Australian Broker 6.9

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ISSUE 6.9 May 2009

Changing broker attitudes

Islamic Finance

How to go green

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page 20

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■ 4: St.George praised ■ 10: Brokers talk with lenders ■ 14: New Mortgage Choice CEO

Brokers heading for 50% of market Some of the industry’s most senior players believe that within 12 months, one out of every two mortgages could be written by a broker.

At an industry breakfast held in Sydney, representatives from Mortgage Choice, National Mortgage Brokers (nMB), National Brokers Group (NBG) and Smartline all agreed that despite the current market challenges, brokers’ share of the market was only heading one way. nMB managing director Gerald Foley said he believed brokers could get as much as 50% of the distribution pie.

“WA brokers got to 50% and that is now quite a mature market,” Foley said.

Backing him up, Smartline director Joe Sirianni said he could clearly see brokers writing between 40% and 50%, while National Brokers Group CEO Steve Lambert said “I reckon we will get up there.”

The general sentiment in the room was that the recently released draft National Consumer Credit Protection Bill, which will require all brokers to be licensed by mid-2010, would help persuade even more consumers to choose a broker over going to a bank.

“Legislation is definitely a positive,” Sirianni said.

“Professional standards mean customer will have more confidence in a licensed broker,” he said.

And he said broking groups were at a distinct advantage over the banks with their “smarter” CRM systems.

“You still get the banks sending out those crappy letters [to customers],” Sirianni said.

Predictions by these aggregation groups are in line with the most recent JP Morgan/Fujitsu Australian Mortgage Industry Report (volume 9), which found that barring NAB - the top five banks are still reliant on brokers for between 35% to 40% of their mortgage business (Turn to page 12 for more on this story).

Foley said growth in the channel all came back to the consumers having to process lots of information but growing more time poor, and the fact that they preferred the personal touch: “People like to borrow money from people. They want someone to blame if something goes wrong. If you go on the internet [to buy a mortgage] and you get it wrong, you have nowhere to hide – it’s not like you’re buying a book or a CD.”

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Gerald Foley

Credit bill gets thumbs up from industry

While aggregators, industry bodies and brokers are likely to have sore heads assessing the 800-odd pages of the recently released draft consumer credit bill, initial reaction to the document has been positive.

The government released the exposure draft of the National Consumer Credit Protection Bill 2009 at the end of April, as part of the first phase of its plan for national credit regulation.

Interested parties have until Friday 22 May to submit comments on the draft legislation, after which time the bill will be introduced into parliament by

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mid-year. If it receives royal assent, the new Act will be implemented across all states and territories.

But while it is too early for criticism or praise, the industry has given the government bill, which will require all brokers to obtain a licence from ASIC, the thumbs up.

Newly appointed CEO of Mortgage Choice, Michael Russell, said the listed mortgage broker was “wholeheartedly supporting national regulations of the mortgage broking industry and would like uniform regulation to be implemented as soon as possible.” Page 28

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MFAA forum: a good first step While brokers debated on Brokernews whether the MFAA forum aimed at addressing the crisis in service levels would achieve anything concrete, those who attended the closed-door meeting on 28 April remained optimistic and hopeful.

The meeting brought together 22 representatives of broker groups, mortgage managers and lenders. It was hosted by TV personality Peter Switzer.

A spokesman for Westpac welcomed the initiation and the opportunity to listen to aggregators and its customers “about ways of working together”.

Kathy Cummings, executive GM for third party banking at the CBA, described the gathering as very pro-active “with all participants making a solid commitment to work towards solutions”.

“Service levels are a hot topic and to have the opportunity to explain how much rework is required from poor quality applications was great and to discuss what role the MFAA could undertake in training was also very constructive,” she said.

Aggregators were also upbeat.

Connective principle Mark Haron said there was still a fair bit of work to do and things would not be fixed overnight, but “if we make sure actions come into play we can hopefully get on top of this. If there is better reporting and info from lenders, brokers can understand where the errors are occurring.”

The mood was…

AB asked a number of people who attended the MFAA Forum on 28 April to tell us what went on behind the closed doors: ÎÎ “The roundtable was conducted in a positive and cooperative manner, with robust debate of the issues raised,” – Ray Hair, PLAN ÎÎ “The mood was collegial with participants actively looking for solutions..” – Kathy Cummings, CBA ÎÎ “Open and co-operative, and one of the more robust, frank and honest sessions that I have attended within the industry,” Brendan O’Donnell, Choice ÎÎ “The mood was good. Everybody was very keen to participate and to get an outcome…”

– Mark Haron, Connective ÎÎ “A very positive initiative” – Westpac spokesperson

www.brokernews.com.au regional managing editor

George Walmsley editor

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Agnes Gajewska Luke Cornish contributors

Ray Hair

Ray Hair, CEO of PLAN, highlighted the immediate steps that would be taken by lenders and aggregators to address the level of rework for lenders and brokers.

“Training and communication on processes, credit policies and application quality must be improved across the industry,” he said.

Overall, he said the roundtable was a “very positive first step in improving the level of communication and cooperation between lenders and aggregators/ brokers. This is an ongoing journey, and all participants are commited to it.”

Choice CEO Brendan O’Donnell said he was happy with the outcome, and thought brokers will see positive outcomes as a result, saying that “given the co-operative nature of the meeting, we’re expecting that actions will be taken to assist brokers with their business.”

