Australian Broker magazine Issue 6.11

$4.95 POST APPROVED PP255003/06906

ISSUE 6.11 June 2009

Top 10 tips for Managing buying a laptop redundancies page 25

page 22

Legal isues for brokers page 18

■ 4: Aggregators and licensing ■ 10: Online fraud ■ 14: Female brokers

Odds narrow on Mortgage Choice-Count deal A merger, takeover or alliance of some sort looks increasingly likely between Mortgage Choice and Count Financial, after a meeting of senior executives.

The meeting between Mortgage Choice CEO Michael Russell and Count Financial chairman Barry Lambert took place on Friday 15 May, though both claimed later that it was set up purely to get to know each other.

But it did send the rumour mill spinning, with Russell giving it yet more momentum when he told Australian Broker that he would be looking to engage companies in a bid to form alliances to expand and strengthen the brand.

Speaking to AB before the meeting, Russell said he would try to use the occasion to determine whether any opportunities existed between the two organisations. He said he was “pretty keen” to discuss such opportunities in lieu of an unwanted takeover.

Lambert said he was not in a position to speak about the contents of the meeting,

Mortgage House plans NRL return The spate of sex scandals involving rugby league players has not put off non-bank lender and aggregator Mortgage House, which plans a return to sponsoring the sport.

Founder and managing director, Ken Sayer, told Australian Broker Mortgage House would be “back in town” either later in the year or early next year. “I would sponsor a team every day of the week, provided there is a gentlemen’s exit clause so that when there is unacceptable behaviour we can vote with our feet,” he said. Mortgage House has previously sponsored both the Roosters and the

Melbourne Storm and Sayer said just such a gentleman’s agreement allowed it to exit its deal with the Eastern Suburbs-based Sydney club when an “incident occurred”.

“There was an incident [at the Roosters] and we came up to them, shook hands and said ‘we’re out of here’,” Sayer explained. He said everyone parted ways amicably.

Sayer’s eagerness to return to NRL sponsorship came as a string of scandals involving rugby league players saw Aussie Home Loans reverse its keenness to sponsor this year’s State of Origin contest. Page 28

though he quelled rumours of any formal talks by saying that Count had no arrangement with Mortgage Choice – aside from its 15.27% stake in the company.

“We would certainly welcome doing business with [Mortgage Choice] but [Michael Russell and I] did not go past a personal chat. I can’t say any more other than I appreciated the opportunity to meet Michael and learn about his background.”

A Mortgage Choice spokesperson also said Michael Russell had nothing further to report following the meeting.

Although the meeting has been played down by both parties, over the past year Count Financial has made no secret of its desire to acquire Mortgage Choice, first flagging interest in the company with a $124m takeover bid in July 2008.

Then-managing director of Mortgage Choice, Paul Lahiff, rejected the offer saying it did not reflect the underlying value of the business.

Page 28

ARL boss: State of Origin made Wizard The Australian Rugby League (ARL) hit back strongly at disparaging remarks made about the sport by Aussie chairman John Symond, insisting it remained a great sponsorship vehicle.

Geoff Carr, CEO of the ARL, told Australian Broker the Wizard sponsorship of the NSW Blues had been a “great vehicle of awareness”.

“No one had heard of Wizard until they sponsored them,” Carr said. “There have been difficulties lately, but we are comfortable the sponsorship will deliver for Aussie as it has for Wizard.”

2 News

AFG buyback exercise “a vote of confidence”

Kevin Matthews

AFG and institutional investors 1994 Business formed by Malcolm Watkins and Kevin Matthews 2001 Macquarie buys 10% stake 2004 Tower and Allianz each take 5% stake March 2007 plans announced for $40m float Oct 2007 IPO plans placed on hold following US sub-prime problems

AFG executive director Kevin Matthews says a decision by its institutional investors to hold onto their shareholding is a vote of confidence in the aggregator.

His comments follow The Age reporting that AFG founders – Matthews along with Brett McKeon, Malcolm Watkins and Bradley McGougan – had been unsuccessful with a buyback offer put to minority shareholders Macquarie, and insurance businesses Allianz and Tower.

The founders, who collectively own 74% of AFG, offered 30c a share – equal to AFG’s net cash and liquid assets backing – to re-acquire Macquarie’s 10% stake and the 5% held separately by Allianz and Tower.

Despite the offer being turned down, Matthews said it had been a worthwhile exercise and showed the three businesses valued their investments in AFG highly.

Matthews said there were a number of reasons for launching the buyback, one of which was to allow AFG employees – many of whom are small shareholders – to cash in on their investments if they so wished.

On the institutional side, he said AFG was no longer as close to these investors as it had been in the past – particularly Macquarie.

“Macquarie is no longer in the mortgage market so the strategic alliance is no longer there. We made the offer to them in good faith, but they didn’t want to sell.

“It’s a vote of confidence that they want to stay in the business.”

While Matthews told AB the offer would be reviewed at an upcoming board meeting, he said it was doubtful a higher offer would be made.

Making a significantly higher offer would not make sense to the founders, he said, adding that one of the problems at the moment was placing a value on aggregation businesses.

www.brokernews.com.au regional managing editor

George Walmsley editor

Larry Schlesinger journalists

Agnes Gajewska Luke Cornish contributors

Sam Benjamin Jen Harwood David Marriott Doug Mathlin Matthew Nolan

production editor

Tim Stewart

design manager

Jacqui Alexander designer

Ruby Alvarez

sales director

Justin Kennedy hr manager

Julia Bookallil

marketing manager

Danielle Tan

marketing coordinator

Jessica Lee

traffic manager

Stacey Rudd

advertising sales

Simon Kerslake t: 02 8437 4786 f: 02 9439 4599 simon.kerslake@keymedia.com.au Rajan Khatak t: 02 84374772 f: 02 9439 4599 rajan.khatak@keymedia.com.au editorial enquiries

Larry Schlesinger t: 02 8437 4790 f: 02 9439 4599 larry.schlesinger@keymedia.com.au distribution

Australian Broker is available by subscription.

E-mail all subscriptions and mailing enquiries to: subscriptions@keymedia.com.au t: 02 8437 4731 or f: 02 8437 4753

Copyright is reserved throughout.

No part of this publication can be reproduced in whole or part without the express permission of the editor.

Contributions are invited, but copies of work should be kept, as Australian Broker can accept no responsibility for loss. © Key Media 2009

Australian Broker is the most often read industry publication, according to independent research carried out by the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia in December 2008.

The research also found that brokers rate Australian Broker as the best for both news content and feature articles, followed by sister publication MPA. Overall, on all categories, Australian Broker ranks top followed by MPA. The results were based on a sample of 405 respondents who were the subject of telephone interviews.

PLAN: Re-accreditation a good thing for brokers Recent bank accreditation policy changes have not been overly popular with brokers, but at a recent PLAN Australia Personal Development Day CEO Ray Hair said brokers should see the silver lining.

Following a stream of policy changes made by the Big Four, many brokers voiced concerns that the majors are using the amendments to get rid of the broker channel. However Hair said that banks have in fact tweaked their policies to improve cost efficiencies and form a

www.brokernews.com.au

more productive relationship with brokers.

“Most banks are quite upfront and comfortable about saying that more than 40% of their business comes from brokers,” he said.

“That’s not going to change. Banks need brokers – we just have to work out how we can work on a more cost-effective basis.”

He added that by introducing volume requirements into accreditation policies, banks would be able to filter through to brokers who were more familiar with their products.

This, he said, would also have some benefits for top brokers whose quality metrics are currently being affected by worse performing members in their aggregator groups. Hair said that currently PLAN’s top 500 brokers are currently writing 76% of the total business.

By limiting accreditation to brokers who are familiar with a bank’s policies and products, some of the worse performing brokers will be omitted from conversion ratios – providing a better result for top quality brokers.

News 3

www.brokernews.com.au

4 News

Broker Poll: re-accreditation fees

Aggregators unlikely to wear licence risk While aggregators are waiting to hear what the final form of the new licensing rules will take, the balance of opinion is swinging in favour of members holding their own licence, rather than allowing them to be authorised credit representatives.

Current licensing proposals contained in the National Consumer Credit Protection Bill allow licence holders to grant authority to Ray Hair ‘credit representatives’ to perform credit activities (such as loan writing) on their behalf without the need to hold their own licence – the catch being that the licence holder bears all the risk should the conduct of their representative result in losses for the borrower.

In theory, this would allow aggregators, broker groups and franchise operators to become the licence holder and make their members credit representatives, mirroring the structure of the financial planning industry where planners provide advice under the authority of a dealer group, (which holds the AFSL licence).

However, aggregators AB spoke to hinted they were more likely to require their members to seek their own individual licences.

AFG executive director, Kevin Matthews, said having operated under a licensing regime in WA since ‘day one’ it would expect its brokers to be licensed themselves.

“All AFG members in WA have their own licences though we have in some cases allowed them to hold a C class license under us,” he said.

Matthews said if it were to allow brokers to be authorised under an AFG licence it would need to look at “improving margins to cover the risk”.

He pointed out that AFG already has experience dealing with authorised representatives, having been responsible

www.brokernews.com.au

for them as the licence holder for its financial planning business. He said it was not a responsibility to take lightly.

“You need to be able to monitor what people are up to. That is the hard thing as they are virtually independent contractors,” he said.

CEO of PLAN Australia, Ray Hair, said it was currently debating the legal versus business opportunities and risks involved in taking either stance.

According to Hair those businesses that ask every broker to be licensed will take on less risk in a legal sense, but will also have a weaker business proposition.

However, the reverse opens up the potential for legal ramifications if a broker operating under an aggregator’s licence breaches the law.

The issue, he said, would intensify as the licensing date drew nearer.

“It will be interesting to see the approaches that are taken. I think it will really set some organisations apart from the others,” Hair said.

Gerald Foley, managing director of National Mortgage Brokers (nMB), said the final shape of licensing and the requirements for a small broker business to gain a licence would determine its final position on whether brokers ultimately trade under its licence or require their own licence.

“It’s too early to call at this stage. The larger broker groups operating under nMB will almost certainly need to obtain their own ACL,” Foley said.

RAMS CEO, Melos Sulicich also agreed it was still early days in the process: “We will need to review not only the proposed legislation, but also the final legislation before we determine how we will react to it in order to appropriately manage its implications for our customers, franchisees and brokers.”

Westpac has entered into consultation over a re-accreditation fee, in a bid to restrict business to brokers who are unfamiliar with the bank and its products due to not meeting its volume targets. AB asked brokers what they thought:

Q1. Would you be willing to pay a re-accreditation fee?

