participation, feedback and character that has filled our pages with the colour you will see inside.

Ben Abbott, EditorAustralian Broker and Australian Broker Online

Ben Abbott

One for the history books...

For a tour through the best of Australian Broker over the years, turn to page 25.

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The founder of a new political party aimed at reforming the major banks has called on brokers to give it their allegiance.

Adrian Bradley, the former head of media for Bankwest and now founder of the Bank Reform Party, said brokers’ interests naturally

The party is seeking to level the playing field between brokers and consumers and the major banks.

“That one-sided relationship is wrong. The balance needs to be redressed so brokers can get about with doing business. Brokers have a bigger role to play in channelling business out to a variety of lenders and creating competition,” he said.

The newly-formed party is eyeing seats in the Senate at the next Federal election, where it could serve to stimulate review of the sector. While the party was still in the process of forming its constitution and platform, the key thrust will be better oversight, increased price transparency, the promotion of competition and opening accessible funding to smaller lenders.

Bradley also proposes a review of “the nexus” between banks and administrators, receivers, valuers and lawyers, as well as placing a potential cap on executive pay and bonuses.

“Any oligarchy is good for the oligarchy, but not good for competition and consumers. There’s been a significant market consolidation and reduction of competition, and we don’t think that’s good. We’re looking for more support for non-bank lenders,” he said.

Bradley has vowed the party would not seek to “distort markets” and was not in the business of bank bashing, but instead wanted to promote healthy and profitable banks.

ISSUE 9.10

June 2012

‘Disgraceful’ decisionFBAA not happy with MFAA tick

Page 2

Three into oneLess is more for disclosure docs

Page 4

Consolidation agendaSpruikers just want aggregator sales

Page 8

Inside this issuenMB Conference 12Hamilton Island news roundupCoalface 20Development proves lucrativeForum 21Brokers on disclosure docsViewpoint 22More consolidation to comeSPECIAL: 200th Issue 25

A trip down AB memory laneMarket talk 36Broker goodies? The budgetCaught on camera 38NMB parties like it’s 1999

A new party bent on reforming the banking ‘oligarchy’ claims it’s a natural fit for brokers

New political party calls for broker support

align with those of the burgeoning political party.

He pointed to brokers’ frustration with the amount of regulation placed upon the mortgage broking sector, while the same standards often do not apply to banks.

“The onus has been placed on brokers to operate within these regulations, and the banks don’t seem to have the same onus. The relationship is so one-sided, and that’s the relationship the banks have with every Australian,” Bradley said.

Adrian Bradley

Page 18 cont.

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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.

‘Disgraceful’ ACCC decision deridedFBAA president Peter White has blasted the “disgraceful” ACCC decision allowing the enforcement of mandatory MFAA membership for some brokers, but has assured brokers the broader market will not be affected.

White expressed disappointment at the ACCC’s decision to allow controversial third-line forcing notifications requiring Aussie and Mortgage Choice brokers to be members of the MFAA. But White said most brokers have nothing to fear from the ruling.

“In one respect, it’s not a big deal. It does not impact the broader industry at all. It purely relates to Aussie and Mortgage Choice, and if you’re not involved with those two this is irrelevant to you,” White said.

An ACCC spokesperson has told Australian Broker the competition watchdog will allow the notifications to stand for Aussie Home Loans and Mortgage Choice. ING DIRECT has withdrawn its notification, and Virgin Money said it no longer engaged in the practice.

“The ACCC believes the arrangements continue to deliver a benefit to the public, notwithstanding the commencement of a national regulatory regime for the credit industry in 2010,” ACCC chair Rod Sims said.

The ACCC conceded that the notifications reduced competition among industry associations, but argued that as they affect only Aussie and Mortgage Choice brokers, the detrimental effect on

the public wouold be “minimal”.However, White said the

decision was disappointing “on a philosophical level”, arguing that no brokers should “be forced” into membership with a particular association. He also argued that the decision could have a broader impact given the position the two franchise brokers hold in the marketplace.

“Aussie and Mortgage Choice may be the minority, but publicly and by way of advertising and market presence, they’re two of the largest and most powerful companies,” he said.

Regardless of the impact, White said the decision would stand and there may be little recourse. He admonished the industry for failing to be vocal on the issue.

Forsyth not ‘right guy’ for FirstfolioFirstfolio has made clear it will be moving in a different direction following the resignation of chief executive Mark Forsyth.

Forsyth recently shocked the industry by hastily resigning the post he had held since 2006, and a Firstfolio spokesperson has told Australian Broker the resignation was spurred by the board’s desire to change strategy.

Forsyth’s tenure has seen the company acquire a funding platform through Calibre

Financial Services, as well as Club Financial Services, online home loan company eChoice and Apple Home Loans. He previously vowed to keep the company on the path towards further acquisitions, but higher finance costs as a result of the acquisitions saw the company’s half-year net profit fall by 86% for the six months ending 31 December, when the company reported a net profit after tax of only $400,000.

The spokesperson said the company’s board no longer wanted to follow the strategy of acquisition.

“The board and [new director] Eric Dodd wanted to consolidate a lot of the acquisitions made over the last little while. They wanted to go far more in the direction of the mortgage lending and banking side. They wanted to see more day-to-day operational experience in that area, and there was sort of the feeling that Mark was not the right guy,” the spokesperson said.

The spokesperson confirmed that Forsyth resigned when told

the company wanted to move in a new direction.

“When the conversation came up with Mark, the board discovered Mark was quite keen to move back to Singapore,” he said.

Executive director Mark Flack has been made acting CEO of the company while Firstfolio searches for a new chief executive. The spokesperson said the search would take place both internally and externally.

Mark Forsyth

Transformation... but not the kind the board wantedFormer Firstfolio chief executive Mark Forsyth continued his string of acquisitions with the purchase of Calibre Financial Services, a lender he said the company would acquire for its securitisation platform. At the time, Forsyth called the acquisition “transformational” for Firstfolio.

http://www.liberty.com.au

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Second-tier hungry for more risk

ING Direct has revealed it will relax some of its credit policies as the lender says it has a greater appetite for risk.

Speaking at a broker roadshow event in Sydney, the bank’s chief risk officer, Bart Hellemans, outlined some of the policies under review. Hellemans said changes to the bank’s credit policies will be communicated to brokers in the weeks ahead, but tipped several decisions ING Direct had already made to revise its credit policy.

Hellemans said the bank would now allow add-backs on depreciation, would accept two dwellings on a single title, would decrease the minimum space on units to 40 square metres and would allow casual employment and contractors.

“A whole series of those changes will be coming through, and will be communicated to you by the end of the month” Hellemans said.

However, Hellemans said the bank still sought to maintain a strong portfolio, and ruled out relaxing the lender’s credit policies in some areas.

“There are a few things I will not do. First of all, under our reduced equity finance product I will not entertain refinancing. I will not entertain financing for the purchase of land if there is no construction obligation within 12 months. In terms of non-residents and foreign buyers, while we will change some of the criteria relating to Australians living overseas, for non-residents with no ties to Australia we’re not going to relax the rules. I will not do low-doc lending,” Hellemans said.

But Hellemans vowed that ING Direct would strive to clearly communicate its credit policy, and would be open to feedback from its broker network on possible changes.

“I will promise going forward that if I don’t want to do it, I’ll tell you,” he said.

The bank will also develop a review program wherein its risk management team will review all declines, all requests for additional information and all approvals with excessive conditions before passing communication back to brokers. Hellemans said the review program would kick in from 1 July.

“It reinforces that we hear you, and if you have issues with our underwriting criteria and standards, I will listen,” he said.

The MFAA has called on the government to ditch some of the disclosure documentation required by the NCCP.

In a submission to Treasury on the proposed NCCP amendments, the organisation has asked the government to dump the credit quote, credit guide and credit proposal required from brokers, and instead combine the forms into one finance broking contract. The plethora of documents currently required has caused inconvenience for both brokers and borrowers, the MFAA claimed.

“Each of these documents is required at a different stage in the transaction. The need to do these things at different times is a significant additional cost to brokers, and inconvenience and confusion to broker and customer alike,” the organisation said.

The MFAA called the requirement for the three separate documents an “unexpected and avoidable” cost to brokers. It claimed that the disclosure required by the NCCP could easily be satisfied by the finance broking contracts previously used in NSW, WA and Victoria.

“We are not aware of any problems with the previously required document,” the MFAA said.

To drive home its point, the organisation included in its submission testimony from an unnamed, mid-sized aggregator, claiming that the burden of compliance cost the company upwards of $150,000 a year. The aggregator went on to say that its brokers had seen their productivity hampered by the

introduction of the required NCCP documents.

“Whilst a number of these documents replaced previous documentation and processes, the findings from our compliance audits indicate that it takes much more time for a broker to write a deal post the implementation of NCCP and responsible lending obligations versus before,” the aggregator said.

The MFAA said the simplification of the required documents would assist consumers and reduce compliance costs for brokers.

While the association said it supported regulation of the credit industry, it warned the government off of regulating too much, too soon.

“MFAA has been a strong supporter of enhanced regulation in the credit sector, but it is essential that the rate of change to regulation is now slowed to allow the market to have commercial certainty and for new businesses to plant green shoots,” the group said.

Ditch disclosure docs, MFAA tells government

Bart Hellemans

Time to ditch the fax for online variationsING Direct is now able to allow brokers to submit variations to existing customer home loan details online, rather than manually by fax. Brokers can now gain access to this online loan variation option, with supporting documentation accepted via email. ING Direct has also committed to give brokers milestone updates via email and SMS on their variations. “We’ve now addressed what was the single, biggest sore point for brokers,” head of delivery Lisa Claes said.

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Chris Acret

Non-banks quash alternative product exodus Resimac and Pepper have said proposed enhancements to NCCP legislation are unlikely to deter brokers from non-conforming lending, despite predictions this could be the case.

Australian Broker previously reported that Gadens Lawyers’ Jon Denovan said the proposed enhancements, which include one measure that would push more liability onto a broker for unfair

and dishonest conduct, would push brokers further away from specialist lending.

However, Resimac’s chief operating officer Allan Savins said he expected the impact of any amendment to legislation would be minimal in terms of risk and new business potential.

“As long as brokers take the time to make reasonable enquiries as to the borrower’s needs and

financial position and act with honesty and integrity, then there is no reason for brokers to be concerned about offering prime or specialist loans,” Savins said.

Pepper’s David Holmes said he believes the legislation provides brokers with opportunities.

“The amendment to the legislation doesn’t change the requirement that the broker needs to be satisfied that he hasn’t put a borrower in an unsuitable loan,” Holmes said.

“If a broker follows the NCCP responsible lending guidelines, then there is no reason why they shouldn’t write alternative documentation and non-conforming loans today.”