Reporting back on the meeting, MFAA CEO Phil Naylor said those attending had acknowledged that many of the current concerns were the result of the unique coincidence of the boosted First Home Owner Grant, low interest rates and material decrease in lenders operating in the market.

Both parties agreed on a number of steps to improve service to borrowers, including lenders “continuing to do all possible to ensure demand levels are being met by upgraded resources in loan processing” and ensuring “comparability in service levels between broker and proprietary channels”.

Lenders also promised to provide clear communications as to the service levels and provide updates where those levels change and also to give as much notice as

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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.

possible when credit policies need to be changed. In a joint initiative, lenders pledged to provide broker groups with detailed data as to re-work and error rates, while broker groups said they would institute training to remedy re-work issues and error rates.

Aggregators pledged to provide their members with adequate information (based on data from lenders) to ensure borrowers are not given unrealistic expectations about loan approvals.

This has been a hot topic on our forum. Check out www.brokernews.com.au/forum to see all of the comments.

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News 3

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Brokers praise St.George service efforts

With lenders receiving a pretty bad Key points wrap for blown-out processing delays, • St.George engages branch and with the looming FHOG boost staff to tackle processing delays deadline nearing, St.George has ramped up its fight to regain control of • channel conflict not a concern its mounting workload – to the sound • within first week of of applause from brokers. program processing times Under the recently announced for PAYG deals reduced by scheme, St.George has enlisted the 15 days • brokers supportive of new help of its branch network lenders to St.George service program bring service levels back within normal time frames. By using branch staff, under the supervision of the broker processing unit, the bank revealed plans to process 2,000 PAYG files.

To reassure its broker channel, St.George also said there would be no channel conflict. The branch network lender would only communicate with the broker involved should more information be needed for the file.

“The process we have put in place, combined with governance rules and customer contact protocols, mean that channel conflict will not be an issue,” said St.George general manager for intermediary distribution, Steven Heavey.

“When you underpin this with changes we made last year to our financial performance scorecards as part of optimising channel capabilities, brokers can be reassured that the only thing in the branch lender’s mind is helping the customer and the broker make settlement within the parameters of responsible lending,” Heavey said.

The process is in its early stages, but Heavey revealed that the bank has begun to achieve results and has received positive feedback from brokers.

He said that within a week of the new program, the processing time for PAYG deals was reduced by 15 days.

“Brokers are just happy that we have the type of culture and operating model whereby we can pull together as one team and focus on getting customers the best outcome,” he added.

Although cautious, brokers have revealed their gratitude and support over the bank’s actions.

“The initiative to use branch managers to take on overflow does appear on the surface a clever idea. But as always, the proof is in the pudding,” said Australian Mortgage Brokers principal mortgage consultant, Stewart Noble.

Smartline personal mortgage adviser, Martin Castilla, added that it was a positive sign that St.George was working to fix its serviceability with the third party distribution channel. “[Brokers] are working long hours to sign clients up, then keeping the flow of files going in – it shouldn’t stop when the file hits [the bank’s] queue,” he said. “[The current climate] is forcing lenders (and us) to improve our processes and efficiency and doing things right first time.”

Neither of the brokers were concerned over channel conflict as a result of the program.

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What’s hot online 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

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MFAA to press on with disciplinary role Key points

• ASIC to have the power to expel or suspend licence holders • MFAA will also continue to discipline its members • authorisation to do so backed by the ACCC subject to one condition • MFAA says its standards will always be higher than industry

Phil Naylor

The MFAA will continue to suspend and expel members that breach its code of conduct, despite the industry’s new regulator ASIC being granted tough new enforcement powers under the draft National Consumer Credit Protection Bill.

Besides being able to suspend or cancel a broker’s Australian Credit Licence, ASIC will have the power to enforce civil penalties for misconduct including fines of up to $220,000 for an individual and $1.1m for a corporation.

MFAA CEO Phil Naylor told AB its disciplinary process would remain in place, though he said it might become something of a lesser role once the new laws come into place.

However, he maintained that the MFAA would always aim to have higher standards in place than the minimum requirements.

His comments follow the ACCC’s backing of the disciplinary rules imposed by the MFAA on its members, after the previous authorisation, granted in 2004, expired in February. “The ACCC has basically given us the thumbs up, provided we consider one aspect of the rules,” Naylor explained.

In a statement issued on 22 April, the ACCC said it proposes to grant “conditional authorisation” to the MFAA to enable it to continue to use the rules, which form part of its Code of Practice and Constitution.

The proposes authorisation was made on condition that the MFAA delete a rule which provides the

MFAA’s board with the ability to impose sanctions on a member regardless of any other action being taken by the MFAA Tribunal or at law. The ACCC considers this rule undermines the role of the MFAA Tribunal.

Naylor said the MFAA would consider this condition and respond to the ACCC in due course.

Under the MFAA’s disciplinary rules, a member can be expelled for misconduct or breach of the code.

Members can also be suspended if an investigations officer reasonably suspects that a member has acted fraudulently or dishonestly or brought the MFAA into disrepute.

ACCC chairman, Graeme Samuel, said the authorisation provides immunity from court action for conduct that might otherwise raise concerns under the competition provisions of the Trade Practices Act 1974.