Yes: 6% No: 91% Maybe: 3% Maybe: “Depends how much, and what WE get for it (eg, better service?),” anonymous post from Brokernews

Q2. Is the requirement for brokers to settle one Westpac loan every six months to keep their accreditation reasonable?

Yes: 3% No: 97% No: “This is the whole reason we pay an aggregator so the bank gets bulk submissions and settlements May as well have direct accreditation so then a fee would make some sense,” Craig Fulton, Petire, Qld.

Q3. Do you think banks have the right to penalise brokers who do not meet volume targets?

Yes: 3% No: 97% No: “Penalising introducers for not using the products is absurd, the client determines ultimately who they will commit to – all my clients are presented with all the lenders in a comparison presentation. If the lender is not up to scratch competitively with the other lenders, taking into account the clients circumstances, they don’t get the business,” Ty Middleton, Applecross, WA.

News 5

www.brokernews.com.au

6 News

Draft bill: Challenger demands fairness for all

Steve Weston

When Challenger announced its decision in September 2007 to buy PLAN and Choice and invest in FAST, it promised to go into bat on behalf of brokers.

And this the non-bank lender has done with arguably the industry’s most comprehensive and detailed submission on the draft National Consumer Credit Protection Bill 2009.

Running to 33 pages, it calls for a level playing field for all participants in the mortgage industry and argues against any regulatory action which impairs the capacity of brokers to provide borrower choice, and for non-banks to write competitively priced loans.

The credit regulation regime, it said, must be “carefully targeted at assuring the quality and integrity of mortgage broking services without substantial increases in administrative or other costs that may diminish brokers’ ability to operate in the market.

Rules that place brokers at a competitive disadvantage to the direct-to-lender channel might result in borrowers favouring the direct channel, Challenger warned in its report.

Commenting on the submission, Challenger’s GM for distribution, Steve Weston said the new credit rules must “optimise competition, not have one sector of the industry less impacted than the others”.

“The outcome must be workable – the criteria need to be sensible,” he added.

Heading the list of things Challenger felt should be included in the new credit laws were licensing rules that make “every effort to simplify the credit application process to ensure that it issues appropriate licences to successful applicants”.

It suggested separate “licence application templates” for different industry participants. In supporting minimum standards, Challenger recommended Certificate IV in Financial Services (Finance/Mortgage Broking) should be the minimum benchmark.

Once again it stressed that licence obligations should be “reasonable enough to enable individual brokers and other small scale credit assistants to comply” arguing against obligations covering formal arrangements for managing conflicts of interest, ASIC mandated internal dispute resolution processes and other compliance and risk management requirements.

The submission also detailed the role non-banks had played in providing “effective competition to the banks for the direct benefit of Australian homebuyers” and noted how margins were starting to increase due to consolidation and lenders exiting the market.

As part of its submission, the financial services giant reiterates its strong support for the industry: “Challenger strongly supports the importance of mortgage brokers and mortgage managers within the Australian mortgage market.”

Key points: Industry submissions on the draft bill MFAA • Obtaining an ACL should not be as difficult as obtaining an AFSL. • Licensing should be simplified so as not to disadvantage (or disqualify) small operators.

• Registration should be permitted until 31 December 2010 • Licensees should be obliged to disclose fees paid to referrers • The notices referring consumers to an EDR need to be amended to inform consumer about the licensee’s own IDR, and to explain that an EDR can only assist if there is a genuine dispute.

• Disclosure of commission should be in bands to enable the consumer to assess whether the broker’s recommendation may be influenced by the amount of commission the broker will receive.

Challenger • Different licence application templates must be provided for the various industry participants.

• ACLs with five or less representatives should be exempt from some licence obligations.

• Brokers should only have to make reasonable enquiries of the consumer rather than verify any information collected from the consumer.

www.brokernews.com.au

• Simplify the requirements for brokers providing a credit guide.

• Brokers should only be required to disclose six of the top 10 lenders over an extended period of time.

• Changes should be made to recommendations covering commissions and fee disclosures.

• Broker should not be held responsible for assessing whether use of borrowed funds is appropriate to borrower’s needs.

FBAA • Government should conduct a “post implementation” review of the time frames for registration and licensing.

• Regulations should clarify that staff of a credit representative who provide ‘factual’ information only or refer consumers to other sources of information and advice be deemed not to be providing credit assistance.

• Disclosure documents should be combined to reduce the volume of literature given to the consumer and to reduce repetition.

Ray Weir (Finance Solutions, WA-based finance broker) • Credit provider should be required to give the consumer a copy of any internal or external valuation where the result of the valuation differs from what was anticipated by the consumer.

• The bill should establish a formula by which lenders and borrowers calculate economic break costs.

• There should be obligation to maintain a “loan application register” or data base of loans arranged for audit purposes.

Australian Institute of Professional Brokers (AIPB) • The requirement to provide borrowers with the six credit providers that the licensee conducts the most business with should be dropped in favour of a provision which reflect the panel of credit providers used.

• Regulations should make it clear to the borrower the nature of the relationship between the credit service provider and the credit provider.

News 7

www.brokernews.com.au

8 News

Whittingham selling Govt sees sense in bill exclusion database The federal government’s decision to

Losing two VCAT cases has seemingly not battered Mark Whittingham’s spirit, with the director of Home Loan Selection Services (HLSS), LeadSearch and My Mortgage advertising the sale of 40,000 customer data bases across Australia.

Whittingham first came into the spotlight after reports of lead scams began to surface at the beginning of the year. Since that time more than forty brokers have contacted Australian Broker with complaints against the lead provider.

He has also been involved in several VCAT cases, two of which he lost at the beginning of May. Undeterred, Whittingham has recently sent out an email advising brokers of an opportunity to buy customer databases. The email claimed there were 9,000 names in Victoria, 10,000 in NSW, 13,500 in Queensland, 4,500 in Western Australia, 4,500 in South Australia and 500 in Tasmania.

“We are sorry that we cannot get back to each of you by phone, but this has been a huge response, having over 50 enquiries in one hour this morning – so in order to best answer your questions we thought that a further email would help,” the email said.

It went on to outline that a successful bidder would receive the name, email address and postcode and/or limited financial information, derived from “most people whom now own a home” at a price of $1–2 per customer.

Another email sent a day later by LeadSearch advertised 40,000 names available across Australia (NSW, Vic, SA, Tas, WA and Qld), with 10,000 across Queensland only.

“If you are interested in buying one of these, the agents are looking for a quick sale and will pass them on with a condition that they will be exiting the industry and will no longer use the database,” the email stated.

“If you are interested please reply to this email by 5pm Friday as it will be a quick sale.”

Whittingham’s websites www.mymortgage.net.au, www.leadsearch.com.au and www.hlss.com.au were all in operation at the time of going to press.

Lost in translation While many brokers claim they cannot get a hold of the elusive Mark Whittingham, the director of Home Loan Selection Services, LeadSearch and My Mortgage, he has reportedly been trying to get in contact with Australian Broker.

Whittingham is claiming that he sent positive material from satisfied customers of HLSS, LeadSearch and My Mortgage into the magazine.

Australian Broker has not received any emails matching the above description, however it did make several attempts to email Whittingham. Each one was greeted with a bounce back from the director’s email address.

www.brokernews.com.au

Opposition will pass bill

The MFAA is confident the draft axe two potentially crippling provisions credit bill will have a relatively easy contained in a previous incarnation of passage through parliament. the draft credit bill will be greeted by a MFAA CEO Phil Naylor said the sigh of relief by brokers. opposition had not expressed any Both provisions were included in the concerns about the bill: “I have been National Finance Broking Bill released speaking to the staff of the opposition leader in this area and by the NSW state government in they seem to be fairly comfortable February 2008, subsequently replaced with it…unless we raise some issues by the draft National Consumer Credit that we believe need some assistance Protection Bill released last month. in parliament.”

The first of these was a stay of enforcement provision, where if a loan was initiated by a broker and the lender was in the process of seeking repossession, the borrower could seek a stay of enforcement if there was a dispute with the broker.

“One thing the bill does not have in it is a stay of enforcement,” said MFAA CEO Phil Naylor.

Naylor said advice from the association’s professional indemnity advisors was that such a provision would have sent professional indemnity premiums “through the roof ” and “would have caused lots of other issues as well”.

“Fortunately the government has listened to us,” he said.

The second provision which didn’t make the transition from state to federal bill was a “capacity to repay” requirement which in the NSW bill required brokers to make “sufficient enquiries” about a consumer’s financial status to ensure they can afford the recommended loan.

At the time legal experts said such a provision would make it impossible for brokers to deal in low and no-doc products.

Had the provision been included, Gadens COO Jon Denovan said a broker would have not complied with his duty to verify a borrower’s ability to repay the loan and therefore would have lost his licence if he had recommended a low or no-doc product.

On this point, Naylor said he was also pleased to report that “the minister, Treasury and ASIC have listened to us on that and that onus is not there”.

Naylor’s responses on these two exclusions were part of an education video put out by the MFAA designed to guide its members through the most important aspects of the bill.

Among the points stressed most heavily by Naylor was the all encompassing nature of the bill – that it does not just target brokers but applies to all people involved in the loan-writing process.

“It is not broker legislation – it is credit industry legislation and the idea is that it covers everyone who operates in the credit industry, he said. “It covers everyone who sits between the borrower and the ultimate lender.”

To watch the MFAA video, go to: http://www.mfaa.com.au/default.asp?artid=2341&menuid=371

News 9

www.brokernews.com.au

10 News

Brokers be warned – online fraud on the rise Brokers will need to be vigilant after a spate of hoax emails highlighted the escalating problem of online fraud.

The first round of fraudulent emails to affect mortgage brokers was sent out by somebody purporting to be an ASIC ombudsman.

Targeting Choice Aggregation Services, these emails from ombudsman.asic@gmail. com claimed that the aggregator was stealing trail from unsuspecting brokers.

The email entitled “Have you lost your commission?” claimed that due to “current commission cuts and the issues faced with Challenger,” Choice has “pulled” commissions from underneath brokers.

“The conspiracy, lies and corruption [are] beyond comprehension,” the email stated.

Choice, its parent Challenger, and ASIC were quick to confirm that the email was not authentic. “The origin of this email has yet to be established; however Choice is currently

investigating the source and will work with ASIC as well as industry bodies to identify the sender,” a statement released by Choice said.

“ASIC doesn’t even have the role of ombudsman,” an ASIC spokesperson added.

However, while the ASIC email was easy to spot as a fraud, a spokesperson from the Australian Communications and Media Authority (ACMA) – the authority responsible for enforcing the Spam Act in Australia – said that overall email-based crime was escalating and that email scams were getting more sophisticated.