Savins said that any additional

change to regulation naturally creates more uncertainty, due to the magnitude of change that the market has been faced with over the last few years.

But he said the view held by many brokers that NCCP makes servicing specialist lending borrowers impossible is incorrect.

“I would say that those brokers who turn the opportunity away to write a specialist lending loans are losing out on a potential client for life and incremental business from a market segment that potentially represents 5% of the mortgage market,” Savins said.

Allan Savins

ASIC chides lenders on comparison ratesASIC has raised concerns over banks failing to correctly advertise comparison rates, but a top broker has claimed the rates are unhelpful to consumers in the first place.

In a letter to FBAA president Peter White, obtained by Australian Broker, ASIC has expressed concern about the way lenders are advertising comparison rates. ASIC said it had

identified numerous areas of non-compliance with NCCP guidelines around comparison rates, and asked the FBAA to raise its concerns with members. The watchdog said many lenders are not advertising the rates correctly.

“ASIC wishes to ensure that advertising of the cost of credit and the use of comparison rates is not confusing or misleading, and that it assists consumers to make informed decisions when purchasing credit products,” the regulator said.

The problems ASIC identified were lenders failing to consistently advertise comparison rates along with annual percentage rates, not advertising the rates prominently enough, failing to include an NCCP prescribed disclaimer about the accuracy of comparison rates and failing to properly calculate comparison rates. But MPA Top 100 Broker Ian Jordan of The Selector Group has claimed the rates are doing nothing to help

consumers, and may instead be a source of confusion.

“I don’t think it’s the fault of the banks. I think it’s the fault of the requirement to advertise the comparison rate, full stop,” Jordan said.

While Jordan said lenders could manipulate comparison rates to their own advantage, he commented that borrowers often misinterpreted the rates as well.

“I think it can be really misleading, and that’s not just because banks are really clever. The issue is that the comparison rate can be advertised a number of ways, and the client is looking at it through rose coloured glasses and assuming it’s going to be the right loan for them,” he said.

Jordan argued that comparison rates did not reveal important details such as product features that may be beneficial to borrowers. However, the confusion surrounding comparison rates could present an opportunity for brokers. Jordan urged the

industry to seize on the issue, communicating to consumers that brokers are best-placed to interpret the complexities of loan products.

“The MFAA really should be jumping on this and using it as a point to get to market,” he said.

Ian Jordan

No point of comparisonASIC raised the following concerns about lenders’ comparison rate advertising• Failing to include a

comparison rate when advertising an annual percentage rate

• The prominence with which comparison rates were listed in advertisements

• Failing to accompany the comparison rate with the NCCP prescribed warning

• Failing to calculate comparison rates using the NCCP prescribed loan amount and term

Denovan on the NCCP enhancementsIn Australian Broker’s cover story last issue, Gadens Lawyers’ Jon Denovan said that the proposed NCCP enhancements:• put more liability for unfair or dishonest conduct on finance brokers• had a definition of ‘unfair and dishonest conduct’ that was too broad• meant brokers were less likely to do non-conforming lending

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The Reserve Bank’s shock 50bp cut, in one economist’s view, was an attempt to “hold the banks’ feet to the fire” on mortgage rates.

BT Financial Group chief economist Chris Caton has told the National Mortgage Brokers conference in Hamilton Island that the RBA made a dramatic move on rates to spur the banks into action.

“To me they were really holding the banks’ feet to the fire and, of course, a couple of the banks have passed on most if not all of that cut,” Caton said.

Caton said many economists were shocked by the drastic move, and commented that the Central Bank generally only makes deep cuts to the cash rate when faced

with economic turmoil.“The 50bps took a lot of people

by surprise, and the reason for that is we’ve been trained like Pavlov’s Dogs to expect interest rate cuts of a quarter of a point at a time unless something changes and changes dramatically in the short term. That hasn’t happened,” he said.

However, Caton pointed to the Bank’s Statement on Monetary Policy. He said the statement implied the Reserve made a more significant cut to the cash rate to move lenders into action.

“In the last paragraph of this statement, they said in their view that financial conditions should be easier now than they were in December. You can translate that

to say that variable mortgage rates should be lower, and I guess they said, ‘We’re not sure 25bps is going to do that, so we’re giving you 50’,” Caton said.

While some economists, such as Westpac’s Bill Evans, have predicted a further 25bp cut before the end of 2012, Caton was hesitant to pencil in such a reduction. Following the Reserve Bank move, NAB cut its standard variable rate by 32bps, Commonwealth Bank cut by 40bps, and Westpac and ANZ both shaved 37bps from their rates. With lenders moving by more than 25bps, Caton said early indications may be that the RBA has achieved its goal.

“The Reserve Bank probably

hopes it is done. I wouldn’t be expecting any more rate cuts, but then I wouldn’t rule it out either,” he said.

RBA cut held banks’ ‘feet to the fire’

An industry stalwart has lambasted the notion that continued consolidation will benefit the mortgage broking industry.

1300 Home Loans founder John Kolenda has accused “some of the bigger bank-owned mortgage groups” of “spruiking” the benefits of consolidation. He argued his own experience with consolidation convinced him bigger networks are

not necessarily better.“I have experienced the pressure

of thinking I needed to consolidate once before when X Inc merged with Loan Market, and the big driver for that was we believed a bigger group was more secure, especially when negotiating with lenders.

“It’s true there were many benefits of the merger to brokers, but, in hindsight, while scale is one part of value, banks focus on application and loan quality just as much as size,” Kolenda said.

Having gone through the merger, Kolenda claimed, given the opportunity, he would not “rush to consolidate for size again”.

“Smaller groups are tighter, better connected, faster to react and more able to help each other and truly keep standards high,” he said.

Kolenda also accused larger aggregators of being too inflexible and resistant to change.

“Many of the major aggregator groups are shackled by old

thinking, dressed up IT legacy systems and by their sheer scale,” he said.

Consolidation has continued to dominate the industry, with Aussie Home Loans acquiring National Mortgage Brokers, Smartline buying WA-based franchise The Mortgage Gallery and Homeloans reportedly considering throwing its support behind the embattled Refund Home Loans network.

Aussie chair John Symond forecasted further industry consolidation, saying smaller aggregators would find it increasingly difficult to compete on technology platforms.

As part of Aussie’s ongoing strategy, Symond said the company would look to purchase more aggregators and roll them into the NMB network.

But Kolenda rubbished such predictions. He accused aggregators who have publicly predicted further industry consolidation of trying to pressure smaller groups into allowing themselves to be bought out.

He claimed it was “obvious to most brokers” that any aggregators “spruiking” industry consolidation were themselves on the acquisition trail, and were seeking to persuade independent groups “to sell out”.

Spruikers want independents to ‘sell out’

John Kolenda

Chris Caton

Flashback: McKeon predicts sales within 18 monthsAFG managing director Brett McKeon predicted this year the remaining independent aggregators would be forced to sell over the coming 18 months. He said increasing consolidation was leaving the industry “diminished” by putting broking businesses into the hands of manufacturers.

http://www.nabbroker2012.com.au

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Homeowners holding on to rate cut windfall

Little love for brokers in BudgetThe Federal Budget has let down brokers by failing to address housing, according to one industry stakeholder.

Ken Raiss, director of accounting firm Chan & Naylor, has commented that the newly-released Budget holds little joy for brokers because it does nothing for a sagging housing market.

“My main concern is the Budget won’t do anything to stimulate activity in the housing sector and, therefore, there are no funds allocated either directly or indirectly to the property market. This won’t stimulate people to move homes, to buy homes or to invest in more investment properties,” he said.

He also claimed the Budget had done little to allay sluggish consumer sentiment pervasive over the past year. Should consumers continue to lack confidence, Raiss said property investment will remain weak. And with housing activity down, Raiss said many brokers would continue to struggle.

“It’s reducing activity in what would otherwise be the largest expenditure item for most people. The overall activity levels of brokers aren’t being stimulated and, therefore, the business activity would have to suffer and continue to feel the effects they’ve felt over the past couple of years.”

House prices are set to remain stagnant as well, Raiss predicted, with the sector finding no significant help in the Budget.

“I think subdued values in the property sector will continue and will be a damper to activity for

brokers,” he said.The housing industry agreed

with Raiss. While HIA senior economist Andrew Harvey lauded the government for leaving in place measures such as the Housing Affordability Fund and the National Rental Affordability Scheme, he said the Budget missed the opportunity to inject life into home building.

“The Budget was an opportunity to introduce measures to progress housing supply-side reforms with states and territories, reduce excessive tax burden on new housing, and expand and extend measures aimed at boosting housing supply,” Harvey said.

Raiss had also called upon the government to institute a price surveillance authority in order to promote transparency in the banking sector. He accused the banks of “years of ongoing gouging and profiteering”, but said the Budget had done nothing to address big bank dominance.

Retailers and home vendors are unlikely to see any joy from May’s interest rate cut, with the majority of mortgage holders planning to bank the extra money.

A new survey from Loan Market has found 57% of home owners are planning to use May’s RBA rate cut, and the ensuing cuts from lenders, to boost home loan repayments. Only 2% of the survey’s respondents said they would be spending the extra cash from the rate reductions.

A Loan Market spokesperson said the rate cut had delivered breathing space to mortgage holders, in spite of lenders holding onto some of the RBA decrease.

“The Reserve Bank of Australia reducing the cash rate this month by 50bps to 3.75% was a welcome relief to borrowers even though most banks have not passed on the full rate cut,” he said.

But the majority of consumers would prefer to hold onto the money, with home loan repayments becoming easier. Even with lenders

failing to pass on the full 50bps, the Loan Market spokesman said homeowners would make more progress on paying off mortgages.

“For consumers who have grown accustomed to conditions to make a repayment at a certain dollar value, a significant savings in time and money can be made if those consumers continue to pay the same amount at the lower interest rates,” the spokesman said.

Savings proved another popular option for homeowners, with 21% saying they would increase their savings rate. Twenty per cent said they would look into refinancing.

The Loan Market spokesperson predicted more good news could be delivered to consumers.

Despite the RBA’s drastic move, he said the Central Bank could further ease rates to revive retail spending and housing demand.

“Another rate cut is on the cards for June with continuing concern about the economic situation in Europe,” he said.

Ken Raiss

Fitch Ratings has defended major banks moving out of line with the RBA, and has encouraged them to keep doing so.

Fitch Ratings has predicted banks will continue to make interest rate moves independently of the Reserve Bank, claiming it is important banks continue to do this.

“Such an approach, combined

with close management of operating expenses, will be important for the banks to maintain or even boost profit in an environment where loan growth is subdued and capital requirements are set to increase under the soon-to-be-implemented Basel III framework,” the agency said.