“The governance regime sets a professional and ethical standard of conduct in the mortgage and broking industry. The ACCC considers that the rules provide a means for enforcing this standard, particularly through the provisions relating to the investigating officer’s powers to investigate complaints, and the range of sanctions which the MFAA Tribunal may impose. The ACCC considers that these measures act as a significant deterrent for MFAA members to act inappropriately,” Samuel said.

In general, the watchdog grants authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.

Aggregators beef up IT offerings Aggregators continue to invest heavily in their IT systems and software, according to the findings of MPA’s Aggregators on Brokers survey.

Choice CEO Brendan O’Donnell told MPA it had developed business education tools for its brokers. “We recognise that the landscape has changed fundamentally, but what really is important for us is to educate brokers about the impact that commissions and decreasing volumes have had,” said O’Donnell.

“So we’ve developed some unique tools which will enable brokers to better understand their cashflow, manage their cashflow and improve their knowledge of what the net present value of what their future earnings is,” added O’Donnell.

The program called Perform@ was recently launched through Choice’s IT platform Podium.

Steve Kane, CEO of FAST said it is piloting a new CRM software and taking feedback from its brokers to “ensure that in the long run it’s a system that provides what a broker actually needs.” Kane said the software was part of its efforts to “really help brokers change their business models where appropriate so they can broaden their revenue streams.”

One of the biggest aggregators, AFG, said its major emphasis this year is on its CRM offering Smart, which it rolled out in 2008.

General manager for sales and operations, Mark Hewitt, said Smart has already been adopted by 400 of its brokers and is growing in popularity.

Among the mid-tier aggregators, National Brokers Group underwent a massive IT and broker systems overhaul in 2008.

“We’ve been working on getting the software fully integrated through the systems. We use the Pisces software system, but we’re probably the only group in Australia that’s got it from end to end,” NBG CEO Steve Lambert said.

“Right now it’s all done, and we’re doing training with all the brokers to

realise its functionality… Now we’ve got a major software solution that we provide free to all our members, so it makes it a lot easier to pay commissions and do reporting, both for them and for us,” Lambert said.

And among the boutique aggregators Loankit is focusing on customising its software to suit individual brokers’ needs. “We come out to the broker, the broker tells us what he wants and we customize it for them on the spot. That way you can concentrate on your business and we will do your IT software,” said CEO Kym Rampal.

News of aggregators stepping up a gear on the technology front comes after brokers rated aggregators a disappointing 3.5 out of 5 on the quality of their IT and broker systems in the Brokers on Aggregators survey which appeared in MPA 9.4.

To read the full Aggregators on Brokers survey, make sure you read the latest issue of MPA online at www. brokernews.com.au/mpa

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Non-bank lenders won’t put borrowers in a fix

Non-bank lenders FirstMac and Opportune Home Loans have assured AB that their new low-rate fixed rate loans will not put borrowers in default danger once the loans revert to much higher standard variable rates.

As the non-bank sector continues to take the fight to the banks, FirstMac and Opportune released new fixed rate one year loans within a day of each other. Both lenders offered an initial rate for the first 12 months of just 2.99%, below the 3% cash rate.

However, once the 12-month term expires, borrowers will find their repayments almost doubling overnight with the Opportune loan resetting to a variable rate of 5.62% while FirstMac’s full doc product reverts to the standard variable rate (currently 5.64%).

Such a scenario is reminiscent of problems that led to the collapse of the US mortgage market, where borrowers were enticed into loans via a low introductory rate but then found they could not make the repayments when the loan reset at a much higher rate.

But both James Austin, chief financial officer at FirstMac, and Paul Ryan, managing director of Opportune, said such a scenario was not possible under strict assessment criteria.

Austin told AB that when a borrower is being assessed for the FirstMac product, their ability to service the loan is made at an interest rate of 8.25%.

“We’re building in quite a buffer,” he explained.

Similarly Ryan said applicants for its fixed rate product were treated as if they were applying for a standard variable loan, meaning they had to meet “the normal criteria and serviceability” requirements.

Both Austin and Ryan said their products had the ability to save borrowers a great deal of money.

If borrowers wanted to make extra repayments, said Ryan, the additional parts could go into an offset account.

“You can continue with the offset account or make a lump sum payment. It’s a wonderful opportunity to help people through the first 12 months,” he said.

Austin pointed out that the FirstMac product stacked up favourably against the big banks professional pack offerings.

He said a borrower would be James Austin better off - assuming they maintained the same amount of repayments - for the first eight years of their loan when compared with the average big four banks’ discounted professional pack rate at a rate of 5.10%.

In addition, he said banks also have annual fees, while the FirstMac loan has no annual fees.

“It’s a very competitive product and it will get good response,” he said.

Austin said FirstMac being able to issue a $600m RMBS deal as part of government’s investment program (managed by the AOFM) had assisted it in being able to launch the product.

“The AOFM program has been very successful for non-ADIs,” he said.

Corporate bullies: banks squeeze out non-banks

While the Big Four consistently publicise the increased cost of funds and level of risk, a recent mortgage industry report claims that the major banks are artificially lowering mortgage rates to squeeze out competition.

The authors of the latest JP Morgan/Fujitsu Consulting Australian Mortgage Industry Report (vol 9), managing director of Fujitsu Consulting, Martin North, and JP Morgan senior banking analyst, Scott Manning, argue that majors have re-priced their home loan books at the expense of their corporate business, as a strategy to gain a further stranglehold on the industry.