This was demonstrated by a host of hoax CBA emails which began to circulate at the beginning of May with the aim of phishing for information and the personal details of CBA customers.

CBA group executive retail banking service, Ross McEwan, said three email scams have been circulating domestically and abroad.

The email phishing scams include requests for people to participate in surveys, update account details, activate cards, win prizes and money, qualify for fee refunds or unlock frozen accounts.

McEwan reminded affected parties, including brokers whose customers may have loans or lines of credit with the bank, that the CBA does not contact customers via email seeking personal information, and all such emails should be deleted.

He went on to say that the emails look authentic and include Commonwealth Bank logos, refer to actual bank staff members or include believable email addresses, so customers and affected parties should take extra caution.

In positive news, McEwan said many of the recipients of the emails had already contacted the bank seeking clarification about their validity.

Brokers warned on ‘tick and flick’ RPL courses With the new licensing rules likely to set a Certificate IV in mortgage broking as the minimum training benchmark, many experienced brokers may seek to obtain the qualification via a ‘recognition of prior learning’ (RPL) process.

But brokers have been warned to do their research carefully before choosing an RPL training provider.

Eric Marchesani, CEO of Skill Solutions, told AB brokers needed to be wary of “slap stick” RPL providers.

He said online RPL courses that adopt a ‘tick and flick’ approach should be avoided and urged brokers to always investigate the training organisation thoroughly before enrolling.

“A well constructed RPL course assesses the skills and knowledge of each student by collecting a variety of evidence, assessing written abilities ‘on campus’ and observing each student engaging in a group discussion,” Marchesani said.

A good [registered] training organisation (RTO), according to Marchesani, also ensured each student is competent before undertaking any formal training studies

www.brokernews.com.au

Eric Marchesani

“To achieve this, good RTOs ask new students to complete a year 12 equivalent literacy and numeracy test,” he said.

Paul Eldridge, CEO of training provider Intellitrain said he agreed with Marchesani’s warning on ‘tick and flick’ courses, but said it was important to note that RPL is not a course, but a process. “[It’s] a process of gathering evidence that the person is already operating at the required level of skill, knowledge and competency. The Australian Quality Training Framework (AQTF) actually requires RTOs to provide

numerous pathways to assist students to gain RPL. As an RTO, you are regularly audited by the government body responsible. I am pleased to say that our process passed with no problems at all.”

Eldridge said brokers should be wary of RPL processes that appear too simple, but said they should also not be “so complex as to make it overly onerous” – a difficult balancing act for providers. But he disagreed with Marchesani that RPL assessments needed to be completed “on campus”.

“In terms of actually assessing students in the workplace or on campus, this is certainly an option, but not the only option. It is simply impractical for people in regional areas to travel hours to prove to someone that they have the required level of communication skills. There are many ways to determine if someone can handle client enquiries,” he said.

Eldridge said Intellitrain’s electronic RPL allows online submission of evidence files.

“This makes it quicker for the student and helps them to organise their submission easily.

To my knowledge Intellitrain were the first to develop this electronic submission and are the only one [that is doing it].”

News

12 News

Broker embroiled in caveat law suit

The Consumer Action Law Centre (CALC) is taking • CALC taking broker to a broker to court after court over a caveat alleging he unfairly placed a • claim alleges client was caveat over his client’s house charged loan fee despite to secure the payment of a rejecting offer and the $4,177 broking fee. broker took out a caveat The action follows a over her house to secure the payment complaint made by • broker claims he borrower, Gabie Paulka, followed procedures against finance broker • CALC and MFAA seeking Affordable Home Loans to have brokers’ ability and its director, William to lodge caveats to Curry, after she discovered a secure payment banned caveat which prevents her from seeking an alternative home loan or selling the property had been placed over her house as a result of an unpaid fee.

Senior CALC policy officer, Zac Gillam, who is launching the legal action against Curry, said his claim sets out that his client sought a loan with Affordable Home Loans. However, after being presented with one that did not match her requirements, she had to reject the offer.

Gillam said the claim alleges that the broker then demanded Paulka pay a brokerage fee of $4,177, and registered a charge as a caveat against her home.

“We allege that the broker in this case has demanded a fee that he is not entitled to and has engaged in both misleading and deceptive conduct and unconscionable conduct under the Fair Trading Act,” Gillam said.

However, the broker in question says that he placed the caveat to recover the lender’s application fee after Paluka failed to pay.

He told Australian Broker that after several consultations with Paulka, she had agreed to take out two loans – a bridging loan at a higher interest rate, and a more attractively priced loan once she had had her ABN for six to twelve months.

“So the first, less attractive, loan was arranged and she accepted it. And then didn’t pay the application fees and proceeded no further,” he said.

“My job was to get her a loan approval, which I did.

The money that she hasn’t paid is from the lender, it has nothing to do with me.”

According to Gillam however, a caveat is a disproportionate reaction to a $4,177 fee.

“Placing a caveat over our client’s home is a particularly unfair tactic,” he said.

“Unfortunately this is not the first time we have seen a broker use a caveat against a vulnerable consumer. It is time this practice was banned.”

He went on to say that when the state governments put out a proposal to regulate brokers in 2008 it included a ban on brokers lodging caveats to secure fees. However the national consumer lending laws, which overtook state-based regulation and are currently on the brink of being introduced, do not have this proposal in place.

“Most brokers do not resort to such tactics and there is no reason this practice should not be banned,” he said.

MFAA CEO, Phil Naylor agreed saying that the use of caveats is against the industry body’s policy.

“We have [also] advised the government that we support the consumer groups lobby to have caveats used in this way banned,” he said.

Curry is not a member of any industry body.

Key points

www.brokernews.com.au

Lender issues forging broker-real estate bond Current challenges facing brokers due to poor lender service levels are bringing real estate agents and brokers closer together, according to Ray White Financial services subsidiary, The Loan Market Group.

Loan Market executive director, John Kolenda, told AB there was “clear evidence” showing many real estate agents are starting to align themselves with mortgage brokers due to the “blow out” in service levels, the “complexities of policy changes and because customers are looking for “greater clarity of choice as products/pricing change every month”.

“With service level challenges, most agents and their customers want some comfort in knowing they are going to get an approval and someone fighting to help them realize their dream,” Kolenda said, adding that it was increasingly more difficult to get loans approved and for a sale and purchase to occur seamlessly.

“An agent, Kolenda said, needs to feel in control of the transaction.

His comments came as real estateaffiliated LJ Hooker Financial Services reported that it had added 22 new mortgage brokers in just two months and had also recorded an increase in lodgment growth of 30% in the March quarter.

General manager Peter Bromley said the increase in business was “further evidence that combining real estate and financial services works”.

“There is still more integration between both sides of the business to take place before we realise the full potential of the relationship but it is comforting to see our strong lodgment growth coming from the network.

LJ Hooker has been on the hunt for new brokers since the start of the year and Bromley said recruitment continued to be a major focus for the remainder of 2009.

“Our recruitment target to the end of the year is 100 mortgage brokers, but this may increase since growth levels look like they will continue to move upwards, particularly following the Federal Government’s decision to extend the boost to the First Home Owner Grant,” Bromley said.

John Kolenda

Brokers to face higher PI premiums?

The industry is divided over whether recently introduced changes to external dispute resolution (EDR) scheme regulations are going to increase brokers’ PI premiums.

In the wake of the introduction of the National Consumer Credit Protection Bill, which will require all brokers to belong to an external dispute resolution scheme in order to obtain a licence, ASIC has amended EDR guidelines.

Among the changes, the regulator has revised the provision to allow EDR forums to hear cases up to the value of $500,000. Furthermore, the maximum amount EDRs will be able to award has been raised from $100,000 to $280,000.

“The increase in claim limits and compensation caps in EDR schemes will ensure that many more consumers and retail investors will be able to bring their claims to EDR schemes, avoiding the expense of litigation. We think this is a big improvement,” said ASIC deputy chairman, Jeremy Cooper.

However the amendments have received criticism from the Financial Planning Association CEO, Jo-Anne Bloch, who said personal indemnity (PI) insurance premiums were sure to rise as a consequence of the changes.

And, according to Insurance Adviser’s senior authorised representative, Darren Loads, mortgage brokers were facing a similar concern. He said ASIC’s decision to increase the award amount would have some bearing on the direction of PI premiums.

“At the moment the PI insurance market is still quite soft for finance and mortgage brokers… they’re still buying it relatively cheaply,” he said.

“The insurers to date have been able to absorb changes without passing on the additional costs. [But] I don’t think that’ll stay that way.”

Loads went on to say that as more claims were lodged in EDR schemes under the higher award rate, ultimately this would result in increased premiums.

“It hasn’t to date, but I think it will,” he said. “I think it will be 12 months until the premiums go up and I would expect somewhere in the vicinity of a 25% increase.”

However, he clarified, the EDR changes would only be a contributing factor. He said that with the flow-on effects of the financial crisis making an impact, the market was going to force premiums up anyway.

MFAA CEO, Phil Naylor, stated that while he could not comment about the situation for financial planners, the industry body’s PI advisers have confirmed that the changes will not impact on mortgage brokers’ PI premiums.

President of the FBAA, Peter White, added that while he did not like the idea of an ombudsman, rather than a court, having the ability to award $280,000, the cost to brokers’ businesses would remain unchanged.

14 News

Rigoni “held MFAA to lobby against ‘silly things’ in credit bill to ransom” trying to organise and get approval from MFAA’s strength as an industry by star rating The ASIC for an “outsourced IDR scheme” lobbyist will be tested when it takes on Key points

Maria Rigoni

• loan application rejected by NAB Broker due to broker’s star rating • Maria Rigoni says her client was “held to ransom” by the bank • bank says rating at the time was one star and she was ineligible to submit the deal • rating has since been upgraded to two stars • bank said deal was being assessed

AFG mortgage broker Maria Rigoni says her client was “held to ransom” by NAB Broker after a loan application was rejected on the basis of her star rating. Rigoni said she lodged a deal electronically with Homeside on 7 May 2009 and had contacted them three times by phone since then to establish the progress of the file.

On 28 May, three weeks after submitting the application, Rigoni said she was told by NAB Broker that the file had been declined due to her star rating.

“NAB really has their role out of focus. I am not their customer – the borrower is. Is the proposal an acceptable credit risk to NAB or not? Has it even been assessed as a credit proposal – who knows?” she wrote in a letter of complaint sent to the MFAA. “I am engaged by the borrower, not the lender, and my borrower is being punished due to my lack of volume to NAB (and other irrelevant documentation) even though NAB was the preferred lender chosen by my client.”

Rigoni said due to NAB’s actions her client had been “held to ransom” due to a “star rating problem that I had not been advised about”.