Fitch argued Australian banks’ net interest margins had come under pressure. The company pointed to results from Commonwealth Bank and NAB, saying CBA’s net interest margin fell 10bps in the first half of 2012 to 2.15%, while NAB’s fell by 9bps in the first quarter of the financial year to 2.19%.

“These levels are still healthy,

especially when compared with many of their international peers, but the downward trend means we expect banks to take advantage of opportunities to increase asset pricing,” the company said.

High funding costs were behind the shrinking net interest margins, Fitch claimed.

“One reason funding costs are rising is because banks are trying to reduce their reliance on wholesale funding, which accounts for about 35%-45%. In addition, the Australian Bankers Association estimates around half of the wholesale funding derives from offshore investors, and just over a third have a duration of less than one year. Fitch considers

both of these factors unstable,” the ratings agency said.

While Fitch said covered bonds had somewhat eased the cost of funding for banks, the company commented there were regulatory limits on the amount of covered bonds banks could issue. Fitch said competition for deposits had also cut into bank margins.

“Deposit costs are also a significant contributor to the rise in funding costs, as the banks seek to attract this more stable form of funding. Adding to the pressure, depositors are becoming more savvy about their investments, seeking out higher-interest-earning accounts,” Fitch said.

Banks should keep ignoring RBA: Fitch

What will you do with the extra money from the RBA rate cut?

Source: Loan Market

2%

57%21%

21%Increase my mortgage repayments

Increase my savings

look to refinanceSpend on consumer goods

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Brokers to battle banks for ‘share of wallet’

An industry analyst has warned brokers to ensure the rush to provide faster, more efficient service does not eclipse the need to properly educate clients.

Industry consultant and Futurology principal Kym Dalton told the National Mortgage Brokers conference in Hamilton Island that the introduction of new technology in mortgage broking could have potential downsides.

Dalton said while services such as electronic lodgments and the ability to order online valuations have made brokers faster and more efficient, this speed could detract from the broker/client relationship.

“I’d like to raise the warning flag to watch meaning isn’t lost in the whole race for speed and adoption of new technologies,” he said.

Dalton urged brokers to ensure clients are properly educated about the complexity of mortgage products.

He suggested many consumers are ill-informed about home loan products, and brokers must take the time to educate their clients.

“While we’re in a great quest for speed in embracing this technology, mortgages are reasonably complex and you want to make sure your customer actually understands the nature of their obligations,” Dalton said.

Such education goes beyond NCCP disclosure obligations, Dalton indicated. He argued brokers have a duty to inform their customers beyond the mere letter of NCCP regulations.

“Share of wallet” is set to be the next battleground for brokers and lenders, but the two may be at odds on what the concept means.

National Mortgage Brokers managing director Gerald Foley told the aggregator’s national conference in Hamilton Island that both banks and brokers must strive for “share of wallet” with every customer interaction.

“Share of wallet is going to become the bigger focus now, and that will become the dilemma for the broker/lender relationship,” Foley said.

Foley explained that share of wallet entailed servicing a client across a variety of different products, but said banks and brokers may not see eye to eye on how this share is divided.

“My share of wallet is quite different to your share of wallet as a lender, and that will be a dilemma that will cause a little bit of discussion and debate,” Foley said.

Whereas banks look to own a customer across a variety of proprietary products, Foley suggested brokers would offer the

same products to clients, but often from different sources.

“From the bank view, share of wallet is a client taking a loan and maybe one or two other products with the same lender. The broker share of wallet view is you come and arrange your loan, maybe insurance and maybe something else on the side as well, but not necessarily all from the same lender,” Foley said.

Foley commented it was vital brokers stay ahead of the curve in offering a variety of services to clients in an endeavour to carve

out their own “share of wallet”.

“It’s not a matter of I’ll deliver you a loan and receive commission and the rest is a free kick. It’s not going to be that way, and brokers have to be in front of that and offer more than one product to the client,” he said.

“If it makes sense to use the same supplier, of course you do that, but it doesn’t always have to be that way,” Foley added.

MFAA chief executive Phil Naylor has assured brokers the group is active with lobbying efforts on behalf of its members, even if those efforts are not always publicised.

Speaking to the National Mortgage Brokers conference in Hamilton Island, Naylor told brokers the association had been active in lobbying government over issues such as the NCCP regime and the exit fee ban.

“There are different definitions of lobbying. My definition is it’s engaging the support of those who will assist you to achieve your objectives without pissing off those

who are against you,” Naylor said.“Sometimes, when dealing with

politicians, that’s a very fine balance. Your enemy today might be your ally tomorrow,” he added.

Naylor said the MFAA had actively lobbied government and regulators through a variety of different means, and had seen a great deal of behind-the-scenes success from its efforts.

“Lobbying is carried out in lots of different ways. It could be simply writing submissions and lodging them with a government department. It could be meeting with politicians and regulators. It

could be meeting with key financial journalists and getting them to understand our point of view and getting them to speak on our behalf, or it could be really orchestrating campaigns to make a point,” he said.

Naylor used the example of the exit fee ban, and pointed to nationwide newspaper advertising the MFAA used to speak out against the ban. While the ban went through, Naylor argued such campaigns showed the government the industry would be publicly vocal in opposition to policy it viewed as damaging or ill-informed.

“What we’ve learned is the government knows we’re there, and if something comes up we will have a crack at them if they do something we think is not appropriate,” he said.

The exit fee campaign also served the purpose of launching a social media strategy, Naylor said.

“We got Twitter going and that was amazing. I was blown away. It was interesting to see that go viral,” he said.

MFAA heard, if not seen: Phil Naylor

Phil Naylor

Kym Dalton

CONFERENCE SPECIAL: NMB

Gerald Foley

Don’t lose meaning in rush for tech

NMB brokers on the Aussie sale“I don’t think it’s going to affect us negatively at all. I think it’s a good thing for NMB and for Aussie. It gives Aussie brokers the opportunity to go work for themselves, and for our business we’re always looking for good brokers.”Jim Henwood, eSelect Finance

“Time will tell where we’re going to end up. Hopefully the boys will stay onboard with NMB and it will be business as usual. I hope everyone stays around, because one of the things I like about NMB is the family environment.”John Veal, eSelect Finance

“I think it will create a lot of opportunities for brokers who want to start their own business. It will also help NMB’s aggregator model to increase its numbers in a diminishing market.”Alex Martin, Asset Plus Finance

“There’s no question that the brokers who joined for the reasons I joined will be looking to see what’s out there, because the loyalty will no longer be there. I’ve stuck with them for 10 years when I’ve had a lot of lucrative offers from other aggregators. I’m happy for them, but it just means now I feel free to look elsewhere.”Jeremy Fisher, 1st Street Home Loans

For all the latest mortgage industry news, visit brokernews.com.au

For all the latest mortgage industry news, visit brokernews.com.au

14

Newsbrokernews.com.au

An industry trainer has slammed registered training organisations offering brokers an easy path to a diploma.

Intellitrain chief executive Paul Eldridge has urged brokers to put more thought into the trainer they choose, arguing the qualification earned varies greatly from one trainer to another.

“Many in the industry are operating under the assumption that the diploma you receive from one RTO is the same as another. That is like suggesting an MBA from Harvard is the same as an online MBA from Kazakhstan Farmers Cooperative College,” Eldridge said.

Eldridge took aim at other industry trainers, saying many offer course structures merely designed to issue a qualification in a short amount of time rather than educate brokers.

“Some RTOs are trying to

deliver 10 units of a diploma upgrade in two days, which appears to be more in the interests of reducing delivery costs to the RTO and appeasing students who simply want the piece of paper rather than focusing on the actual intention of education,” he said.

“On one forum recently, a broker commented he had paid $700 to attend a one-day diploma upgrade and lamented he didn’t learn anything. With all due respect, no wonder you didn’t learn anything. You didn’t attend a course; you just swapped $700 for a piece of paper.”

Eldridge claimed the industry attitude towards education needed to change, and said it should teach brokers skills such as income diversification, management skills and financial coaching.

“If a broker is told ‘just go and get the piece of paper’, then the qualification is being treated as a commodity. It’s hardly surprising brokers shop on price,” he said.

Eldridge argued for the trainer’s model, saying it focused on delivering value rather than a quick or inexpensive qualification.

“The goal we have for our students is they learn how to build sustainable businesses and earn more revenue. We won’t be the cheapest or fastest option, and our students will not all sit around and complete assessment tasks together. Do your homework before you choose your RTO. Clearly they are not all the same.”

A Melbourne-based mortgage broker engineered a huge spike in Facebook views in May by offering consumers the chance to win a free iPad 3 if they could guess ANZ’s rate decision for the month.

Central Choice’s Hany Pham, a former Australian Mortgage Awards recipient, managed to leverage the social media platform and create a ‘massive viral effect’ on its Fan Page.

Following rate decisions by NAB, CBA and Westpac, Pham launched the competition on Facebook that asked customers to guess by how many basis points ANZ would adjust its standard variable rate when it moved after the other majors.

After the competition launched, Pham said Central Choice’s Facebook page saw a huge spike in traffic, according to Facebook Insights. Central Choice normally averages 100 views a week, and was able to boost this to 6,958 views in just one week.

Pham said the competition generated more than enough enquiry to justify giving away a free iPad. However, he said the business also learned a lot.

“To create maximum reach, we created an event so we would be able to message all guests,” Pham said. “While this caused a large spike in views every time we sent out an update, some people said the communications were slightly too frequent. Due to the number of

people sharing the competition, it also dominated their newsfeeds.”

The business also only received 60 entries from the close to 7,000 views, which Pham said was surprising, given the fact he was giving away an iPad.

“To be eligible, you needed to share the competition on your own page,” Pham said. “We did this in order to create maximum viral effect and it created interesting responses. Some people were happy to promote it to all of their friends, while others were not.”

Pham said the campaign has resulted in a number of new client enquiries. “It was a great way to reach out to our existing clients,” he said. “There were also great flow-on effects. For instance, many new referral partners got in contact and wanted to explore joint marketing initiatives.”

Intellitrain blasts RTOs ‘appeasing’ students

Broker uses rate game to spike Facebook

INDUSTRY NEWS IN BRIEF

Home lending gets pre-rate cut boostMarch ABS figures show lending for owner-occupied new homes rose 3.5%, driven by a 13.3% increase in the number of loans for the purchase of a new home. Loans for the construction of new homes remained fairly flat, rising only 0.2%.Housing Industry Association senior economist Andrew Harvey said the numbers were encouraging, as the rise came even before the Reserve Bank’s May cut. He predicted the 50bp cash rate reduction would further boost housing finance, but said more needed to be done.