According to their analysis, there has been a significant divergence of pricing between mortgages and small to medium enterprise (SME) borrowing, with mortgages re-priced by approximately 80bps and SMEs loans re-priced by roughly 200bps.

And while historically there has always been a degree of disparity between mortgages and commercial lending, North said the differential is definitely higher now and is being used by the major banks as a tactic to undercut competition.

He said that in the current market smaller lenders are unable to obtain funding at the same cost as the dominant players, even with government help. According to North the tiered system of the government guarantee means that lower-rated ADIs are “priced out of the market before they even start”, while lenders relying on securitisation markets, even with the help of the AOFM’s $8bn RMBS initiative, are unable to compete with the majors.

North’s concerns were echoed by a senior industry figure who told AB that the majors were executing a “classic pincer move”. The big bank oligopoly is squeezing out the small guys, and once it successfully rids itself of competition it will re-price at a cost to consumers, the industry insider said.

However, CBA executive general manager third party banking, Kathy Cummings, said that the divergence in the CBA’s pricing reflected “inherent risks of longer term arrears and losses of those types of businesses in the current financial and funding environment.”

“The bank’s margins have been contracting as evidenced in our annual report as a result of the credit crunch,” she said.

“We have responded to changes in funding. The fact that our variable rates are so competitive reflects the fact that we have a strong deposit base and are able to secure wholesale funding competitively based on our AA rating.”

North disagreed, saying there was probably truth in the funding and risk argument offered by the banks, however that this was not the entire story.

“I think there’s [also] some strategy on the part of the banks there,” he said.

“It is easier to not pass on the full effect of rate cuts into the commercial sector because you can explain it in terms of market risk, whereas it’s more transparent and more headlined news when you actually look at it in the mortgage context.”

AB also contacted the NAB and Westpac but did not receive responses from either bank.

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News 9

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MFAA committees working to bridge gap While the MFAA-sponsored forum held on 28 April looked to have laid the ground work for improved service levels and a better understanding between brokers and lenders, efforts to bridge the gap have been underway for some time.

Joe Sirianni, chair of the MFAA’s National Broker Committee (NBC) revealed that discussion with the National Lenders Committee (NLC), led by NAB Broker’s Matt Lawler, kicked off in late February when he presented four key issues facing brokers to the NLC members.

The four issues raised by Sirianni were frustrations over worsening service levels; broker accreditations being terminated based on volume targets; the need for a dispute resolution process between brokers and lenders (see box out) and the idea of an accreditation standard.

The meeting and subsequent response by the NLC to these concerns were contained in a letter sent to Sirianni

by Lawler, and forwarded on to AB. In it Lawler detailed the concerns raised by the NBC and the response of the lenders on his committee.

On the issue of service levels, Lawler noted that frustrations were heightened by the fact that “many of the commission changes reflect a quality component particularly around conversion which will be impacted by the current situation”.

In response, Lawler gave a familiar explanation (increased volumes over a short period of time exacerbated by enhanced First Home Owner Grant) but he also felt a contributing “factor continues to be the quality of submissions by brokers”.

Despite playing the blame game, Lawler felt the committees could work together on “proactively encouraging communication about service levels including delays and timeframes”. He also suggested that both committees work together “on the most common areas where brokers could assist the service process if they were to improve their submission.

On the issue of accreditation terminations based on volume, which Sirianni said made being a broker difficult for individuals, aggregators and franchise brands, Lawler said while most accreditations were set around quality, it was up to the individual lender to determine their own basis for and standards for accreditation. “It was, however, discussed that if the industry moved to a higher standard of accreditation then there would be more confidence about maintaining accreditation beyond the volume requirements,” he said.

Sirianni put forward the suggestion that an accreditation standard be developed distinguishing

between a ‘Class A’ broker, accredited with a comprehensive lender panel and a ‘Class B’ broker, accredited with a limited number of lenders.

If standards were set for these two classes of brokers, Sirianni said lenders would have more confidence in allowing a broker to remain accredited, despite volume levels.

The response was a favourable one from the lenders committee though they said a key issue would be lender’s rights to “continue to apply their own accreditation criteria and the extent to which the proposed credit regulation will dictate some of these requirements”.

Based on the idea of having ‘merit’ it was decided that Sirianni and his committee would design a first draft of what format a standard accreditation could take, to be shared with the NLC after which a decision would be sought to move forward on this initiative.

In his letter Lawler said he looked forward to working with the NBC on the “action items from this meeting”.

Sirianni said the general response from the committee to Lawler’s letter was that it still “did not address nor satisfy the concerns raised by the NBC”.

However, he said the NBC acknowledged that the response was an “encouraging start to an ongoing dialogue to reach a mutually rewarding relationship”.

Matt Lawler

Lenders uninterested in better dispute process During his presentation to the MFAA’s National Lending Committee (NLC), Joe Sirianni raised the issue of developing a dispute resolution process in situations involving an individual broker (or broker group) and a lender.

It was the view of the National Broker Committee (NBC), he said, that in many situations disputes were handled in a heavy-handed manner, “with no formal voice or structured process in place to resolve it satisfactorily”.

Lenders though were reluctant to suggest any changes to the way disputes are handled.

NLC chair Matt Lawler said the committee agreed that a dispute resolution process might only slow the process down and not achieve the desired outcome.