A spokesperson for NAB Broker said that at the time of lodging the application, Rigoni was a “one star rated broker who was not permitted to submit new client business under the Star Rating/Limited Accreditation rules introduced on 1 February 2009”.

“In the standard lending process, this particular loan application was referred to underwriting. All supporting documents must be submitted at the time of application in order for the application to proceed in the queue and delays in the queue are generally due to applications being ‘incomplete’,” the spokesperson added.

She said the broker was able to contact NAB Broker “at any time to find out the status of the application”.

“Brokers can find out their up-to-date star rating by logging into NAB Broker online. We also advise brokers of their star rating via email communications and online when there are any changes with the star rating system as well as informing all aggregators.”

Having made the complaint, NAB Broker raised Rigoni’s star rating to two following receipt of evidence of attainment of Certificate IV in Financial Services.

They said the deal was being assessed.

www.brokernews.com.au

the government over what it calls “silly” things included in the draft National Consumer Credit Protection Bill.

First and foremost the industry body has taken issue with the requirement that any broker looking to obtain an Australian Credit Licence (ACL) will need to have “an internal dispute resolution (IDR) procedure” in place.

According to the legislation, an IDR procedure must comply with “standards and requirements made or approved by ASIC in accordance with the regulations; and must cover disputes in relation to the credit activities engaged in by the licensee or its representatives”.

MFAA CEO Phil Naylor described the internal dispute regulation requirement as a “bit of a nonsense if you are a one man broker”.

“It’s a bit artificial if you are a one-man broker…I mean how can a customer ring you up to complain about your organisation to have you say, ‘who do you want to complain about?’ and the customer says… ‘you’… [and then you say] ‘well I’m the complaints person’.”

Instead, Naylor said the MFAA was

with the MFAA providing this service.

Naylor also took aim at two other licensing requirements which he said would be impractical for small broking businesses to implement, and which looked suspiciously like they had been cut and pasted out of the Financial Services Reform Act (FRSA).

The first of these is the requirement to have “available adequate resources (including financial, technological and HR)”, and the second, to “have adequate risk management systems”.

Naylor said these were “a bit silly if you are a one or two-man business”.

“It’s not silly that you would have some arrangements in place, but to have to prepare all that to get a licence seems a bit over the top,” he said.

Naylor said the MFAA had been meeting with regulators on a regular basis to run through some of these issues and said the government was quite keen to find out what the issues are before it finalised the bill. He said the MFAA had warned regulators against “putting in bits that will make things very complex for most of the industry”.

Female brokers a successful minority: PLAN

The mortgage industry is still a man’s world, but PLAN brokers of the female persuasion are pulling their weight, according to CEO Ray Hair.

Speaking at PLAN’s professional development day held in Sydney on 26 May, Hair revealed female brokers make up only one quarter of PLAN’s membership.

That’s fairly representative of the industry, Hair said, adding that while female brokers may be small in number, they are bringing in significant loan volumes.

He speculated that many women in the industry who may have done broking as a part-time gig while raising children have turned their full attention to the profession now that their kids have gotten older.

Quite a few are PLAN’s top earners, he added.

The anecdotal evidence mirrors MPA’s top 100 brokers survey, which has seen the number of women who crack the list increase year on year.

In 2008, 15 of the country’s top brokers were women. Of that figure, seven captured spots in the top 25.

Lisa Sanders

MPA’s top female brokers Rank Name 2 Lisa Sanders 3 Wendy Higgins 9 Michelle Coleman 11 Katrina Rowlands 19 Karen LeComte 21 Sarah Dougan 23 Janine Carpenter 31 Heather Nyssen 32 Julie Mahony 35 Kelly Cameron-Tull 56 Helen Goldsmith 64 Helen Bernard 69 Lee Dittmer 77 Lisa Bermingham 100 Belinda Schuster

Opinion

News 15

The great mortgage gamble As the major banks divide into two camps, Robert Gottliebsen, associate editor of Business Spectator, looks at a defining moment in the Australian banking industry

A

s I reflected on the momentous decisions being made by the CBA and Westpac on the one hand, and NAB and ANZ on the other, I could not help but recall a conversation I had with David Morgan around three years ago when he was CEO of Westpac.

Morgan was really worried about the housing market and the level of credit being extended in Australia. He had taken a courageous decision that would allow Westpac to lose market share in exchange for maintaining credit soundness. Morgan got his timing wrong, but it was one of the finest examples of long-term banking we have seen in Australia.

Now let’s move to 2009. We can now see that ANZ and NAB are making a Morgan-style call in the Australian housing market – which is currently being driven by first homebuyers – and are restricting their lending. The CBA and Westpac reckon ANZ and NAB are calling it wrong, and see the grant-driven housing boom as a once-in-a-lifetime opportunity to make ANZ and NAB less relevant in this key market.

The enormity of these calls was underlined by Nick Tabakoff writing in The Australian (25 May) when he revealed that while all four of the big banks expanded their mortgage books in the March quarter, the CBA/ BankWest and Westpac/St.George were responsible for a combined 85% of the big four mortgage growth during the period.

The CBA and Westpac have been lifting their market share of the housing market for about three years, but the two takeovers added impetus to the trend because the aggressive cultures of BankWest and St.George were suddenly combined with the strong balance sheets of the CBA and Westpac.

Real estate agents tell me that BankWest has been particularly active and sometimes agents can get BankWest to finance first homebuyers that the CBA has rejected.

ANZ and NAB clearly believe that the margins being offered in housing are not worth the risks. NAB and ANZ would argue that with bank capital in short supply it is better to place more emphasis on the capital hungry but higher margin business loans.

In recent weeks I have been on the ANZ/NAB side and have been concerned at the risks being taken by the big banks in lending to first homebuyers on low deposits which inevitably become ‘no deposit’.

Sometimes the loans come to 105% if you ignore the grant because the builders lift the price of the home beyond valuation. The Tabakoff research underlines that it is the CBA and Westpac that have taken the biggest risks.

It’s easy for commentators like me to issue a warning.

For the CEOs involved, the decisions are much tougher.

All four banks are making long-term calls and it may be two years before we discover who was right.

If, in two years’ time, these low-deposit loans do not deliver substantial defaults, then the two aggressive chief executives – the CBA’s Ralph Norris and Westpac’s Gail Kelly – will have been proved right. Accordingly they will be shareholders’ heroes and ANZ and NAB will have made disastrous calls and will have to claw their way back in the mortgage market.

However, the reverse will also apply. If ANZ and NAB have made the right call then their CEOs will be the heroes.

There are big stakes involved for all the banks and their chief executives.

This article first appeared in Business Spectator on 26, May 2009 – www.BusinessSpectator.com.au

www.brokernews.com.au

16 News

Brokers not getting personal Job hunting: Tweeting a

While there is usually an uproar when a lender pulls a product away from brokers, St.George’s recent announcement that it was pulling out of the personal loan space in the channel hardly caused a stir.

The bank made the announcement on 18 May after performing an analysis into the performance of intermediary partners in the personal loans space.

“St.George Bank’s core strengths are in the home ownership and wealth building segments of the Australian market”, said the bank’s general manager intermediary distribution, Steven Heavey, at the time.

And, according to the CEO of the National Brokers Group, Steve Steven Heavey Lambert, the bank was right.

“St.George pulling out of the market Key points: place in this area wasn’t really a surprise, • St.George pulls out of as the [personal loans] market isn’t personal loan space for an area that many brokers utilise,” brokers Lambert said.

• News does not come as a “So St.George would have seen surprise, will have no great minimal volumes through the channel.” impact He went on to say that most brokers • None of the Big Four offer personal loans through viewed personal loans as a poor use of brokers their time to process, with small remuneration at the end.

St.George was the only one of the big banks to offer personal loans via brokers. None of the Big Four offer the product through the channel.

A spokesperson from Westpac told Australian Broker that St.George’s parent bank does not offer personal loans to the third party distribution channel and this was not set to change in the foreseeable future.

Likewise, the CBA confirmed that no changes would be made to its current policy. The CBA does not offer personal loans via brokers; however brokers in the bank’s cross-sell program are eligible to receive a referral fee if they send a customer into a CBA branch for a personal loan.

Neither NAB Broker nor ANZ’s broker channel offer personal loans, although both banks plan to extend their third party distribution product range.

ANZ general manager of specialist businesses, Glenn Haslam, said the bank was in the process of expanding the range of products it has available to brokers.

“We recognise the important role of the broker channel in meeting customer needs and, where it makes sense, we will look to extend the products available for sale, but this is still a work in progress,” he said.

Haslam did not say whether this was likely to include personal loans.

A spokesperson from NAB Broker said the bank was in a similar position to ANZ. “Our focus is on extending what is available [to the broker channel] with new products, as evidenced by the launch of the Cash Management Service,” she said.

She also remained tight-lipped about whether personal loans would be included in the range of products available to brokers.

waste of time While many brokers are members of social networking sites like Facebook, LinkedIn and Twitter, a new survey suggests they may be ineffective tools when it comes to looking for a job.

A survey of nearly 800 Australian jobseekers carried out by specialist recruiter Hays found that almost one in two said social networking sites do not help their career development.

One in three said social networking sites help them to keep up with contacts, while less than one in five said they help them to find out about new jobs.

“It seems social media has not been as widely adopted as a job search tool as some pundits claimed it would be,” said Grahame Doyle, director of Hays.

“Almost half of those currently job seeking still prefer to keep their social media sites for just that – social interaction – rather than as a tool to assist in their professional job search,” he added.

Despite viewing online networking as a poor job searching tool, Doyle said the potential remained to use social media to a job seeker’s advantage.

“The issue however for some candidates seems to be that if they’ve been slow on the update of social media, it can seem an overwhelming unknown to conquer when they are suddenly looking for a new job.

“For example, do you start with a Facebook site, register with Twitter, go straight to LinkedIn or start a Blog?

But according to Doyle, this misses the point – the key is how you communicate.

“If you decide to use social media as part of your job search, Tweeting banks NAB: http://twitter.com/nab BankWest: http://twitter.com/ bankwest Westpac: http://twitter.com/ westpac_help

CBA extends ValEx contract The Commonwealth Bank of Australia has renewed its contract with valuation panel manager, Valuation Exchange (ValEx), for three more years.

The bank cited greater “operational efficiencies and improved valuation quality” as the main drivers for outsourcing valuation panel management to ValEx. “ValEx captures all valuations by all panel valuers throughout Australia in the one management reporting system, ensuring far greater transparency in the valuation process,” said James Sheffield, general manager of Mortgage Wealth.

www.brokernews.com.au

According to ValEx CEO, Andrew Robertson, the company provides a unique offering in that it combines advanced technology systems with proactive human intervention.