NAB vows to retain pricing titleNAB has vowed to continue beating its major rivals on rates following ANZ’s rates

announcement. The bank’s chief executive Cameron Clyne has told the ABC the bank will stick by its vow to maintain the lowest rate among the majors. Clyne has also predicted further rate cuts over the year ahead. He told the ABC the RBA was likely to deliver another 50bps of cuts in 2012, despite an unexpected drop in unemployment.

Stock down, but housing not out of the woodsStock levels are finally beginning to trend downwards, but this doesn’t mean house prices are set for recovery. Figures from SQM Research have shown housing stock decreased by 4.2% in April. The month also marked the most modest year-on-year increase recorded in the past 12 months, with stock up only 0.3% on last

April. The research company has claimed the figures may indicate stock levels have finally peaked, but SQM managing director Louis Christopher warned tapering stock levels do not necessarily equate to house price recovery.

‘Very disappointed’: Australia drags on GenworthUS-based insurer Genworth Financial has said it is ‘very disappointed’ with the performance of its Australian arm after it reported a US$21m first quarter loss. The company told Australian investors and media the level of delinquencies converting to claim had been at a higher rate and severity than expected due to natural disasters and a regional downturn in property markets impacting small businesses and self-

employed borrowers.

Banks off RBA leash, say brokersA new survey claims that mortgage brokers believe major banks have now sidelined the RBA as a setter of mortgage rates in Australia. 1300 Home Loan’s first Market Insights survey of its broker network found that 31% of brokers believed banks had distanced themselves from the RBA’s monthly rate decision. A further 53% believed if the banks refused to pass on the rate cut in full, which CBA and NAB subsequently failed to do, this would be proof the banks were now off the leash. “People are already confused about who is driving interest rates and this shift is making it worse,” managing director John Kolenda said.

Paul Eldridge

Did you bet right? Rate moves in May

NAB Down 32bp to 6.99%

CBA Down 40bp to 7.01%

Westpac Down 37bp to 7.09%

ANZ Down 37bp to 7.05%

Hany Pham

For all the latest mortgage industry news, visit brokernews.com.au

http://www.mortgagebroker.citibank.com.au

http://www.mortgagebroker.citibank.com.au

18 brokernews.com.au

News

“We need strong banks. They’re the lifeblood of the Australian economy, but they need to be accountable. We’re not a bunch of vandals going in to wreck the banks. We don’t want more regulation; we want better regulation,” he said.

Part of this better regulation would be greater transparency of bank funding costs, and the way they tie to the Reserve Bank cash rate – an issue that is causing much public confusion.

“Banks would say that their funds aren’t tied to the RBA cash rate, and that’s a fair argument. Any business has the right to pass on the cost of funds. But funding costs are a business cost for a

bank, and I don’t know of any other business in Australia where the customer is expected to underwrite the business costs. In any other market, if a business did that the customers would leave. But in banking, where are they going to go?” he said.

While Bradley conceded banks would spurn further regulation, he argued that better regulated banks would find benefit from shifting consumer attitudes.

“If we get this right, banks ought to join us. If they promote competition and level the playing field, people will like them. People won’t whinge about banks anymore, and people won’t hate banks.”

He also scorned the idea that a drive for greater monitoring was anti-business. “We’re pro-business. We’re also pro-student, pro-housewife, pro-everyone. We’re pro-bank, we just want the banks to work better.”

Bradley said the party was “non-aligned” and wanted to accept members from across the political spectrum. He said brokers could play an important role in aiding the party to achieve its goals. “Brokers are a sector I’ve been thinking about for quite some time. It’s a sector we’re more than happy to have a dialogue with,” he said.

A lender has claimed that brokers are now writing up to a quarter of their business through non-banks as attitudes towards the sector shifts.

An online broker survey conducted by Homeloans Ltd has found that brokers send nearly 25% of their business through non-ADIs. The company said the survey indicated brokers no longer saw non-banks as lenders for borrowers with poor credit, with just 12.9% using the lenders for clients with credit problems.

Reasons brokers gave for recommending non-bank lenders were product features, the

relationship they had formed with their BDMs and competitive interest rates.

“Gone are the days of non-bank lenders being perceived only as lenders of last resort, or for those borrowers with adverse credit history,” Homeloans general manager of sales Greg Mitchell said.

Mitchell claimed brokers’ attitudes towards non-bank lenders had changed as public ire towards major banks grew.

“Today, brokers are now more open to recommending non-banks because of the growing discontent with the major banks and also because of the wider

product ranges and competitive interest

rates being offered,”

Mitchell said.

The survey also revealed that nearly

80% of brokers

believe non-banks “are a competitive

alternative to the majors”. Nearly 81% said they had sent a deal through Homeloans before.

Recent figures from the Australian Bureau of Statistics show that non-banks have begun to arrest the slide in market share they experienced much of last year and early this year. Non-bank share of housing finance fell 11.1% in December of last year, and a further 21.7% in January 2012.

The latest ABS statistics indicate non-bank share rose 17.4% in February of 2012. But figures from AFG show that the mortgage market share of non-majors, both non-ADIs and second tiers, has remained reasonably steady, down from 22.9% in March to 21.6% in April.

“There’s still great potential to further close the gap – particularly with the rising cost of living leading to more borrowers looking at the alternatives in order to reduce their costs,” Mitchell said.

Non-banks could also be set to receive a bump from an increase in borrowers switching lenders. New research has

suggested nearly 50% of bank customers could dump their current bank when the government’s “tick and flick” reforms start in July.

Roy Morgan Research has found that around 20% of Australians already plan to switch financial institutions in the next year. If the paperwork and administrative effort of switching were substantially reduced, nearly 50% of customers said they would switch.

The main reasons consumers listed for their desire to change were uncompetitive interest rates (35%) and high or unfair fees (30%). Mutuals peak body Abacus claimed the data foreshadows a shift to credit unions and building societies once the government reforms take effect on 1 July.

“Clearly the research has found that the administrative hassle of switching accounts is an impediment to our strong desire for new customers, but this won’t be the case for much longer,” Abacus chief executive Louise Petschler said.

Brokers sending 25% through non-banks

Adrian Bradley

For all the latest mortgage industry news, visit brokernews.com.au

The Bank Reform Party: What it promises• Introduce legislation to ensure bank rate movements reflect interest rate

movements set by the RBA

• Enforce new and tougher anti-predatory lending practices

• Enforce greater transparency on fees and charges

• Examine methods to promote greater competition

• Examine dismantling the “Four Pillars” policy and seek to introduce greater competition

• Examine greater support for non-bank lenders

• Dismantle the “unconscionable nexus” between the banks and administrators, receivers, valuers and lawyers

• Review the obligations placed on borrowers

• Legislate a cap on executive salaries and bonuses

Source: bankreformparty.com

What the banks thinkAustralian Broker contacted all of the major banks for their take on the Bank Reform Party and its goals. Each bank declined to comment, instead deferring to the Australian Bankers’ Association. CEO Steve Munchenberg told Australian Broker the ABA would seek to find common ground with the party once its goals were clearer.“The Australian Bankers’ Association is heartened by the statement from the Bank Reform Party that they will not be bank bashers, and we agree with them that Australian banks are the lifeblood of the Australian economy, and all Australians urgently need strong banks. So, we have some common ground,” Munchenberg said.“Once the party is registered and it has some fully formed policies, the Australian Bankers’ Association would be happy to discuss any proposals, just as we would from any other political party.”

For all the latest mortgage industry news, visit brokernews.com.au

20 brokernews.com.au

Development a Bieg boom to rival mining

Property investors looking to get a piece of Australia’s mining boom often find it difficult to find a property in the right location at the right price – unless they go to Paul Bieg.

A senior finance consultant at Club Financial Services in South Australia’s Norwood, Bieg has lifted his broking business to new levels by building properties directly for investors.

“It all started when I was looking

to build a property for myself in Port Headland [WA] – because I’m an investor myself,” Bieg told Australian Broker.

Finding two blocks of land, Bieg found by negotiating with land developers for a good price and employing builders, he was able to build houses at a discount to market value. “After that, I did another six, and I thought – I can turn that into a business.”

Bieg said he was consistently

getting questions from investor clients about where they should buy, but clients were finding that there was a shortage of property available.

“Clients were crying out to know what they should purchase and where,” he said.

Employing builders and working directly with land developers to negotiate better prices on new land, Bieg now has 100 properties under contract in a number of mining and regional locations, including Middlemount, Dysart, Emerald Chinchilla and Gladstone in Queensland, which are all benefitting from coal mining. Bieg’s business, which goes by the name of BIG Property Investments, also has a focus in Port and South Hedland in WA.

“For example, we thought Middlemount was about to start taking off,” he said. “We are managing the development of 35 properties in total, and we went to clients saying they could rent

them for $850 a week, and would cost $400K to build – they were wrapped. That was 6-8 months ago, and the last valuations are seeing $1250 for rentals – we were right,” he said.

The project management side of his business is also helping fuel Bieg’s Club Financial Services financing arm, which helps clients with the lending they need.

Bieg said he is currently focused on delivering a premium service, and is spending to develop software that will make it the ‘number one investor office out there’.

News

Cautious optimism as commercial sees uplift

Direct of Concord-based Anasta Finance Consulting Andrew Kelly is confident his expertise in commercial lending positions him

well to ride recent market thawing.Having left the banks seven years

ago when he saw an opportunity to fill the commercial market, Kelly said his expertise is concentrated in the commercial area.

However, the GFC fallout meant the market had been “a little light” over the past few years, and the business had seen a shift to servicing 80% residential clients, 20% commercial.

But Kelly said the commercial market is reviving. The past six months have seen the Anasta business swing back the other way, with only 60% of business written for resi clients.

“Commercial enquiries have lifted, and we are seeing more enquires for owner-occupier purchases,” Kelly said. “The bulk of my clients are self-employed, and commercial property prices have not spiked. There are a lot of people who were renting who have decided to purchase, because

rents keep rising but the value of commercial property hasn’t.”

Kelly is upbeat about the rest of this year. “I’m cautiously optimistic. I expected a slow down before 30 June, but that hasn’t happened – it has changed, but it hasn’t slowed, probably because of my more mature client base and referral partners,” he explains. “I don’t think it is going to stop – interest rates are still terrific, but it’s all about confidence.”

This is not to say his client base isn’t hurting. Kelly said he is seeing a second wave of clients needing help with troubled financial situations. “Before the GFC, I probably would have gone five years without an enquiry from a client in trouble,” he said. “But after that, there were enquires from clients in financial distress. Now, there is another wave of clients I’m being asked to help who I didn’t expect to see.”

Kelly said much of this wave was coming from residential clients, and that it was “nigh on impossible” to refinance clients in residential distress situations.

Business booms, as promises pay off

For Aaron Giles of Newcastle-based Australian Property Finance, being a broker comes down to delivering on your promises

- and generally “being nice to people”.