And it took the view that the way each lender deals with a dispute is “part of their competitive package”.

All Lawler could offer was lenders being more transparent about their guidelines and protocols. Upon suggestion from Sirianni, it was decided that a ‘Charter’ be developed making it clear how certain issues would be dealt by a lender.

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“Partial advice does not work” Brokers need to either provide full insurance advice to borrowers or offer a no advice model, according to Smartline director Joe Sirianni.

Sirianni said Smartline had tried offering borrowers all three models – full, partial and no advice – and said one thing that was clearly evident was that, “partial advice just does not work”.

“It’s either no advice or full advice – in between just does not work. That is one thing we have learned,” he said.

Smartline is moving towards the full advice model with Sirianni saying it was “the better proposition simply because we see ourselves as advisors and want to be recognised as such by the client.”

“So if the client is thinking finance or credit, they will go and see their mortgage advisor,” he said.

In the minds of brokers, Sirianni said offering the full risk insurance offering and a panel of providers would be the better solution, though he conceded it remained a difficult journey.

“We have 220 franchises. Not all of them will go down the full advice path. But some will want to be trained and equipped to provide that full advice.”

National Brokers Group CEO Steven Lambert said the problem for brokers transitioning towards a full financial planner was keeping up with the ‘level of knowledge’ for the client to trust them beyond providing the home loan.

“The broker says to the client here is my financial planning, my superannuation, [service], the whole thing. But they are struggling with it, both the client and the broker.”

Lambert said a better solution was where there are two people in the office, the one acting as a broker, the other the designated risk and financial planning person.

“But where the broker does both – it’s a bit hairy at this stage.”

Both Lambert and Sirianni agreed that in the years to come – maybe 10, 15 or 20 years from now – offering financial planning and mortgages would become one.

Sirianni pointed to the new credit legislation which he said would change the mindset of brokers “from transactions to advice” and would make them more comfortable with seeing themselves as advisors.

And to this end, he said the “most immediate and obvious one is risk insurance”.

Brokers regain market share…again

After going through a temporary dip in market share when the onset of the credit crunch forced non-bank lenders to exit the market, brokers are now recovering from another dip forced on them by the lack of choice across credit providers.

According to the latest JP Morgan/Fujitsu Australian Mortgage Industry Report (volume 9), mortgage brokers first fell from their high of 38% to 36% after the first effects of the credit squeeze significantly reshaped the face of the mortgage industry.

However, after clawing back market share for a while, they once again declined in popularity as the rapid reduction in interest rates saw borrowers approaching banks directly due to “less perceived differentiation between ultimate credit providers.”

But brokers have recovered once again, with March figures revealing they currently hold a 37% share of new loans in the mortgage market.

Despite the good news, the report also found that the number of new loans originated through brokers at each of the major five – ANZ, Westpac, CBA, NAB and St.George – has diminished from September 2008 to March 2009.

New third party originated loans which hit almost 45% with St. George in September 2008, declined to 40% in March of this year. ANZ which sold approximately 42% of new loans through brokers in September now has 40% of its business come from the third party distribution channel.

The CBA, which saw close to 40% of its new mortgage business come from brokers at the end of 2008, wrote about 39% New Third Party Originated Housing Loans by Lender of new loans through brokers in March, with Westpac dropping off from 37% in September to 35% in March.

The worst of the performers was NAB which wrote just over 30% of its new business through brokers in September 2008 and has since seen this scale back to below 30% in March 2009.

Key points • Smartline has trialled a range of insurance offerings • Joe Sirianni says brokers either want to offer full advice or no advice • Says full advice offering the better option • More brokers likely to move down advisor path in next 10 to 20 years

Sirianni said the current take-up of noadvice insurance products by brokers was driven by commission cuts and the state of the economy, but as they sell more, brokers will appreciate the duty of care and they will have a better understanding of the advice piece.

“You will see some brokers, who by wanting to do the right thing by their clients, will want to provide tax advice with regard to live insurance, self-employed income protection, and so on,” said Sirianni. He added that these brokers would start going down the path of obtaining the necessary qualifications and training so they can offer choice (in terms of insurance products) to their clients.

“You will find the younger brokers gravitating down that path – I’m not saying everyone, but a specialist mortgage advisor will always beat a generalist,” he said.

Macquarie confirms it is up to something

While some time has passed since rumours about Macquarie’s aggregator project first surfaced, the lender has released comments that confirm it is definitely up to something.

AB first got wind of Macquarie preparing to dabble in the aggregation space back in March, when a series of industry players contacted the magazine to speak about the lender’s secretive discussions with several small aggregator groups.

According to industry sources Macquarie had held a meeting for small aggregators interested in working on a co-operative model late in 2008. Since then it is believed that six boutique aggregators have become involved with the project (one from South Australia, one from Western Australia, one from Queensland and three from New South Wales).

More recently the industry grapevine has been vibrating with information of a possible announcement as early as mid this year.

However, Macquarie – and former head of Macquarie Mortgages, Tim Brown, who is believed to be leading the movement – evaded AB. Persistence saw Brown relent to AB’s questioning with the release of the following comment: “Macquarie continues to review the market, looking for opportunities in the interest of the mortgage industry and our stakeholders. We are currently working alongside a number of parties on a variety of projects and when and if we have any news to provide we will do so.”