“Our panel management team works with the panel valuers to provide improved service delivery, our compliance team provides independent quality control and peer review to enhance risk management, and our management team provides comprehensive MIS reporting on a daily, weekly and monthly basis to ensure continuous improvement at all levels,” Robertson said.

CBA reaches out to Gen Y

In an attempt to connect with Gen Y customers, the Commonwealth Bank hosted a forum in Sydney at the end of May to discuss the global financial crisis.

Held at The Mint, it called on Gen Yers to share their views on how the GFC was impacting on them, to relate any personal experiences and debate whether the media was over-hyping the crisis.

The event invited people to get involved on the premise of: “Do you care? Are you doing anything differently? What does it mean for your financial aspirations?...”

To view highlights from the event go to: http://www.ymoneymatters.com.au/

then our advice is to remember it is just another way to market yourself. Like an online job board or emailing your résumé to a recruiter, you need to keep your communications professional and focused on skills and experience.

“Similarly to a traditional networking event, social media can be a good tool to build new professional contacts. Then just like follow-up networking functions, you can use your social media to stay in touch and remind your contacts you are looking for a role.

According to Doyle, the most beneficial way to use social media in your job search is to research a company to help you tailor your application or to prepare you for interview.

“For example, you can search a particular company via LinkedIn and find contacts that might already work there or know someone else who does,” he says.

“A word of warning though – social media is increasingly used by potential employers as a reference checking tool. So ensure your communications remain professional because you don’t know who could read what you tweeted about last month! Be aware of your digital footprint.”

NAB valuations set to get harder Brokers may be faced with more hurdles on the way to settlement with NAB’s Homeside platform likely to make valuations harder to perform.

A valuation industry source told Australian Broker that Homeside was proposing to restrict its valuation policy.

According to the source, while valuations for Homeside loans had previously needed to fall within the API (Australian Property Institute) standard range, the lender is now asking for a single figure valuation.

“This places much greater risk on the valuer who is unable to assess the interior of the property,” the source said.

Should the policy come to pass, brokers are likely to feel some of the aftershock.

News 17

www.brokernews.com.au

18 News analysis

Brokers destined for legal crossfire?

As the economy shrinks and defaults rise, brokers may find themselves being blamed for loans that go sour. Agnes Gajewska reports.

I

t’s been said before and it’ll be said again: the financial landscape in Australia has shifted so dramatically it is a distortion of its former past.

Brokers have seen their pool of lenders shrink, their commissions dwindle and their credit criteria tighten.

They have also seen the introduction of new fees, quality metrics, requirements and obligations.

However, as the economy continues along its shaky path, third party distribution channels should prepare for a few more hits if the loans they originate go sour.

According to key industry legal minds, lenders are beginning to look more carefully at defaulting loans, and trying to point the blame at the brokers involved.

The flip side

A sign of the times

Michael Russell

While they don’t deny that lenders may pursue legal action where a particular agreement or contract allows them to, both the president of the FBAA, Peter White, and CEO of Mortgage Choice, Michael Russell, voiced doubts over whether such claims would get very far.

Russell said that aside from the fact that lenders set the credit policy which mortgage brokers worked within, in terms of arrears, third party originated loans were tracking on par with the lenders’ proprietary channels.

“No one is denying that at present arrears are probably increasing, but mortgages are inherently low risk. And the mortgage broking industry itself is now a very professionally run business,” he said.

“You’ll always have a fringe element, but I could not imagine in my wildest dreams that there would be a disparity between the quality of broker introduced loans and first party channel introduced loans.”

White agreed, adding that since lenders are the final party to approve any loan, in instances where undetected fraudulent documents are later discovered, lenders would not be able to present a sound case.

“If a broker knowingly put those documents forward, then that’s fair enough,” he said.

“But when it comes down to the level of sophisticated fraud, where a broker is cleared of any [criminal] intent and the lender didn’t pick it up either, then the lender is pointing the finger at themselves.”

As a result, he said, despite the conditions of some agreements, such a case would not pass the court of law.

“If the broker has no power of approval then the lender is equally responsible for not picking it up,” he said.

“To turn around and target a broker in that instance, I think, is something of an unconscionable act.” www.brokernews.com.au

Partner and chief operating officer of Gadens Lawyers, Jon Denovan, and founder of SAKS Consulting, Steve Paterson, have warned brokers that times have changed and in the new lending environment a broker’s liability for defaulting loans will be one of the issues rising to the surface.

“There has been, in recent times, an increasing trend for lenders to look very closely at their agreements with originators where lenders are suffering ever-increasing losses,” Paterson said “So what happens is that when a lending institution loses money, almost inevitably it has a look at why. Then, if [the loan is] from a broker, it’ll have a look at the origination agreement, and if it can find a way to hang the problem on a broker, it will do so.”

“If the bank doesn’t get all of its money, then the bank is going to want to sue anyone it can find,” Denovan added.

“We are handling many cases in which lenders are pursuing brokers, mortgage managers, valuers and lawyers.”

Denovan went on to say that while legislation which forced brokers to take responsibility for their involvement has existed for years, in the previously buoyant times there was never much need for lenders to pursue such claims against brokers.

“The reason we haven’t had a lot of trouble about it in the past is because property values kept going up. So even if you had the dodgiest of loans well – a) there were hardly any defaults and b) even if there was a default, the security was fine,” he said.

However, with the market hitting a plateau, and defaults expected to rise as a result of an increasing rate of unemployment, there is now more blame flying around and brokers will need to dodge the bullets.

Fine print

According to Paterson, many brokers are under the impression that since they do not set the lending credit criteria, or have the final say over whether a particular loan is approved, they are not liable.

This, according to both experts, is simply not the case.

When it comes to liability it comes down to the fine print. Page 20

industry

NewsinBrief

Tips 19

Mutuals revise lending code

Credit unions and building societies have introduced a revised Mutual Banking Code of Practice, which advises members of their rights as well as the responsibilities of their lenders.

Industry body Abacus developed the code of practice in consultation with the industry, regulators, consumer groups and their members.

Written in plain language, the new document draws on existing lending practices and puts into print the service, advice and price expectations of both lenders and members.

According to Abacus CEO Louise Petschler, the new code was developed to help consumers enjoy “the best possible” relationship with their local credit union or building society.

“The Mutual Banking Code of Practice is an initiative that plainly sets out the responsible and ethical lending practices of credit unions and mutual building societies,” said Petschler.

New areas of the code cover appropriate affordable lending, assistance, access to advice and the treatment of fair fees and terms and conditions.

Mortgage Choice ranked ninth in franchise poll

Listed broker, Mortgage Choice, has achieved ninth place on the latest Top Franchise list put together by the marketing agency 10 Thousand Feet.

It surveyed more than 2,000 franchisees from 65 systems across Australia to produce a list of the top ten.

Forty-three percent of Mortgage Choice franchisees participated and 80% of those said they would renew their franchise arrangement. Ninety percent claimed they had passion for the customer, brand and product, and more than two thirds thought that Mortgage Choice offered a balanced home and work lifestyle.

The poorest rating element was opportunities for expansion (54%), followed closely by financial and social rewards (55%).

Overall, Mortgage Choice achieved a score of 63 out of a possible 100.

The top rated franchise business was Souvlakihut, which achieved an overall rating of 82 out of the possible 100.

Cashflow becoming a problem

A slowing economy is forcing businesses to address cash flow issues, according to figures reported by Dun & Bradstreet (D&B).

The credit reporting firm found the number of debts referred has increased by 20%, with the increase in dollar value jumping by 50%.

D&B also reported that almost 150,000 firms are now more likely to pay their trade accounts in a delinquent manner, and that business to business payment days have reached 57.6 days – close to double the standard term.

“A number of Australian firms are now acting on their arrears relatively quickly, when previously they would have allowed them to accumulate for lengthy periods of time. These executives are seeking to address both current outstanding payments and longer term arrears, which is increasing the level of debt being referred for collection,” said D&B CEO, Christine Christian.

According to D&B, 80% of business failures are the result of poor cash flow management

FBI tackles mortgage fraud

The FBI is stepping up its efforts to combat mortgage fraud, the agency’s chief revealed.

The newly created National Mortgage Fraud Team is using wiretaps and computer technology to track down the country’s worst perpetrators of mortgage fraud and identify where more FBI officers are needed.

Among their methods is the use of advanced computer technology to locate individuals and businesses that show patterns of property flipping.

According to a report by Reuters, mortgage fraud cases in the US have tripled since 2006 to more than 2,400 cases. The FBI has more than 560 open corporate fraud investigations.

Moody’s: Non-conforming RMBS market grim

Despite reporting signs of stabilisation across the 30 days past due delinquency category in the non-conforming RMBS market, the latest Moody’s Investors Service report said the outlook for the sector remained grim.

The 90 days past due delinquencies category has continued to deteriorate in the first quarter of 2009, reaching a record high of 10.17%, the report found.

Moreover, despite a reduction in the delinquencies pipeline, Moody’s does not expect the 90 days past due delinquency bucket to fall in the short term, as non-conforming borrowers continue to face difficulties in the credit market.

“Looking ahead, Moody’s expects delinquency levels to remain at recent highs with significant upward pressure in the current economic environment,” Sydney analyst and author of the report, Ryan Lu, said.

In positive news, Lu said that the performance of the non-conforming sector was within Moody’s expected levels and has not warranted any rating action.

The segment makes up approximately 0.5% of the total Australian RMBS market. www.brokernews.com.au

20 News analysis

Peter White

From page 18 “A lot of brokers don’t bother to read their contract with their aggregator or banks,” Denovan said.

“Some contracts say that if a document you get is false, then you – the broker – are liable whether you knew it or not. Other contracts say that you’re only liable if you knew, or should have known.”

This means that under certain arrangements some brokers may find themselves implicated even if the mistake in documentation could not have been detected.

“So if someone gives you a forged driver’s licence and it’s printed on pink paper and the picture doesn’t match and so on, and you don’t spot that, then you’re gone. But under other contracts, if you have the most perfect forgery of a driver’s licence and you don’t spot it because it’s impossible to spot, the broker is still gone” Denovan said.

“That’s why it’s so important for brokers to read their contracts very carefully.”

The repercussions

Jon Denovan

www.brokernews.com.au

The result is that brokers who find themselves in the lender firing line are likely to have their remuneration affected.

Paterson said that the most common target for lenders looking to retrieve lost funds is to cut off a broker’s trail commission. Therefore if a loan which was introduced through a broker is nullified in court, or is found to be fraudulent after a customer has defaulted, lenders may cut off all trail going to that broker to compensate for the total of the lost funds.