Having begun in the industry as a CBA mobile banker in the Newcastle area, Giles was talked into broking in 2006 by Greg Sterland, who still manages the business.

Giles said, six years later, he is not doing anything different from what he was doing from ‘year dot’ – and it is all about treating clients and referrers as you say you will.

“I’m not doing anything differently than when I first started. It comes down to doing what you say you are going to do, being nice to people, being professional and, at the end of the day, getting the application done and not stuffing people around,” Giles said.

This modus operandi might seem obvious to many, but Giles said referrers speak to him about other brokers they have dealt with that “just don’t know what they are doing”.

“Some brokers are out there wasting everyone’s time. They need to be giving the institutions what they want, to make sure the deals run smoothly,” Giles said.

And his reputation for doing just that is propelling Giles’ business forward. A high volume writer, Giles said he had achieved $40m in settlements in the financial year to April – a significant lift on the preceding financial year, which saw him net a more modest $27m.

Giles said the boost in both loan numbers and loan volumes (he beat the previous financial year within the six months to December 2011) came down to solid repeat and referral business, including from two key real estate relationships in Newcastle.

“A lot of people know me – Newcastle is a small place,” he said. “I just do the right thing by clients, and that gets the repeat business and the referrals. It’s nothing other people don’t do, but it’s something I enjoy doing; getting the referral, acting on it straight away, and getting the approval done for the client,” he said.

THE COALFACE

• Loan volumes skyrocket

• Being a nice guy pays off

• No fee-for-service planned

• Commercial market thawing

• More resi clients in hardship

• Contact the key to referrers

• Building property for investors in mining and regional areas

• Club FS finance business fuelled by new developments

• Building ‘best’ broker office nationally for investor clients

Paul Bieg

Andrew Kelly Aaron Giles

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21brokernews.com.au

Review

‘Amen’ to MFAA disclosure stance, say brokersBrokers have given the MFAA a heavy pat on the back for talking tough with the government on the current requirements for multiple forms of credit disclosure documentation.

Australian Broker Online reported the MFAA had requested the government ditch the current form of disclosure docs, combining credit quote, guide and proposal in one.

The MFAA claimed the plethora of documents required had caused inconvenience to brokers and customers, while it also increasing broker costs.

Speaking with Australian Broker, Peter O’Connor from Cavalier Finance in Brisbane said he welcomed the MFAA’s lobbying approach on disclosure documentation.

O’Connor said as the situation stands, “we have to get through an inch of paper” before getting to an

application, and customers often don’t read the docs anyway.

O’Connor said, in addition, brokers who take customers through the documentation are put at a competitive disadvantage, with customers feeling they are too difficult to deal with.

On the Australian Broker Online Forum, brokers came out in strong numbers to comment on the MFAA’s approach – for once, supporting the MFAA wholeheartedly.

Nicole (10 May 2012, 10:18AM) said, in her experience, customers did not read the documents.

“I send by email the Credit Guide and the Privacy statement immediately after the first contact. Each has a ‘sign here’. Very few sign and send back and I then have them sign an original at the first face-to-face meeting. As for all the other docs, my research is they are simply not reading them either.”

Melo (10 May 2012 09:59 AM) agreed the government had made the documentation too dense.

“NCCP over-complicated a simple process. It should be one page document, without all the text.”

Industry consultant Kym Dalton (10 May 2012 10:08AM) argued disclosure and comprehension were

not the same thing. “Evidence is that the greater volume of disclosure, the less is meaningfully comprehended,” he said.

Meanwhile, Rach (10 May 09:57 AM), along with many other brokers on our site, was moved to praise the MFAA’s stance. “Amen to the MFAA!” she said.

FORUM

Take note if you think the MFAA doesn’t do anything on brokers’ behalf.

Incognito on 10 May 2012 10:04 AM

Great to see some positive action from the MFAA. I have been critical about

some things the MFAA are doing, including the haste of the need for Diplomas, but in regards to the NCCP lobbying and documentation they are very good.

Country Broker on 10 May 2012 10:17 AM

Well knock me over with a feather. The MFAA has actually made a

recommendation that is common sense and will help deliver simpler processes and benefit everyone involved from lender, aggregator, broker, admin and customer.Long term Broker on 10 May 2012 10:21 AM

Brokers were less than chuffed with the ACCC’s decision to support third line forcing notifications that require MFAA membership among some franchise brokerages.

This relates to a couple of retail groups. The rest of us select an industry body

based on their services, activity and contribution to our business. I certainly could not have afforded the lobbying undertaken by the MFAA on my own and am happy to be part of that community.Bruce on 11 May 2012 02:30 PM

In over 12 years of broking ... I have not yet once been asked if I am a member of

the MFAA (or MIAA) or for any educational qualifications, C4s or Diplomas (which I have). I do, however, get asked (told) every 12 months, to hand over $400 - $500 to be a member of something of very little value to me or my customers.Roberta on 11 May 2012 02:47 PM

If it's not compulsory for lawyers to be members of the Law Society, it is unfair to

make it compulsory for brokers to be members of MFAA or FBAA, right?Liz on 11 May 2012 03:08 PM

[It's] sad when the governing regulatory body bends the rules to suit. I’m with

Roberta; 15 years broking and never once been asked if I am a member of anything. Last week I got my first call from a prospect who got my name off the MFAA site ... If spent my advertising dollar for that sort of return I would be broke by now.PC on 11 May 2012 04:17 PM

Why didn’t you all have your say when you had a chance? Once again, you

wait until it’s too late. ASIC and ACCC don’t read your comments on this page, you should have put in a

submission with your reasons why you don’t agree with them.Sally on 11 May 2012 05:15 PM

Interesting. If ASIC doesn’t believe the FBAA has substance, why would any of

its members. No real surprise, [but] a big nail in the FBAA’s coffin.Michael on 11 May 2012 05:27 PM

So with the same logic, we should have ACCC's blessing if we tell customers

they have to take out insurance with every loan and it must be with us ?Choice Broker on 11 May 2012 05:30 PM

22 brokernews.com.au

Comment

There’s no hotter issue than consolidation, and if Aussie’s James Symond has anything to say about it, there’s a lot more to come.

VIEWPOINT

Mergers to kill the middlemanIf you think you’ve seen the end of true competition in the mortgage market, well, you may be in for a surprise following Aussie’s acquisition of National Mortgage Brokers. As James Symond

says, Aussie doesn’t just ‘pay to play’ in this market – it pays to win.

“We certainly play to aggressively be the number one or number two player out there, and we compete hard,” Symond told Australian Broker TV. “We certainly see ways we can increase the business, improve the business, and make a difference in the marketplace as we have done with the Aussie brand and our retail businesses currently.”

Symond says Aussie’s strategic approach is two-pronged – grow, and acquire.

“There are two phases. Certainly quality organic growth is a key; NMB is a high quality brokerage, and although it is only a smaller aggregation business, it is a high quality aggregation business and to us that was very important. But certainly it is a marketplace that is opening up more and more. Being more acquisitive for

further quality aggregation businesses is certainly something we are very interested in,” he says.

So with more acquisitions waiting in the wings, is consolidation likely to continue? That is one thing the market has not seen the end of, says Aussie’s Symond.

“We are seeing more and more consolidation. You have got a marketplace where margins are decreasing, and a marketplace where the commission cuts from three years ago are certainly biting today,” he says. The big are getting bigger, because they need to be - they need to get economies of scale. The small are becoming state-based and specialised so they can control costs, and the danger is [for] those aggregators or mortgage brokers in the middle.”

For NMB brokers, the merger will hopefully bring more support to assist them in their own battles for market share. “At the end of the day we are in a business where we have been very successful for a very long time and one of the key ingredients for that success is relationship,” Symond says.

“So, hopefully, what we will bring to NMB is our skills and relationship. It is about support. It is about IT. It is about appropriate commissions. It is about helping them build a business. It is about having an overall high quality relationship.”

Game on: Firstmac and AFM talk footy

For brokers, there’s no topic that gets more interest over a beer or two than the footy. So no doubt Firstmac and AFM’s latest footy ventures will resonate with the channel.

For Firstmac, Kim Cannon said it was about seizing an opportunity. “We looked over the years to a number of sponsorships with various football clubs across different codes. The opportunity came up with the [Brisbane] Broncos when one of their

sleeve sponsors went into receivership and again, getting a sponsorship on someone as good as the Broncos doesn’t come up every week, so when the opportunity arose we pounced on it,” he said.

Brokers will benefit from AFM’s sponsorship of the Canterbury-Bankstown Bulldogs, national head of sales Clint Hawthorne told Australian Broker TV.

“We work in an industry where relationships are paramount,” he says. “So by entertaining brokers at a corporate box it is a little bit different from taking brokers out to lunch.”

If brokers are wise, perhaps they will learn to imitate some of these players.

“If a broker was to adopt a similar strategy at a local level and look to sponsor a football club or cricket club in the local community, the same benefits can apply,” Hawthorne said. “They can potentially increase the leads they generate, they can potentially increase their brand awareness and profile in the local community.

Kim Cannon, Firstmac

Clint Hawthorne, AFM

James Symond, Aussie

23brokernews.com.au

OPINION

Should you disclose your client’s credit file accidents?It is questionable whether brokers are obliged to disclose their client’s credit repair history under the National Consumer Credit Protection Act. Joe Trimarchi explains.

Recently an opinion was put forward suggesting mortgage brokers may run afoul of the National Consumer Credit Protection Act if they don’t disclose to lenders that a client has used a credit repair company to remove inaccurate information that appeared on their credit file.

This issue is worthy of discussion and should be agitated to obtain an understanding of the obligations placed upon finance professionals by NCCP legislation in regard to credit repair.

The NCCP questionIn short form, NCCP legislation was conceived and implemented for the purpose of having loans pass a “not unsuitable test”. It was thought this would stop dubious lending practices adopted by some lenders in the past.

The legislation is geared towards offering greater protection to the borrower, and from this premise follows a series of positive obligations placed upon mortgage lenders and their representative mortgage brokers to take all information into account and to disclose all information that may impact credit worthiness in order for this test to be satisfied.

Accordingly, on a simple reading of NCCP legislation one may formulate the impression that a default listing that is lawfully removed because the same was listed in error should be disclosed to a prospective lender at the time an application for finance is made; this view was adopted by the head of a credit repair company recently and has gained some momentum.

The reasoning adopted in this argument may be flawed and, as such, should be discounted because little or no consideration is given to the provisions of Part III A of the Privacy Act 1988 (Cth), which regulates credit reporting in Australia.

Privacy Act provisionsThe Privacy Act regulates the exchange and recording of information appearing on a credit file and only domestic or household credit is regulated by the Act.