In other words, watch this space.

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14 News

Russell a good choice for CEO Making the switch from Choice to Mortgage Choice – with a nine-month break in between – Michael Russell has been welcomed back to the industry with open arms.

Russell, who is no stranger to the mortgage market having served as head of Choice Aggregation Services for five years before leaving the company in July 2008, was promoted to the role of Mortgage Choice CEO at the end of April.

The appointment followed the resignation announcement of long-serving Mortgage Choice managing director, Paul Lahiff, on 1 April – at which stage an external recruiter was employed to search for suitable candidates.

Chairman of Mortgage Choice, Peter Ritchie, said the board was delighted to have attracted someone of Russell’s calibre to the role.

“We were searching for someone with proven leadership skills and an innovative approach who could guide the company through its next phase of development, and we achieved that,” said Ritchie.

Michael Russell

Russell bids Lahiff an early farewell On the day of Paul Lahiff’s resignations several comments of support for the departing managing director were posted on brokernews.com.au.

One comment made by a “Michael Russell” stood out in particular. It read: “Paul is an absolute gentleman and has always been a champion of the mortgage broking proposition. Paul you will be remembered for your wonderful contribution and I dare say we will cross paths again soon.

Mortgage Choice did not confirm whether it was the Michael Russell bidding an official farewell to his departing predecessor (for more see Insider on page 30).

“Michael’s strategic approach, in-depth knowledge of the industry and wellestablished connections will serve us well.”

Russell is well-known throughout the industry for having spent seven years with Choice, the last five of which were at the helm.

The transition from Choice to Mortgage Choice: 2001 Russell starts his career with Choice 2003 Russell is promoted to the position of managing director 2003 The Make a Wish Foundation is introduced as a Choice corporate charity. Since this time Choice has raised more than $500,000 to grant wishes to children with threatening illnesses May 2005 Choice Aggregation Services brand is launched to replace Choice Home Loans as the group aggregator July 2005 First acquisition (Fintrack) is completed December 2005 Second acquisition (Mortgage Find) is completed 2006 Choice diversifies into life insurance, general insurance and white labelling, as well as segmentation of members into emerging, mid-tier and platinum to be able to better tailor proposition 2007 Choice turns 10 years old and launches ‘Broker 360’ software 3 September 2007 Business sold to Challenger Financial Services for $163m May 2008 Russell announces his resignation from Choice July 2008 Russell hands over Choice CEO role to Brendan O’Donnell April 2009 Russell promoted to CEO of Mortgage Choice

He has also held positions at ANZ Banking Group and National Mutual Royal Bank in the 1980s and 1990s.

In taking the position as the head of a listed company, Tony Carn, general manager sales of ASX-listed Homeloans Ltd said Russell would face a few key differences, including being accountable for the company’s profile and its share market price, its adherence to Australian Accounting Standards in financial reporting, abidance of ASX corporate government principals and reporting requirements, as well as continuous disclosure obligations to the market.

However he went on to say Russell was the right man for the job.

“I think the selection of Mike Russell as the new CEO of Mortgage Choice is a wonderful appointment,” he said.

“Mike is a well respected and experienced leader in the Australian mortgage industry.”

The Mortgage Choice promotion is not Russell’s first foray back into the mortgage industry. He had previously joined the board of mortgage loan lead generator Ratesonline. com.au as a ‘non-executive’ director in early April.

Hardship relief leads 98% of borrowers to recovery Despite the current market gloom, according to the CEO of insurance provider QBE LMI, Ian Graham, the majority of borrowers who receive hardship relief should hold out for the light at the end of the tunnel.

Speaking to AB shortly after QBE LMI revised its Home Ownership Preservation program in order to engage with lenders and better aid borrowers facing genuine hardship, Graham said Australian financial institutions were doing an extremely good job of helping borrowers in strife.

Graham said that his company’s experience with more than 20 lenders had revealed that lenders have been identifying the right borrowers and have provided the right systems for Australian borrowers suffering from the effects of the national downturn.

“Our experience with the lenders has been very positive,” he said.

He went on to say that while in some cases borrowers were not eligible to meet hardship program requirements, the vast

majority of borrowers who banks prequalified for assistance before consulting QBE LMI, were being approved by the insurer.

“I can’t comment on how many borrowers the banks have been unable to help – if [lenders] decide that they can’t assist a particular borrower, we don’t see the application. However, from what they send to us, over 90% get approved,” he said.

In further pleasing news, Graham said that of the people who received assistance, the recovery rate was very high.

“The success rate of people granted assistance who are able to remediate (or recover) their position is pretty much 98%,” he said.

Graham said this was a positive sign considering that unemployment is set to deepen. The majority of borrowers who find themselves financially compromised by an unexpected, and temporary, change in situation, he said, would be able to receive hardship assistance.

Ian Graham

Key points • QBE LMI is working with 20 lenders to better aid borrowers facing genuine hardship • Australia’s lenders are doing a “good job” to alleviate financial hardships • More than 90% of assistance applications received by QBE LMI from lenders are approved • 98% of borrowers receiving hardship relief have been able to make a recovery

www.brokernews.com.au

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7/05/2009 3:35:51 PM

News 15

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7/05/2009 3:35:53 PM

16 News

Fines aplenty in new credit rules

of direct

arly

Tales of enormous fines being imposed on brokers in the UK may soon be a coming closer to home.