If a trail book is not sufficient, lenders may also pursue mortgage brokers through legal avenues in order to recover lost funds.

How to avoid it?

Unfortunately there isn’t much that brokers can do about the past. If they have signed an agreement that deems them liable, they need to ensure that all of their files and documents are in order.

Both Paterson and Denovan also recommend that brokers carefully re-read the agreements they’ve formed with their aggregators and panel of lenders – and where something seems unsuitable try to re-negotiate. However, Denovan warned that this may not meet with success given the upper hand the banks have at the moment.

The best weapon according to Paterson, is just to be aware of all origination agreements and prepare for legal cases to arise.

“That way if they are blamed they can point to the proper way in which they developed the matter.”

New brokers, or brokers who are yet to sign a contract with lenders or aggregators, should be particularly vigilant when reading their contract agreements. And when signing new agreements, brokers should negotiate.

“Brokers have a right to negotiate – and they should ask for that even if they don’t understand [the contract],” Denovan said.

According to Paterson, going forward brokers also need to take particular care in four areas: identity, making sure the borrower understands the deal, capacity to repay and the settlement process. He said that by focusing on those areas, brokers have a chance of minimising litigation risks.

“It is in those four areas that lenders can find fault with brokers,” he said.

News 21 Sponsored by

Name: Andrew Grace From: Mortgage Ezy To: Ballast Finance Title: Relationship manager Grace comes to the role with more than 20 years of experience in the financial services industry. Previous to taking on the relationship manager role at Ballast, Grace worked for Mortgage Ezy where he was the WA state manager.

Name: Amy McNicolls From: Westpac To: Westpac Title: Accreditation development manager, mortgage broker distribution, NSW McNicolls commenced her financial services career at Westpac in 2003. McNicolls will bring her extensive knowledge and understanding of Westpac’s products and credit policies, and keen understanding of both Westpac’s branch and broker channels to her new role.

Name: Michelle Standley From: The Brokerage To: Australian Life Insurance (ALI) Title: Business Development Manager, Gold Coast Michelle joins ALI with over 24 years experience in the finance industry. She spent three and a half years with boutique aggregator The Brokerage. Her experience also includes 20 years with Westpac. In her new role she will help brokers diversify their businesses through the introduction of mortgage protection insurance products.

Name: Steve Taylor From: GMAC RFC To: AAMC Training Group Title: BDM NSW Taylor joins AAMC as NSW BDM having been in the finance industry for more than 23 years.

He will utilise his finance industry experience to ensure that he is able to drive businesses and individuals alike. He will also ensure sustainable growth by offering and providing the best training solutions for their needs.

Name: David Coleman From: Resimac To: Resimac Title: National Sales Manager Coleman has been appointed to the position of national sales manager for Resimac after 18 months in the role of Queensland state manager. He comes to the role with 28 years of banking and finance experience, and will be focusing his efforts on the distribution strategy and creating stronger relationships with key customers. www.brokernews.com.au

22 Feature

Safe exits For any broker in the unfortunate position of having to downsize their business, following best practice guidelines are crucial when it comes to redundancies. Shana Schreier-Joffe and Manoj Dias-Abe provide some legal tips

T

he process of making a decision about the necessity for redundancies can be difficult.

Employers need to comply with all relevant legal obligations, manage the termination process, and put in place a communication strategy to maintain workplace morale for remaining employees. Mismanaging this process has the potential to leave the organisation exposed to expensive legal actions, and may cause affected employees unnecessary psychological harm and irreparably damage workplace morale as remaining employees are left feeling less secure. When conducting redundancies, consider the following points.

A change management strategy

A company facing economic circumstances which require it to make a significant portion of its workforce redundant should ensure that the redundancies are treated as a part of a broader change management process. A change management strategy involves viewing the process in a holistic way and covers various aspects, including: investigating potential alternatives, determining legal obligations, devising a communication strategy, undertaking risk minimisation and engaging in contingency planning.

The communication aspect of the process is especially important. A redundancy process which is badly handled in terms of the way communication is undertaken runs the risk of damaging the company’s brand in the marketplace as well as injuring the company’s relationship with remaining employees, which in fact may jeopardise the long-term health of the company.

Valid reasons for the redundancies

At law, a redundancy occurs “not on account of any personal act or default of the employee dismissed or any consideration peculiar to [to the employee], but because the employer no longer wishes the job the employee has been doing to be done by anyone.”1 It is important that before undertaking any redundancies, you establish that there are no other cost 1

www.brokernews.com.au

cutting measures that the organisation can adopt as an alternative to redundancy. In addition, establishing a valid reason for the redundancies that can be communicated widely to the workforce will form an important element of a communication strategy to maintain employee morale. If there are financial pressures on an organisation, these should be communicated to the workforce well in advance of any notice of intention to make employees redundant.

Consultation

Consultation generally means that an employer must provide information to the parties about the necessity for the redundancies, explain how the redundancies are to proceed, and take into consideration the views of employees before any final decision is made.

Consultation does not require an organisation to change its position on redundancies based on the feedback received. However, consultation must not simply be used to rubberstamp a predetermined conclusion.

Even where a formal consultation process is not required under law, it is generally recommended that a proper consultation strategy be developed and that an employer discuss any proposed redundancy with employees before making a final decision on the issue.

Consultation with affected employees is about ensuring integrity of the redundancy process and affording employees procedural fairness. It is entirely conceivable that an employee may be able to make a persuasive case as to the necessity of their position to the business going forward. Arbitral proceedings which have examined redundancy processes have often looked at the level of consultation undertaken as a key criterion to establish that a redundancy process has been fair and reasonable.

Finally, it is essential that employees who are not to be made redundant and are to remain in the organisation are given some form of information about the rationale for the redundancies. It is also important that those who remain as well as those that may be made redundant feel that although the redundancies were necessary and that

R v Industrial Commission of South Australia; Ex parte Adelaide Milk Supply Co-operative Limited (1977) 16 SASR 6 at 8.

Feature 23 they were carried out in a fair reasonable manner. This will go a long way in ensuring that the relationship of trust and confidence between the employer and employees is maintained.

during the period of their employment. What constitutes reasonable notice will be assessed with reference to the employee’s particular circumstances, including seniority, age, length of service and the employee’s profession.

Selecting employees

Discrimination / unlawful termination claim A discrimination claim is likely to a rise where an employee can establish that they have been dismissed for a reason protected by legislation, such as race, sex, age or disability. It is essential that employees are selected for redundancy on an objective and fair basis to reduce the chance of a discrimination claim being brought.

The employees who are to be terminated on the grounds of redundancy should be selected in a fair manner.

As part of this, it is necessary for the organisation to establish fair selection criteria.

The selection criteria should correspond to your business needs. The criteria should be weighted appropriately, meaning that fairness will allow certain criteria to carry greater weight than others. For example, the skill and expertise of individual employees carries more weight than length of service.

It is preferable if the main criteria can be objectively assessed (such as length of service and employee’s skills, qualifications, training, level of experience). The criteria must not discriminate on unlawful grounds.

These grounds include such characteristics as: age, sex, pregnancy, race, marital status, disability and union membership.

It is also important that the basis on which employees are selected for redundancy does not have a disproportionate impact on any particular category of employees to avoid suggestions that the employer has indirectly discriminated against a particular prescribed group of employees. For example, if the company chooses to implement a “last on, first off” policy for selecting employees for redundancy, this may have a disproportionate, and thus discriminatory, effect on females if newer recruits were mostly females.

Major risks for employers

Employees who seek to challenge their redundancy, or the quantum of the payment they have received in respect of their redundancy, have several legal avenues open to them.

Unfair dismissal claims Prior to the Work Choices reforms, the most common means by which an employee challenged their redundancy was by bringing an application for unfair dismissal. The ability of employees to bring unfair dismissal proceedings has been severely curtailed by Work Choices. An employer has a number of grounds which it can rely upon to have an application for unfair dismissal dismissed, including, inter alia, “genuine operational reasons” for the employee’s termination; the organisation employs fewer than 100 employees; and the employee has been employed for less than six months.

Employers faced with this situation often proceed on the assumption that the genuine operation reasons exemption has given them a carte blanche when it comes to making employees redundant. However, an examination of the case law in this area should cause employers to be a little more wary of the extent to which this exemption can be utilised. Where an employer intends to rely upon this exemption, the employer will still be required to produce evidence of the reasons for the termination and establish the existence of genuine operational reasons.

Breach of contract claim A breach of contract claim involves an employee arguing that their dismissal was contrary to the terms of their contract. Importantly, the contract comprises not only express terms, but also a range of “implied” terms, such as the mutual duty to preserve the relationship of trust and confidence as well as provisions contained in company policies which may have contractual force depending upon the particular circumstances.

Another common legal claim averred by employees in this situation is a claim for “reasonable notice” upon termination. An employee may have an argument that they have an implied right to reasonable notice notwithstanding an explicit notice provision in a written contract of employment. An employee may be able to argue that the contract no longer validly covers their employment as a result of a number of promotions

Trade practices claim Trade practices legislation prohibits employers from misleading or deceiving employees in relation to their employment, especially when offering employment and during contract negotiations. For this reason, employers need to take particular care when making representations regarding job security, expected length of employment, or an employee’s entitlements.

In the case of O’Neill v Medical Benefits Fund of Australia [2002] FCAFC 188, Mr O’Neill was able to establish that his employment had been terminated contrary to a representation made to him about the security of his position. Due to the fact that Mr O’Neill had been enticed away from a previous position, damages in this case was calculated by reference to how long he would have likely remained employed in his previous position had the misrepresentation not been made.

In summary

The need to ‘downsize’ an organisation in a time of economic turbulence is an unfortunate reality. However, by ensuring the integrity of the process and respecting the dignity of those affected, an employer will go a long way towards reducing the impact upon employees.

Furthermore, following best practice guidelines in relation to redundancy can have an enormous impact on maintaining employee morale in the organisation and help maintain a cooperative workforce that is united to achieve the organisation’s goals well into the future.

About the authors: Shana Schreier-Joffe and Manoj Dias-Abe are partners at Harmers Workplace Lawyers

Shana Schreier-Joffe

Legal requirements Once a decision has been made to make an employee or group of employees redundant based on an assessment of the business needs of the organisation, the next step is to determine the organisation’s legal obligations in respect of any severance payments which need to be made. This step often belies a complexity that is not readily apparent and it is advisable to seek legal advice during this step.

As a matter of course, employees who are to be made redundant are usually entitled to the following: • notice of termination • payment in respect of any accrued and unused statutory entitlements, such as annual leave and long service leave • severance pay It will be necessary to consult relevant legislation; the express terms (whether written or oral) and implied terms of an employee’s contract of employment; and company policies to determine the extent of these obligations.