Section 18G (a) of the Privacy Act 1988(Cth) places the onus on a credit reporting agency and/or a credit provider to ensure the information recorded on a credit file is accurate, up to date, complete and not misleading. In the event the information recorded on a credit file is not accurate, up to date, complete and, as such, has the ability to mislead, then

Section 18 J(1)of the Privacy Act 1988(Cth) requires reasonable steps to be taken.

This includes corrections, deletions or additions made to the credit file to ensure the information it contains is accurate, up to date and not misleading.

The Privacy Act recognises the importance of preserving the integrity of the information held on a credit file, recognises errors occur and calls for the deletion of any errors.

The Privacy Act does not require erroneous information to be disclosed to a credit provider and nor does NCCP legislation. In the unlikely event NCCP legislation requires disclosure of deleted erroneous entries the two pieces of legislation would certainly conflict.

Incorrect correctionThe credit reporting provisions of the Privacy Act seek to minimise intrusiveness into an individual’s affairs by setting strict limits on permitted information appearing on a credit file.

Disclosure of deleted information seems to fly in direct contradiction to this principal and will punish consumers for a crime they did not commit.

Moreover, the question needs to be asked: Are finance brokers obliged to disclose to prospective lenders a client’s default that occurred (10) years ago given this information will naturally fall off a credit file after (5) years?

The answer is no, therefore, adopting this reasoning, information deleted as a result of it being listed in error should be treated in the same fashion.

Finance professionals should understand NCCP and the legislation must be complied with in order to safeguard the interest of borrowers. However, it does run the risk of reducing credit availability to some borrowers.

The forced disclosure of deleted credit information is one example where credit availability would be denied to a borrower. This is surely not the intention of the NCCP, which simply seeks to codify responsible lending practices.

Towards positive reportingCredit providers have benefited from recent changes in the law that allows additional information to be recorded on a credit file. Coupled with NCCP legislation, this sees the consumer short changed once again by reducing their ability to access available credit.

The forced reporting of deleted credit default information would only fuel this burden.

Joseph Trimarchi of Joseph Trimarchi & Associates Solicitors.

The information contained in this article is purely for educational purposes and does not constitute legal advice.

http://www.mezy.com.au

Surveys: AB poll finds brokers sadly neglected

Then & now...In January 2004, Australian Broker delighted the mortgage broking market with a launch issue crammed full of news, opinion and entertainment that brought new life to publishing in an industry experiencing exciting boom times.

Entertainment: In Australian Broker’s first issue we...

• Reviewed Tim Burton’s Big Fish starring Ewen McGregor• Laid into Wizard’s property price SMS wizardry in the first ever

Insider column• Gave brokers tips on how to wrestle free of an alligator• Featured a PVC shower curtain with built in AM/FM radio• Reviewed Bill Bryson’s A Short History of Nearly Everything• Sent one of our own staff on a round of speed dating

Predictions:

Keep watch on

the regulatory space. The media is asking why the industry

remains unregulated. The sooner we are regulated the sooner we can start selling the broker channel as the legitimate and professional channel it is.Alex Moulieris, PLAN Australia

We see the

mortgage comparison rate legislation not achieving a great deal in its

current form. I would expect that, like New Zealand did, Australia will dispense of this legislation at the first opportunity.Gerald Foley, National Mortgage Brokers

News: AFG calls for industry regulationThe AFG has called on the government to bring national uniform regulation to the broking industry. Executive director Kevin Matthews said the government must act “sooner, not later” to prevent rogue brokers from tarnishing the industry’s reputation. Matthews said: “It will only be a matter of time before brokers more interested in making money than helping borrowers, bring the industry into disrepute.”

John Symond, Aussie Home Loans

Editorial:What we told our first readers…“So, you’ve decided to pick up the first issue of Australian Broker, the new monthly business-meets-lifestyle magazine for mortgage brokers – now you really can mix work with pleasure. Our aim is to offer you an entertaining and informative look at your industry, providing all the knowledge you need to improve your existing business, as well as the tools and confidence to explore new sectors and markets…”

Not much between SVR productsSt.George’s Professional Benefits Pro Pack just pipped CBA Mortgage Advantage for top place in a review by a panel of brokers, with nothing separating the middle order, which included ANZ’s Breakfree and Westpac Premier Advtantage.

The industry has a great future if brokers take a long-term view. Too many grab large upfront fees, not worried about tomorrow

Source: Australian Broker’s first online straw poll

The number of brokers satisfied with aggregator service

The proportion of respondents saying they saw their sales manager rarely if ever

50% 46%

ISSUE 001

25brokernews.com.au

200th issue

26 brokernews.com.au

200th issue

Over the years, Australian Broker has devoted itself to bringing you the best of the market’s news and views. Join us on a journey through some of our all-time favourite stories.

THE AUSTRALIAN BROKER STORY...

Page 28 cont.>>

Lenders put on high-risk alert

Lenders have been put on warning that slipping credit standards won’t be tolerated after APRA revealed it had several lenders on “high risk alert” and could soon be “on their doorstep”. However, BankWest’s John Rolfe disagreed credit standards are slipping.

Interest in Bluestone hots up

New speculation in the industry points to both GE and Westpac as potential front-runners to buy an equity stake in Bluestone Mortgages.

FBAA and MIAA abandon merger plans

The FBAA has walked away from talks of a merger with the MIAA due to objections over a structure that could see brokers out-voiced by larger broking groups.

Aussie plans fail

Aussie Home Loans is shutting down all eight of its retail stores in a total reversal of its strategy to open 200 shops, and will now focus instead on franchises.

General Motors revs up

General Motors is hoping to take on the big boys, Liberty and Bluestone, in the non-conforming market, after taking a 25% stake in mortgage manager Capital First.

Wizard: We took action

Wizard Home Loans has come out in its own defence after media reports alleged one of its brokers used fabricated ANZ bank documents to secure a business loan.

RAMS to take on broker channel

RAMS declared it will expand its third party business up to 50% in the 2004/05 financial year, after growing 100% in the 2003/04 period

Liberty success in media action

Liberty Financial has been successful in its initial legal action against Channel Nine current affairs program A Current Affair after it produced a sensationalist story questioning the company’s practices. Liberty said many statements were incorrect and misrepresented.

BoQ banks on hypocrisy

Bank of Queensland is still using brokers for its equipment finance division even after the company’s MD David Liddy claimed it was dropping brokers.

Brokers shunned by Integris

Integris Home Loans has effectively stabbed brokers in the back by cutting them off from the credit unions they have lodged loans with.

High growth for lo-docs

Low-doc loans now account for nearly 10% of business in the mortgage industry – with many believing the numbers are set to increase.

Refund Home Loans has been given accreditation by the Commonwealth Bank, while an ACCC investigation into decisions by ANZ, St.George and Westpac to deny the refund broker accreditation continues.

Lenders lose out as Loanlink liquidatedLoanLink Brokers Services in

Queensland has gone into

liquidation: everything but the company’s kitchen

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Industry comes out fighting after JP Morgan Report

Senior industry figures have been forced to return fire following the release of Fujitsu and JP Morgan’s latest influential report that slammed brokers for only recommending two or three lenders most of the time, and said banks would soon seriously curtail commissions.

Mortgage Choice dispute unresolved

There appears to be no resolution in sight to a bitter, long-running power struggle between Mortgage Choice and as many as 40 of its top performing franchisees.

Brokers threaten $50bn CBA backlash

Brokers have warned CBA they will ditch the lender in unprecedented numbers if it decides to reduce the commission it pays them, after Ralph Norris suggested a review of costs.

Brokers back off RAMS

Brokers have been warned to stay away from RAMS after its staggering implosion, with AFG saying it could no longer endorse new business after a Westpac/RAMS franchise deal.

X Inc on hunt for brokers

Aggregator X Inc has said it has shaken off the effects of a previous legal battle with Aussie and set sights set on more than doubling its mortgage broker network across Australia.

Award-winning Hahne expelled

Victorian-based mortgage broker Col Hahne and his GAL Home Loans have been expelled from the MIAA, less than a year after winning three awards given out by the industry body.

Brokers behaving badly in the ACT

Brokers and lenders working in the ACT could come under fierce scrutiny from a research project conducted by the Consumer Law Centre of the ACT. The study was provoked by the conduct of some lenders and brokers providing low-doc and no-doc loans to ill-equipped borrowers.

Haron quits FAST to set up rival

Industry icon Mark Haron will set up his own broker group later this year after his swift and sudden departure from FAST, which he ran with phenomenal success over six years.

Bankwest move signals aggregator shake-up

Bankwest has negotiated deals with its top six aggregators to guarantee upfront and trail commissions until the end of the year in return for increased volume and efficiency.

FAST ‘won’t sell out’

Executive chairman and 81% majority shareholder of FAST Anne-Marie Syme has declared she has no plans to sell her stake in the

aggregator, saying it would remain independent. “It’s not in the game plan,” she said.

Brokers have been left wondering exactly what happened after Macquarie Bank rocked the industry with its decision to ‘wind back’ origination services. The majority of Macquarie loans were originated by third party, meaning a considerable impact on brokers.

Draft regulatory Bill given thumbs down

An NSW government draft Bill intended to serve as the basis for national mortgage legislation has been given the thumbs down by brokers who say it gives lenders an unfair advantage.

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http://www.choiceaggregationservices.com.au

Is this man taking money out of your pockets?

Under direction of new consumer banking boss Peter Clare, Westpac has outraged brokers and aggregators by unilaterally slashing commissions by 35% over the life of a loan. AFG’s Kevin Matthews said it was brave of them to go first, but brokers would vote with their feet.

Broker commissions under threat

Commissions paid to mortgage brokers once again appear to be under threat, after the federal government made a decision to ban commissions for financial advisers.

Vic brokers nonplussed by St.George rebrand

MPA Top 100 brokers working in Victoria have sounded off on St George's rebrand as Bank of Melbourne in the state, and say it remains to be seen if customers will view it favourably.

GMAC-RFC to offload mortgage platform

Capital First is up for sale as part of a GMAC-RFC ‘strategic review’ which included the suspension of writing new business. GMAC revealed the strategic review included ‘seeking expressions of interest from potential acquirers’ for its mortgage platform.

CBA backlog blitz ‘a good start’

The industry has applauded the CBA’s effort to make headway through a massive processing backlog, with processing staff being forced to stay back over a weekend.

Dark days as Bluestone suspends originations

Non-conforming specialist Bluestone Group has been forced to suspend originations of

its residential product a year after the funding markets closed suddenly.

Once one of the most recognisable brands in Australia, Wizard Home Loans will soon become just another mortgage products sold by Aussie brokers. 120 out of 160-odd Wizard franchises in operation will move to Aussie, adding to its 30 retail stores nationally.