The government’s proposed National Consumer Credit Protection Bill has clearly taken a leaf out of the UK manual when it comes to dishing out hefty fines.

Recent fines handed out to brokers in the UK by the Financial Services Authority (FSA) include a Nottingham broking firm fined £17,500 (A$35,000) for not providing suitable advice on a mortgage product, while in December last year an Oxford businessman was fined £35,000 (A$71,000) for falsely claiming to be authorised by the FSA. The man in question placed advertisements in the phone directory falsely stating that his company was authorised to carry out regulated financial services.

From 1 July next year, licensed brokers in Australia who breach the new rules will need to have deep pockets to afford the hefty fines, and could even end up in jail.

Under the draft rules, a broker found to be engaging in credit activities without a licence faces a civil penalty of 2,000 penalty units, which at the current penalty unit rate of $113.42 equates to a staggering $226,840.

If also found guilty of a criminal offence, a broker could be jailed for up to two years, be fined the

equivalent of $22,684, or both. Similar penalties apply even before a broker begins engaging in credit activities.

These may penalties may apply if they advertise or promote the fact that they hold a credit licence when they do not; or if they claim to be able to engage in a certain credit activity without the need for a licence when they do in fact need one.

Criminal penalties for such offences range from one year in jail, fines of more than $11,000 or both.

Under the new rules, licensed brokers will also need to be extra careful about who they form business partnerships with. If not, they could find themselves being fined heavily by ASIC, if while acting as brokers, they engage the credit services of someone else who does not hold a licence.

On the positive side, the rules make it clear that ASIC must grant a hearing to all applicants who have their licence refused and must also do so before changing the conditions imposed on a licence holder, such as suspending or cancelling their licence.

All brokers then will have the opportunity to appear (or be represented) at a private hearing before ASIC where they can “make submissions” in relation to the refusal to grant a licence or to argue against having their licence suspended or cancelled.

Key points • hefty UK-style fines in proposed new credit laws • jail terms are also possible • false advertising will carry big penalties • all brokers will entitled to private hearing with ASIC

Strict licensing pays off for WA brokers Lending responsibly

Under the new consumer credit laws, brokers will have to meet responsible lending requirements in two core areas. They must not provide a consumer with a loan if: • they consider it to be unsuitable; and • if the consumer does not have the capacity to repay the loan

More than 30 years of state-based licensing will benefit finance brokers on the West Coast after the government revealed that they will have an easier time obtaining an Australian Credit Licence (ACL).

All brokers will need to register with ASIC by the end of the year and apply for an ACL by 1 July next year to continue to help borrowers, but WA brokers, along with banks, credit unions and other ADIs, will be ‘streamlined’ as part of the proposed new legislation.

Under the National Consumer Credit Protection Bill 2009, finance brokers who have met the requirements to hold either an ‘A’ or ‘B’ Class licence under the current WA licensing regime can be streamlined to a licence without having to again demonstrate their competencies and qualifications.

Licensing timeline: the countdown begins 2009 27 April Exposure draft of National Consumer Credit Protection Bill 2009 released 22 May Last date for comments to be received on the bill Mid-year Proposed time when bill will be introduced into parliament September Expected date when bill will be enacted 1 Nov – 31 Dec Brokers must apply to register with ASIC 2010 1 Jan – 30 June Brokers must apply for an Australian Credit Licence (ACL) 2011 30 Jun All brokers must have an ACL to operate

How does a broker qualify for an Australian Credit Licence?

• meet minimum training requirements and having adequate financial and human resources to meet their obligations as a licence holder • meet enhanced standards of conduct including a requirement to act honestly, efficiently and fairly, and to properly train and supervise people who act on their behalf. Licensees must meet these obligations when engaging in credit activities, or risk losing their licence • have the mandatory membership of an External Dispute Resolution scheme

Explaining this streamlining, the bill said such participants “have been subject to sufficiently rigorous levels of supervision”.

“Streamlining will mean that the application procedure will be simplified. Applicants will be able to apply for a licence without having to provide detailed material to ASIC. However, once licensed they will still have to meet the same obligations as all other holders of an Australian Credit Licence,” the bill explained.

Brokers in WA were first required to be licensed when the state introduced the Finance Brokers Control Act in 1975.

As part of the new regulatory regime - provided the bill receives royal assent (expected in September) brokers will have two months to register with ASIC starting from 1 November.

If a business is not registered by 31 December 2009, it will be prohibited from engaging in a credit activity until licensed.

Then starting in the New Year, brokers will have until 30 June to apply for an ACL. By 30 June 2011 all brokers must hold a licence. Brokers entering the industry on 1 January will need to apply for and obtain a licence from ASIC to commence their lending activities.

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7/05/2009 3:35:55 PM

News 17

ING reassures brokers after booting seven originators Key points • ING Direct reduced number of mortgage managers from 17 to 10 • move made in line with ongoing de-risking process • brokers should not feel threatened • mortgage brokers continue to make up roughly 74% of ING Direct business

Despite cutting its mortgage manager origination channel from seventeen to just ten operators, ING Direct has claimed the broker channel does not need to feel threatened.

The shock move, made at the end of April, was the result of ING Direct looking to concentrate its funds on its most volume-producing business partners.

It was also made in line with an ongoing de-risking of ING Direct’s business, which will see the lender continue to grow its loan portfolio across fewer operators in the mortgage management area.