An employer should consider providing employees with a severance package which is more generous than their strict legal obligations, especially where the organisation’s strict legal obligations fall well below industry standards.

It is worthwhile noting that the current position is that there is no statutory

obligation to provide severance pay where this requirement is not contained in an industrial instrument, employment contract and/or company policy.

However, from 1 January 2010, the Australian Government will introduce a general requirement to provide redundancy pay in accordance with a specific scale which rewards length of service.

There are limited circumstances in which an organisation will be relieved of the obligation to provide severance pay. Further advice should be sought in relation to whether the organisation’s requirement to provide severance pay can be avoided on a number of legitimate grounds, such as: the procurement of suitable alternative employment for affected employees, financial incapacity to pay, or the existence of a transmission of business. www.brokernews.com.au

Top

10 tips

Buying a laptop

Technology 25

Techie talk

A laptop is a broker’s best friend, CNET Australia’s Justin Jaffe offers ten points on what to look for in the perfect companion 1. Processor – Intel’s Pentium M, AMD’s Turion 64 and Apple’s PowerPC G4 processor offer business users the best balance between performance power, battery life and weight. For less demanding computing, an Intel Celeron or an AMD Sempron processor will do the trick.

Bare minimum: Regardless of what kind of processor you decide on, you’ll need at least 1.73GHz of processing speed.

2. Memory – You’ll want enough memory to run a few applications at a time.

The more memory you buy upfront, the longer your laptop will be able to handle current (and future) applications.

Bare minimum: 512MB. 3. Video card: For most business users, video memory is one area where you can afford to cut corners. Unless your system will be doubling as a gaming machine, you don’t need to shell out extra money for a high-end card with its own memory.

Bare minimum: An integrated graphics card that shares memory with the system chipset.

4. Hard drive – Email archives, spreadsheets and Word documents add up.

If you plan to carry music and video on your system, consider 80GB or more.

Bare minimum: 60GB; 5,400rpm.

5. Optical drive – The least expensive laptops come with fixed drives that cannot be removed. A swappable drive bay offers more flexibility: You can easily pull out a CD-ROM drive and swap in a combo DVD/CD-RW drive (or even a second battery).

Bare minimum: If you’re totally uninterested in the prospect of mobile movie watching, a CD-ROM drive will get the job done. An upgrade to a DVD/CDRW combo drive will let you burn CDs and watch DVDs. 6. Screen size - Depending on the type of work you do, you’ll want to make sure your screen fits the job. Graphics and spreadsheet tasks call for larger screens while email requires very little space.

Bare minimum: 12-inch display 7. Weight: A few grams here, a few grams there – it all adds up. You may be tempted to get a larger notebook that seemingly offers more bang for the buck, but for the business user, less is more.

Ideal range: 1.5kg to 3kg 8. Battery - Laptop batteries don’t last as long as they should. Even the best performing systems top out at about six hours and most last half as long.

Bare minimum: One Lithium-ion primary battery with at least two hours of battery life.

9. Networking – Today’s business demands online connectivity. All laptops come with an Ethernet connection and almost all come with built-in wireless connectivity. You’ll want both. If work takes you away from both office and hot spot, you can buy a laptop with an integrated 3G card, which connects to a mobile data network.

Bare minimum: Ethernet LAN connection and integrated wireless (preferably 802.11a/b/g) card.

10. Ports and connections – The most sophisticated laptops feature advanced audio and video connections, such as digital media card readers, S-video outs for connecting to a TV, a DVI port for connecting to digital LCD monitors and a FireWire port for capturing and editing digital video. Unless you have multimedia aspirations, few of these are necessary for a business laptop.

Bare minimum: Two USB 2.0 ports; a VGA connector.

Justin Jaffe writes for CNET Australia – an online technology publication which produces reviews, features and news. Visit www.cnet.com.au

Australian Broker’s resident technology expert Sam Benjamin provides answers to readers’ technologyrelated questions Backing up files

Question: I have been making backups of important work documents

on my USB drive but I would like to know if this is actually reliable way to backup? What would you recommend? (Steve, Manly NSW)

Sam: There are a few things to consider in relation to backups:

• match the backup medium to the amount of data you intend to backup • backups should be stored as far away from your computer as possible • no storage medium lasts forever • make your backup routine simple, otherwise you will avoid doing it The different mediums available range from digital tape, CDs, DVDs, online or network storage and USB or external hard drives – and each has its own set of pros and cons.

My preferred option is to buy and use an external hard drive for data backups. External hard drives are cheap compared to tape drive systems and storage capacity is huge. They’re also easy to use; in many cases, all you have to do is plug the hard drive into your computer’s USB port.

And while hard drives do fail, their failure rate is much lower than that of other backup media such as CDs. Disposing of your old computer

Question: I have recently upgraded my computer; do you have any

suggestions for what to do with my old computer? (George, Norwood SA)

Sam: It’s important to find ways to reuse or recycle your old computer

rather than merely dumping it in the garbage bin and moving on.

Obviously you will want to ensure no personal data is left on your hard drive before you part with it. Once you have copied the data you want to keep, merely reformatting the computer will not totally remove the data as it will still be retrievable in some form. There are different programs available that will completely erase your hard drive or you can physically destroy it the old fashioned way – with a hammer. Not very environmentally friendly, but effective.

Some companies will actually recycle your old computer when you purchase a new one from them. Or you could give it to someone who doesn’t have a computer, like a school or a charity.

Better searching on Google

Question: While using Google recently I noticed some of the search

results had a date or time when the information was recorded. I found this useful because what I was looking for had to be up to date. Can you filter the search results in Google? (Arlene, Maroubra NSW)

Sam: If you want to see the date the web pages listed in the results was

published on the internet, simply add “&as_qdr=y15” to the end of the URL of the search results. To take this a step further you can sort the search results according to date published, type of file and so on. To do this click on the “show options” link that appears under the Google search bar after the results are displayed. The search results window will split with a feature on the left hand side of the screen allowing you to refine your search according to your needs.

If you have a question please email it to asksam@financetools.com.au To view previous Q & A columns please visit www.financetools.com.au and click on the Q & A link. www.brokernews.com.au

Opinion 27

Inside economics Economic data has become ‘less bad’ over the last two months. Fears of a continuing collapse in global economic activity leading to a re-run of the Great Depression have now been largely unwound, and this has seen shares deliver strong gains. However, it’s possible that the easy gains are behind us. The focus is now likely to turn to the timing of the economic recovery and how strong it will be.

Timing the recovery

Share markets typically bottom about six months before the economic cycle. So if economic growth is going to bottom and start turning higher from later this year, as we think it will, then it would be consistent with shares having bottomed during the first half of this year. In other words, it’s likely the lows in March were it for the bear market.

Alternatively, if the recovery is going to be another 12 months or so away then the risk of a new low in shares is much greater.

To be sure, economic data relating to current or recent past economic conditions remains very poor – US April retail sales data indicates that US consumers are still cutting back, GDP growth fell at an alarming rate of 10% annualised in the euro-zone in the March quarter and an even worse 15% in Japan, and

Timing the recovery The improvement in economic indicators is consistent with an economic recovery by year end, writes AMP economist Shane Oliver

unemployment is still rising everywhere.

However, a range of considerations provide confidence that an upturn in the economic cycle is moving into sight for later this year.

Firstly, governments worldwide have provided massive stimulus in the form of fiscal and monetary policy and assistance for banks.

They have also resisted the temptation to put up trade barriers. This is the opposite of what happened in the 1930s, making comparisons to the Great Depression meaningless.

Secondly, there is increasing evidence that this stimulus has got traction in financial markets. Interbank lending rates (such as the three month $US Libor rate) have fallen to record lows, investment grade bond yields have fallen by two percentage points or more from last year’s panic highs, US junk bond yields have fallen from a peak of around 23% down to around 14%, mortgage rates in the US, Australia and elsewhere have fallen to generational lows and credit issuance has started to pick up. None of this is to say that credit markets are back to normal, and in some areas they remain very difficult, such as in commercial property finance – but they are moving in the right direction.

Thirdly, and most importantly, a range of forward looking economic indicators are

showing an improvement. Consumer confidence in most countries is trending higher, and business confidence surveys in most countries appear to have turned a corner.

While none of these indicators are actually confirming a recovery from later this year – as they don’t look that far ahead – their improvement suggests it is on track. Longer leading indicators such as the steepening in yield curves do point to a recovery six or nine months down the track.

But how strong will the recovery be?

While there is increasing evidence the recession is abating and there is reason for confidence in a recovery from later this year, there is much uncertainty regarding the strength of any recovery. In Australia, recessions deeper than a 2% slump have been followed by a 6% plus rebound.

The logic is simple – the deeper the slump the larger the cutback in inventories, the greater the level of pent up demand and the greater the fiscal and monetary stimulus.

The most likely scenario though is that the first year of the recovery will be constrained.

Recessions associated with financial crises and those that are globally synchronised tend to have slower recoveries refecting tight credit conditions and continued deleveraging.

www.brokernews.com.au

28 News

From page 1 Aussie took over sponsorship of the NSW State of Origin team (The Blues) as part of the agreement when it bought the Wizard brand in December 2008.

But in an article in the AFR, Aussie chairman John Symond said the mortgage broker was getting little value out of being associated with the sport.

Ken Sayer

“The reason you sponsor a sport or an athlete is to enhance your brand. At the moment rugby league isn’t enhancing our brand.

If our contract was up next week, we wouldn’t renew it,” he said.

These comments were in complete contrast to the remarks Symond made a few months ago when announcing that Aussie would take over from Wizard as a sponsor of the Blues.

Symond said at the time: “Having played rugby league at school many years ago, I have always wanted to get involved in one of Australia’s most exciting rivalries and I expect this year’s competition will again be a tightly-fought contest.”

Sayer said he totally disagreed with Symond’s latest remarks about sponsoring the sport, provided there was a ‘get-out’ clause.

Asked why he rated sport sponsorship so highly over other forms of entertainment, Sayer said sport was part of what made people Australian. “We love sport, it’s who we are.”

Odds narrow on Mortgage Choice-Count deal From page 1 In the months that followed Count continued to build its investment in the company, and currently holds a 15.27% stake in Mortgage Choice. Count’s chairman, Barry Lambert, has also been vocal about the damage that the current financial turmoil has caused to the mortgage broking proposition.

Speaking of his intentions in November 2008, Lambert said that a combined Mortgage Choice/Count entity would be “well positioned to create a valuable business referral program for the benefit of Mortgage Choice franchisees across Australia while enhancing the existing brand.”