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Consolidation the ‘elephant in the room’

Consolidation of mortgage aggregators is expected to continue apace in 2012 due to

margins and costs, forcing the industry to assess the future viability of aggregation models.

Brokers blast ING Direct on service

Brokers have reacted with a litany of complaints over ING Direct's service proposition, following “veiled threats” from the second tier lender in which it warned that brokers risked becoming irrelevant if they continued to send the majority of their deals to the big four.

BankWest shuts brokers out of top product

BankWest has blamed costly credit markets for its decision to pull its popular Rate Tracker loan out of the third party channel, a declared ‘victim of it’s own success’. “We’ve hit the volume hurdles that we wanted to hit in the broker channel,” Mark Reid said..

ASIC on the prowl with fines, bans

ASIC has turned up the heat on its monitoring activities, and expects to be taking more deterrence action in the months ahead after a series of fines and bans.

ASIC supervision is carrot and stick

ASIC will assist brokers to comply with the newly introduced National Consumer Credit Code, or deploy ‘significant enforcement and deterrence resources’ if necessary to ensure their compliance.

Associations defend their position

Industry associations are drawing up their post-regulation plans in order to remain relevant in the eyes of brokers, following the shift towards ASIC oversight of the industry.

SHOCK! Westpac raises commissions… in NZ

Ah, what a difference the Tasman makes to broker policy! Or so it appears after Westpac New Zealand decided to raise commissions to encourage more broker business following concerns over the volume of deals coming through the channel recently.

Aussie’s NMB buy just the beginning

Aussie Home Loans has declared its purchase of National Mortgage

Brokers is just the beginning of a series of buys as it goes on the acquisition trail.

Brokers discount Genworth claims

Brokers and industry bodies have disputed claims by Genworth that LMI premiums do not represent a significant barrier to refinancing, after the insurer said they only affected 1% of the market.

Brokers face ‘unfair’ NCCP liability

New slated amendments to NCCP legislation run the risk of putting

brokers off non-conforming lending at a time when their attitude to the market was thawing.

University degrees are next: MFAA

The MFAA has revealed that it is in the midst of developing a certification process that will allow members to pursue higher education in addition to their Diploma of Financial Services, in a first move towards a university degree minimum level of education.

Mobius trail runs cold

Brokers who submitted deals through non-bank lender

Mobius are wondering what has

happened to their trail after

monthly payments were frozen.

Potential suitors of Refund Home Loans, which was forced to enter voluntary administration, have been warned they could be buying into an inherently flawed business model.

Shorten on brokers: Not right to be rigid

Assistant Treasurer Bill Shorten has told brokers they do not need to be “rigid” in applying NCCP responsible lending obligations, after he admitted that the legislation was being interpreted restrictively by lenders and brokers had been ‘scared away’.

Credit shortfall to impact non-banks

A Fujitsu/JP Mortgage report has predicted demand for home lending may outstrip supply as the major banks ration credit, giving non-banks a chance to get back in the market

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Aussie back to roots after CBA deal

Aussie Home Loans will seek to use its partnership with Commonwealth Bank of Australia to compete with other lenders through its suite of home loan products. Symond’s bid to ramp up Aussie’s own offering again came after CBA bought a third of Aussie for a reported $60m.

Brokers 2 – Whittingham 0

Broker claims against lead generation services provided by Mark Whittingham are set to start pouring in after a campaign for refunds initiated by Australian Broker resulted in victories for two claimants.

Volume hurdles showdown

The FBAA is considering strong action against lenders who have put in place volume

hurdles, with vice president Ron Gunthrie saying it may approach the ACCC.

34 brokernews.com.au

Got any juicy gossip, or a funny story that you’d like to share with Insider? Drop us a line at insider@ausbroker.comInsider

an upside-down page 42, followed by pages 41, 40 and 39.

Insider feels it is probably already enough of a challenge getting FBAA members to read an article called ‘Creditor’s statutory demand and the Xmas Scrooge’, but we think it is taking things a bit too far by expecting them to read it upside down and back-to-front!

If that’s not enough to induce a migraine of epic proportions, the missing pages at the front end of the magazine (pages 15–18), suddenly appear after page 38, upside down of course and in descending order.

Taking the banks on (board)For many a year, John Symond has talked loud and proudly (to anyone who would listen) that Aussie Home Loans would continue to ‘take on the banks’.

While we’ve always thought this statement meant he was taking the fight to the country’s major lenders, in light of the CBA buying a third of the mortgage broker, it seems he might have meant it a bit more literally – as in taking them on as a shareholder.

Of course, not everyone seems to have got the memo about the investment by Australia’s biggest bank (apparently it was a ‘done deal’ for some time) – most notably Aussie’s new CEO Stephen Porges who, last issue, launched into a rather vitriolic attack on the banks, accusing them of not caring about customers and only being in it for the money.

Following the confirmation of the investment by CBA, one suspects the mortgage broker might tone down the verbal assault a tad.

We’re here for the foodMany people have blamed greed

for the current mess we’re in, but it was greed of another kind that Insider observed at a recent NAB Roadshow, courtesy of two foul-mouthed brokers.

While around 500 brokers sat quietly listening to various speakers present in the ballroom of the Four Seasons, low grunting noises and a loud conversation could be heard from a table nearby.

Heads turned towards two brokers who were intent on doing their best impressions of a scene out of George Orwell’s Animal Farm.

Making noises that would have put farm animals to shame the two brokers scoffed the food on offer, talked loudly during the presentation and then got up to leave once they ran out of things to eat. But we should mention that they did manage to do a bit of networking. Before leaving they ventured up to a colleague, reminding them to ‘enjoy the bullshit’.

A question of ethicsNow it’s never going to be easy to get brokers to concentrate on listening to keynote speakers with the white sands of Broad Beach just 100m away, but that still doesn’t explain why a paltry number of delegates showed up for the last session on Day 1 of the Australian Brokers Forum on the Gold Coast.

Insider recently came across some ‘interesting’ remarks by deputy chairman of the Ray

White Group, Sam White, in our sister publication MPA.

In a feature looking at how brokers fitted into real estate businesses, White made the following comment: “We felt that Hookers would be able to offer their clients more financial advice and rates. So we started our business to ensure that our agents had tools that would be relevant.”

Hookers… immediately thoughts turn to mortgage broking offices located in the wrong end of town, where a red light burns all night and shadowy borrowers, their faces hidden behind the collars of upturned winter coats, slip in from the cold.

Okay, so none of this is entirely true – ‘Hookers’ is of course White’s nickname for rival group L.J. Hooker, and put in context the remark refers to Suncorp buying L.J Hooker in the early 90s.

Then again, perhaps White has inadvertently stumbled on to something – with broker groups setting themselves such ambitious growth targets, perhaps it’s time to look beyond the ranks of disgruntled ex-bankers to those professionals who put their customers’ needs first.

After all, every borrower should hope for a ‘happy ending’ … right?

A very tough readInsider was left with a very sore neck after attempting to peruse the most recent issue of Finance Broker magazine, which hit our desk recently.

Paging (rather rapidly) through the FBAA members’ magazine, Insider reached what he expected to be page 15 – it usually follows page 14 – only to be confronted by

Perhaps it was the subject matter – ethics.

Insider is still trying to work whether the lack of participation showed that the mortgage industry is in dire straits with few ethical practitioners to be found or that the brokers are already so ethical that they saw no value in attending the session.

The art of managing mortgage managersInsider recently found itself within the hallowed halls of Challenger’s mortgage management division in Melbourne.

It was interesting to note the way the wholesale funder has divided up the floor space – it’s entirely open plan with each mortgage management team assigned a designated cubicle of their own with a sign hanging above their allotted space displaying their name and logo (sort of like the hanging gardens of mortgage managers).

Of course, this got Insider thinking back to those days of high school exams and the inevitable panic that would sink in when the person next to you began writing away madly and you were still chewing your pen just trying to understand the question.

Insider wonders if similar moments of panic set in among the competing mortgage managers – especially if a phone in the cubicle next door is ringing, but yours hasn’t buzzed since last week.

‘Yes hon, I can give you a loan with a happy ending’

You’ve laughed. You’ve cheered. You may even have cried. Yes, Insider has been a friend (or foe) to many over the years, depending where the jibes were directed. Here’s some of his best.

Hookers? Yes, please

‘Define ethical? Ummm....’

retrospective

http://www.australianmortgageawards.com.au

36 brokernews.com.au

Treasurer Wayne Swan is waxing lyrical about his latest budget, but what does it mean for you? Adam Smith outlines what it means for your business and family

The Federal Budget has been handed down, along with Treasurer Wayne Swan’s promised $1.5bn surplus. But what does the Budget mean to you, your business, your family and – perhaps most importantly – your grog? Has

our illustrious Treasurer delivered small businesses like yours a gift from above or a kick to the nether regions? Will the magical surplus actually appear, or is it just smoke and mirrors? We dissect the gargantuan document so you don’t have to.

Your businessSwan has touted the budget as delivering further benefits to families and businesses, saying it includes measures to stimulate small business and entrepreneurship.

Small business owners missed out on a mooted cut to the 1% company tax rate, which was previously scuttled by the coalition. Swan took aim at the Opposition for that result, but vowed that small business would not be left out in the cold.

At the heart of the Government’s offering to small business is a $714m loss carry-back scheme allowing business owners to offset a current year tax loss of up to $1m against tax paid in previous years, receiving a refund up to $300,000.

But the Government may be giving with one hand to take away with the other, one group has said. The Institute of Public Accountants has claimed their scrutiny of the budget has revealed it does little for small business.

“New reforms are being funded by previously announced reforms which are now being cancelled. On balance, many small businesses may not be better off. The announcement that businesses will be able to carry back up to $1m worth of losses and offset it against the previous profits was a welcome relief.

However, this measure doesn’t go far enough – it doesn’t benefit profitable businesses or provide immediate relief. Unincorporated small businesses which make up over 66% will receive no relief,” the Institute’s CEO Andrew Conway said.

And for brokers looking to expand their product offering into self-managed super funds, things may have gotten a bit more complicated, particularly if their clients are high income or close to retirement. Clients aged 50 and over will now only be allowed to make concessional

contributions up to $25,000 per year before contribution cap penalties kick in. High earners will also be slugged as the contributions tax for people earning $300,000 or more doubles from 15% to 30%.

Your familyThe crux of the budget has been its delivery of further welfare benefits to families. The Government has touted its increased cost of living payments as spreading the benefits of the mining boom, with Swan indicating that $3.6bn of the mining tax will go to fund the initiatives.

Among the initiatives for families are an increase to the Family Tax Benefit Part A, a new supplementary allowance for the unemployed, students and parents with young children, an extra $2.1bn injected into a new Schoolkids Bonus to replace the Education Tax Refund and more than tripling the tax-free threshold from $6,000 to $18,200.