Mortgage Choice, however, has always refuted any claims of a future successful Count takeover.

Photograph by Pulch Photography

Mortgage House plans Off the cuff NRL return

Michael Russell CEO of Mortgage Choice What was the last book you read? I just read two autobiographies by James Freud. They were I Am The Voice Left From Drinking and I Am The Voice Left From Rehab.

If you didn’t live in Australia where would you like to live? I’d definitely live in Paris. I’ve only visited Paris once a couple of years ago with my wife, and my head was spinning the whole time. The beauty of the place, the beauty of the architecture, just the whole environment was so wonderful and romantic. It was terrific.

If you could sit down to lunch with anyone you like who would it be? Jimmy Barnes, Robert Harvey, Nelson Mandela, any of the ‘James Bonds’ and Tim Horan.

What was the first job you ever had? I did the paper round on my three-speed dragstar when I was 12. I can still taste the potato cakes we used to buy from the tips when we returned!

What do you do to unwind? Spend as much time as I can with my family. I’m a very passionate St. Kilda supporter so I attend all of their games and as many social functions as possible and I also play a weekly game of poker with friends.

I bought a ute a year ago and I actually love charging around on the weekend taking unwanted rubbish to the tip for my family and friends. It sounds a bit nuts, but I love it.

What’s the most extravagant gift you ever bought yourself?

I was lucky enough to go to Torino a couple of years ago to the Winter Olympics as a guest of one of our lenders. And in addition to that trip I purchased an additional week to go to Paris with my wife.

That was like a second honeymoon, so that was probably the most extravagant thing that I’ve done. I’m also a big Bond fan so I have a few bits of Bond memorabilia.

Which CD is currently playing in your car stereo? That one’s easy. I’m playing AC/DC’s “Back in Black” and Andrea Bocelli If you could give anyone starting out in business one piece of advice, what would it be? Just be really passionate about what you’re doing. Love what you’re doing and do it well. Don’t be discouraged about those preaching Armageddon but, more so, take it as a challenge to prove them wrong.

If I was not working in the mortgage industry I would like to be…a partner in any business owned by my children.

Where was the last place you went on holiday? When I was on gardening leave, as a treat following the sale of Choice, I took my family for a couple of weeks to the States, to the West Coast. So we did the whole Disney World, Universal Studios, Rodeo Drive thing.

What’s the one thing most people would not know about you? Most people wouldn’t know that throughout my teenage years, twenties and into my thirties I was an avid sportsman.

I played rugby league, did a lot of martial arts, I completed in triathlons and did one half-iron man. They’d look at me now and they just wouldn’t believe it – and I don’t think I have too many photos to prove it.

www.brokernews.com.au

Opinion 29

At the click of a mouse

The internet adds a whole new element to networking.

Networking expert Jen Harwood demystifies the art of introducing yourself in cyberspace What is online networking?

Online networking lets you develop and manage social and business connections via the internet.

The main benefit of online networking is that you can take advantage of access that is unavailable with traditional networking. Online networking enables participants to make connections, share information and post inquiries across the world.

>>>>>>>>>>>>>>>>>>>>>>>>>> >>>>>>>>>>>>>>>>>>>>>>>>>>

Online chatter

AB’s live broker forum gets tens of thousands of visits a month. As we went to press, these are the topics that were most interesting to brokers.

What does that means to people in business?

It allows business people to connect to prospects, customers, partners and other stakeholders to build and maintain business relationships. It enhances traditional networking by allowing business connections to be managed online and utilised at the appropriate time.

What advice would you give to people new to online networking?

I advise people to follow my four Ps of Online Networking: • Purpose: understand why you are going to invest the time and determine what you want to get out of it.

• Profile: create your best representation to the entire online world.

• Participation: don’t be an online wallflower. Introduce yourself to people of interest and join an interest group.

• Persistence: stay connected and continually network online.

Where should brokers start to network online?

There are a number of online networking platforms available. I recommend Linkedin (www.linkedin.com) which allows you to set up a professional individual and/or company public profile that appears on search engine listings such as Google. There is also the more social Facebook (www.facebook.com) where you can stay in touch with family, friends and acquaintances, post comments, photos and videos and join groups or communities of common interest.

How do I get started?

I recommend that if you’re not on one of these networking sites already, that you have a go! Both Linkedin and Facebook have simple stepby-step prompts to follow during the registration process. I encourage people to place a photo on their profile because – as is the case with traditional networking – people like to put a face to a name. Initially, invite people you know (your contact lists) and make sure you only post information that you want publicly visible.

You can network with Jen online at LinkedIn (www.linkedin.com/in/ jenharwood), Twitter (www.twitter.com/jenharwood) or Facebook (www.facebook.com Profile: Jen Harwood)

>>>>>>>>>>>>>>>>>>>>>>>>>> >>>>>>>>>>>>>>>>>>>>>>>>>>

Have your say

Do you have a strong view that is not being heard? Brokernews is by far the most popular place for thought-provoking industry discussion with readers constantly exchanging ideas and opinions on the most pertinent topics. To start your own discussion or to comment on any industry developments, visit Brokernews and follow the instructions at the bottom of each story. Have your say – and be heard! www.brokernews.com.au/forum/

www.brokernews.com.au

30 Final word

Insider

Be very careful what you say – and who you say it to. Insider is on the prowl and leaves no stone unturned.

In your workplace, at your party, sitting in on a press conference… ready to take a jibe at brokers, have a go at lenders, and taunt the odd mortgage manager and non-bank lender as well. And be warned, because the joke’s definitely on you

Brokers facing life in jail

At 333 pages long (not to mention many more pages of explanatory notes) it’s a wonder anyone has the stomach to read the entire draft National Consumer Credit Protection Bill 2009.

But many brokers will be relieved to hear that such hardy souls exist after one broker reported a rather glaring mistake in the draft bill during a recent Gadens seminar.

Following more than 40 minutes of discussion (and a few jokes about whether you could ‘dob’ someone in for filling in an application wrong), the broker in question threw in this curve ball: “I don’t know if it’s an actual typo in the legislation, but one of the penalties is actually life imprisonment.”

“Oh terrific,” was the characteristically dry response of Gadens’ legal eagle Jon Denovan, generating a fair amount of laughter in the room.

Of course being of the pendantic sort, Insider instigated a quick search of the draft bill (using keywords of course)…and sure enough on page eight mention is made of “serious fraud” being punishable by “imprisonment for life or for a period, or maximum period, of at least three months”.

Well….at least we’re given the choice!

Homer Simpson defaults on mortgage

Dodgy brokers, adjustable rate mortgages (ARMs), defaulting home loans…who would have thought these would be the subject of a recent episode of The Simpsons.

www.brokernews.com.au

For those who did not see it, Episode 12 of Season 20 (titled ‘No loan again, naturally) which aired on Channel 10, begins with Homer revealing how he funded a Mardi Gras party by using a home equity line mortgage.

However Homer is later forced to put the house up for auction after he receives a letter from his broker telling him that his adjustable rate mortgage payment has increased drastically (Insider is certain a few US viewers could identify with that predicament).

In the resulting auction, the Simpson’s good hearted neighbour Ned Flanders outbids nasty Mr. Burns for the house, and as part of his overall good neighbourliness Flanders agrees to allow the Simpsons to move back in and rent the property from him.

This of course goes pear shaped when Homer accuses Flanders of being a bad landlord (how many viewers in Australia could identify with that?)

Unfortunately Insider missed the ending, so we cannot reveal if the Simpsons ended up on skid row…or if Flanders was forced to leave his keys in the mailbox.

In bad taste

Having noted that many aggregator conferences are happening closer to home these days due to the impact of the GFC, Insider could not help but notice the front page of the 13 May issue of the Australian Financial Review.

The newspaper ran with an image of an idyllic white beach, blue skies and sea complete with unoccupied hammocks resting under a thatched gazebo.

Under the image ran the headline “Junking the junkets” followed by a paragraph explaining how financial planners were missing out on end of year junkets (annual conferences) to ‘exotic’ places like “Cancun in Mexico” due to fund managers pulling the plug on paying for these events.

While it’s not surprising to learn that financial planners are starting to lose out on some of their traditional perks, Insider doubts any planners (or brokers for that matter) would be keen to hop on a plane to Mexico given the current flu pandemic, no matter how exotic looking the photographs in the travel brochure…or on the front cover of the AFR.

Got any juicy gossip, or a funny story that you’d like to share with Insider?

Drop us a line at insider@ausbroker.com

Other services

Liberty Financial 13 11 80 www.liberty.com.au page 7

RP Data www.rpdata.com page 29

Pepper Homeloans 1800 737 737 www.pepperhomeloans.com.au page 14

Trailerhomes 0417 392 132 page 28

Provident Capital 1800 668 969 www.providentcapital.com.au broker@providentcapital.com.au page 4

Crown & Gleeson 1800 735 626 www.crownandgleeson.com.au page 2 Interim Finance 02 9971 6650 www.interimfinance.com.au page 6

Eurofinance 02 9252 8311 www.eurofinance.com.au page 15

Property Match Up 1800 463 462 www.propertymatchup.com.au page 20

New Capital Finance 1300 550 707 www.newcapitalfinance.com paradisepoint@newcapitalfinance.com page 27

Money Quest 1300 886 100 www.moneyquest.com.au page 21

Pulch Photography 0432 710 970 www.pulchphotography.com t.pulch@gmail.com page 31

Challenger 1300 786 552 www.challenger.com.au pages 9 & 11

Better Mortgage Management 1300 662 661 www.bettermm.com.au info@bettermm.com.au page 32

Residential Mortgage Fund 1300632737 www.residentialmortgagefund.com.au page 13

Wholesale

GBST 07 3331 5829 www.financialservices.gbst.com steven.anderson@gbst.com page 8

Other services

Scottish Pacific Benchmark 1300 332 867 www.spbgroup.com.au enquires@spbgroup.com.au page 10

Mortgage Manager /Non- Bank

Debtor finance

St George 1300 308 129 page 3

www.residex.com.au The House Price Information People

Residex 1300 139 775 www.residex.com.au page 30

Lender

Bank

Preferred Brokers Network 1800 010 290 www.preferredbrokers.com.au wjenkin@preferredbrokers.com.au

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

Short term lender

PLAN Australia 1300 78 78 14 www.planaustralia.com.au mail@planaustralia.com.au page 5

Mortgage Manager /Non- Bank

Choice Aggregation 1300 135 389 www.choiceaggregationservices.com.au page 19

Non-conforming

Aggregator/ wholesale broker

Services

Resimac 1300 764 447 www.resimac.com.au newbusiness@resimac.com.au page 17