The housing marketThere was little new in the budget for housing. The Treasurer retained existing commitments to the Housing Affordability Fund and the National Rental Assistance Scheme, but the housing industry has claimed this did not go far enough.

“The Budget was an opportunity to introduce measures to progress housing supply-side reforms with the states and territories, reduce the excessive tax burden on new housing, and expand and extend existing measures aimed at boosting housing supply,” HIA senior economist Andrew Harvey said.

Harvey lamented the lack of measures to boost supply or help states and territories remove stamp duties.

“Without dedicated housing policy measures and housing supply-side reforms the residential building sector will continue to act as a drag on the macro-economy and the nation’s growing housing shortage will continue to place undue pressure on the household budgets of homebuyers and renters,” he said.

Market talk

Brokers and the budget

The Federal

government may be giving with one hand to take away with the other

How will the budget affect your business?

I believe for small businesses the loss carry back and $6,500 write off allowance will encourage investment while consumers will benefit from the increase in Family Tax Benefit and School Kids bonus, which should help support waning confidence. The governments shift to surplus didn’t cut

too deep. These measures should both be viewed as positive for the mortgage industry, especially if it assists the RBA to further lower rates in 2012.

Danny Masri, Mortgage One Australia

How will the budget affect your family?

Dropping the promised business tax cuts was a little disappointing. To be applauded though are the measures for Aged Care and the National Disability Insurance Scheme. I’ll be paying $25,000 more in tax than I was three years ago as they have reduced the super cap, plus doubled the tax I pay on

the super that goes in. All in all, I think we are still very blessed to be living in the Lucky Country.

Gerard Tiffen, Tiffen &Co

37brokernews.com.au

Channel changing Where global banks are getting their business from now, and where they expect to get it from in the future

Would you take on a flatmate to help pay your mortgage?

$38,000**The average amount a low income family would save in interest by applying the increased Family Tax Benefit A to their mortgage payment

At a glance…

Source: RBA

Nearly a third of Aussie homeowners would take on a flatmate to help pay their mortgage, and many say they already have.

Research from PRDnationwide has found 31% of homeowners would like to look into the option of renting out a spare room to offset their mortgage payment. While 44% said they wouldn’t rent out a room, 14% said they had already taken on tenants, and 11% said they would like to, but had no space.

PRDnationwide director Aaron Maskrey commented that the result was indicative of a tough economy where many homeowners were experiencing difficulty meeting their mortgage repayments..

“Renting out a spare room to generate extra cash could reduce the likelihood of suffering mortgage stress,” he said.

The prospect of taking on tenants could also offer hope for struggling first homebuyers, Maskrey suggested. With housing remaining a stretch for many hopeful first-time buyers, Maskrey

said a flatmate could offer some breathing room with repayments.

“Getting onto the property ladder is increasingly difficult for thousands of first-time buyers in Australia, and increasingly, homeowners are making unused space earn its keep,” he said.

Maskrey said the proportion of homeowners open to the idea of flatmates had grown. PRDnationwide last conducted the survey in 2009, when only around 20% of respondents said they would consider renting out a spare room.

“That was when the global recession had just begun to bite and people were perhaps under less pressure,” he said.

But with cost of living pressures growing, Maskrey said homeowners were increasingly buying properties with a granny flat or spare room with the express purpose of renting it out, though some had yet to do so. He said finding tenants was becoming an easy proposition as well.

“Finding a lodger has become easier, with a range of websites advertising for rooms to rent, and flatmates,” he said.

Source: ING Direct

Source: PRDnationwide

NUMBER CRUNCHINGStressed homeowners taking on flatmates

44%31%

14% 11%No

Yes, I already haveYes, I would like to look into it

Yes, but I don’t have the room

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Caught on camera38

nMB took brokers back to Hamilton Island this year for its national conference, following the group’s sale to Aussie. Taking a break from the office, there were plenty of opportunities to enjoy the idyllic surrounds, play dress up, and generally party like it was 1999.

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Image 1 Anthony Boulos (nMB), Clair George (1st Street), Jeremy Fisher (1st Street), Kon Avramidis

Image 2 Flloyd Nangreave (MC), Trish Lingard, Kirsten Esler (NAB Broker)

Image 3 John Andersen and Gerard TiffenImage 4 Clair George & Mardee Thomas (1st

Street)Image 5 David Newham (Newham Mortgage

Management)Image 6 Flloyd Nangreave (MC), Trish Lingard,

Kirsten Esler (NAB Broker)Image 7 Brett Hartley (MAS Funder), Gerard

Tiffen (Tiffen & Co), Troy Phillips (MAS Funder)

Image 8 Kon Avramidis (nMB)_Alex Martin (Asset Plus Finance), Paul Bakker (Westpac), Jodie Hainey (nMB)

Image 9 John Karipidis (Money Saver Finance), Floyd Nangreave (MC), Alex Martin (Asset Plus Finance), Rose Addamo (Citibank)

Image 10 Jodie Hainey (nMB), Alex Martin (Asset Plus Finance), Vera Jovanovic (nMB)

Image 11 Mardee Thomas (1sr Street), John Kennedy (JK Mortgage Solutions) and Jeremy Fisher (1st Street)

Image 12 nMB Broker of the Year ($) Peter Wotherspoon with Sal Cinque and Tracy Williams

Image 13 Phil Naylor (MFAA), Kym Dalton (Futurology), Gerald Foley (nMB)

Image 14 Margaret Chapman (nMB)_Anthony Mardini (Griffin Financial Group)_Barry O’Connell (Aqua Wealth)

Image 15 Peter Blackwell (Roberts Home Finance), Andrew Cairns and Emoke Palos (ING), Jennifer Blackwell

Image 16 Natalie Wilcox (Think Advantage)_Gerald Foley (nMB)_Jason WIlcox (Think Advantage)

Image 17 nMB Broker of the Year (#) Gerard Tiffen with Sal Cinque and Tracy Williams

Image 18 Tristan Miller and Gerald Foley (nMB)Image 19 Tracy Williams, Sal Cinque, Kon

Avramidis (nMB)Image 20 Vera Jovanovic (nMB), Kon Avramidis

(nMB), John Karipidis (Money Saver Finance), Song Ye (nMB)

39brokernews.com.au

ANZPh: 1800 812 785www.anz-originator.com.auPage 7

Citibank Mortgages1300 652 059www.mortgagebroker.citibank.com.auPage 16-17

Homeloans Ltd08 9261 7000www.homeloans.com.auPage 22

ING DIRECT1300 656 226introducer.ingdirect.com.auPage 40

Liberty Financial 132 388www.liberty.com.au Page 3

National Australia Bankwww.nabbroker.com.auPage 9

NCF Financial Services Pty Ltd.1300 550 707www.ncf1.com.auPage 8

PLAN Lending 1300 787 874www.planlending.com.auPage 5

Pepper Homeloans1800 737 737www.pepperonline.com.auPage 13

Versara1300 CAVEAT (228 328)www.versara.com.auPage 4

NON BANK LENDERMortgage Ezy1800 TOO EZY (866 399)www.mezy.com.auezyquit@mezy.com.auPage 24

SHORT TERM LENDER Interim Finance 02 9982 2222 www.interimfinance.com.au Page 2

Mango Media 02 9555 7073 www.mangomedia.com.au Page 1

WHOLESALEResimac1300 764 447www.resimac.com.auPage 11 & 27

OTHER SERVICESResidex1300 139 775www.residex.com.auPage 39

Trailerhomes0417 392 132Page 37

AGGREGATOR / WHOLESALE BROKERChoice Aggregation Serviceshttp://www.choiceaggregationservices.com.au1300 135 389Page 29

PLAN Australia 1300 787 814 www.planaustralia.com.au Page 23

BANKCommonwealth Bank132 015www.commbank.com.auPage 15

COMMERCIAL Think Tank Property Finance1300 781 043www.thinktank.net.audeal@thinktank.net.auPage 19

FINANCESemper Capital Pty Ltd1 800 SEMPER (1800 736 737)enquiries@semper.com.auwww.semper.com.auPage 21

LENDER Ace Finance Aust Pty Ltd1300 327 727www.acefinance.com.auadmin@acefinance.com.auPage 6

www.residex.com.au

The House Price Information People

To advertise in Australian Broker call Simon Kerslake on +61 2 8437 4786.

http://www.introducer.ingdirect.com.au/pcm

Joe SirianniExecutive Director, Smartline

“Australian Broker: whether you love it (or hate it), agree or disagree, any viable industry needs a forum to debate issues that affect us, and brings us up-to-date with the ever-changing landscape of our industry. Well done on playing that role.”

Gerald FoleyManaging Director,National Mortgage Brokers Pty Ltd

“Key Media, through its various print and online publications, has

quickly established a reputation within the Australian mortgage broker market and broader lending landscape as a valuable source of industry news and information. The frequency and speed that news is now delivered ensures that everyone is abreast of the latest events and views of the many and varied industry participants.”

Wendy Higgins Owner Manager, Mortgage Choice Glenelg

“With a very busy schedule I often find I am tucked up in bed by the time I get to read Australian Broker. I always read it from cover to cover and find it has many interesting articles

and industry insights within its pages. I am sure I have read all 200 issues and learnt something from each and every one of them."

Peter White National President/CEO, FBAA

“Australian Broker is the leading information magazine for the finance broking sector, covering all aspects of our industry. Maintaining quality editorials, informative content and a great resource to our industry, the FBAA has always been greatly appreciative of how they have approached and handled controversial industry happenings so as to give a balanced view and perspective on matters whilst not being shy to tackle the tough questions and issues of the day.”

Kathy CummingsExecutive General Manager, Third Party,Commonwealth Bank

Michael RussellCEO,Mortgage Choice

“Australian Broker and its online cousin Australian Broker Online continue to play an important role in the evolution of the mortgage broking industry in Australia. Real-time news and issues requiring debate and input from industry participants are critical to the ongoing health and growth of any industry, and Key Media and Australian Broker should feel proud of their contribution over the past decade.

“Australian Broker has been part of the mortgage broking landscape for the past eight years. During this time the magazine has played an active role in distributing news and encouraging debate on industry issues; a role which has contributed to the growth and success of this industry. Congratulations on your 200th issue.”

Steve WestonFormer General Manager, Broker Platforms,Advantedge Financial Services

“Both Australian Broker and Australian Broker Online are institutions in the Australian mortgage industry. They provide high quality, timely content on topics that are relevant to the industry. Their articles are often the catalyst for debate amongst industry participants.”

“Australian Broker, in either print or online, is a news source we check daily. It’s speed, insights and focus on current issues make it a ‘must have’ news source for the industry.”

Mark Hewitt General Manager, Sales and Operations,Australian Finance Group (AFG)