However, while the move has meant a 41% reduction in the number of mortgage managers, it amounts to just 13% of business – which will now be picked up by the remaining ten originators.

A spokesperson for the lender said brokers need not fear similar treatment.

“ING Direct will always look to attract quality business from quality brokers. The fact remains that the vast majority of ING Direct volumes are sourced through the broker channel, a channel that is vital to our branchless bank model,” he said.

“Accordingly we are always working with our aggregator partners to ensure that our broker panel represents the best offering for clients in terms of quality, efficiency, and value for our business and the aggregators,” the spokesperson said.

Currently about 22% percent of ING’s mortgage book – worth $34.4bn – is derived from mortgage managers, compared to 74% through the broker channel, and roughly 6% which is direct.

ING Direct revealed the change will be made over a six-week transition period and confirmed that all current portfolios would be serviced as per agreements.

Although the lender would not name which mortgage managers have been affected, AB has received confirmation that Resi, Opportune and Firstfolio are a part of its remaining ten business partners.

Australian First Mortgage (AFM) would not reveal whether it had been cut, however its director, Iain Forbes, said the mortgage manager hoped to sustain a good relationship with ING Direct going forward.

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7/05/2009 3:35:59 PM

18 News analysis

An exercise in change management Most brokers would agree that providing risk insurance is a logical fit when helping a borrower secure their mortgage, but a roundtable of aggregators agreed that putting this into practice is not quite as easy.

Larry Schlesinger reports

I

nsurance providers and aggregators will argue that providing a borrower with mortgage protection is not only required ethically, but it’s also a way for brokers to fill the gap left by commission cuts and a tougher lending environment.

But at a recent Leadership Forum held in Sydney, those in attendance agreed that a lot of brokers are still not offering clients the option of taking out risk insurance. This is despite the fact that brokers have the perfect opportunity to engage borrowers on the subject when they’re sitting in their living room helping them fill out their mortgage application.

Part of the sales process

The general consensus in the room was that having a discussion with clients about insurance makes perfect sense.

According to Gerald Foley, managing director of National Mortgage Brokers (nMB), providing mortgage cover for a client is good for the broker and the borrower.

“It should be part of the broker’s sale proposition, part of how the loan is written,” Foley said.

Steve Lambert, managing director of National Brokers Group, agreed and said it seemed “crazy” for brokers to not try and sell their clients another product “which is such a great solution”.

“It’s ridiculous, but we’re struggling to educate our guys to make that step,” he added.

What’s holding brokers back?

So why is just one in every 20 brokers (according to the latest industry figures) prepared to have a conversation with their clients about insurance?

Aggregator bosses suggested this might have something to do with the challenge of fundamentally changing the way a broker views their job.

Lambert said many of NBG’s brokers had previously worked for lending institutions or professional organisations where they had targets for cross-selling things like risk insurance and home and contents insurance.

They had left to become brokers and have until recently made good money simply selling mortgages.

“But now five, six or even 10 years down the track, we’re asking these guys to change the way they sell things,” said Lambert.

He added that despite commission cuts being a strong motivating factor getting brokers to consider the insurance proposition, it is still a struggle “to get them there”.

According to Smartline’s Joe Sirianni, many brokers still see themselves as “technicians” rather than sales people – nor are they seeing the bigger picture“Lots of brokers are saying to the customer, ‘we can do your loan for you’, but they are not sitting back and looking at the holistic needs of the customer,” he said.

These include not considering what should happen should a borrower be struck down by a debilitating illness or one of the breadwinners pass away suddenly.

Mortgage Choice national lending manager Debra Player recalled a recent conversation with a Mortgage Choice branch manager where a customer had been killed in a tram accident over the weekend, but had not signed the forms providing them with mortgage protection. “It’s the worst phone call you can ever have,” she said.

Changing minds

To get brokers thinking beyond the mortgage, Sirianni said brokers needed to be trained to

“They can’t afford it”

Aggregators round the table also agreed that brokers were also pre-judging their clients and deciding in some cases that they cannot afford the insurance on top of the loan they are taking on. “They think it’s too expensive, or they not pay for it themselves - so they are passing on their own limitations,” Player said.

But, she said, it was not up to the broker to decide – “it’s up to the customer to decide whether they want to pay for it or not.”

Lambert highlighted the following example to emphasise the mental block in some brokers’ minds: “One of our brokers, who writes a lot of loans, sat down with a client and having taken all their details and gone

“I spoke about fee for advice, and the sentiment in the room when I mentioned advice was… whoa, we don’t give advice” move away from “technically filling in a loan application to look at a customers needs in broader perspective”.

Similarly, Gerald Foley, said brokers needed to change the perception of their role as “order filler” to one that “identifies needs and gets solutions”.

“That is a total different mindset,” Foley said.

This means getting brokers to think of the “nasty” ‘A’-word, namely ‘advice’.

Sirianni said the Smartline board had recently presented in Western Australia: “I spoke about fee for advice, and the sentiment in the room when I mentioned advice was… whoa, we don’t give advice.”

“It’s a nasty word – the mindset of brokers has been in the past that we don’t give advice at all, its all about the single product,” he added.

But, he said, the fact remained that every broker does give advice when they open their mouths and say “I recommend this product or guide someone in a certain way…that’s the reason the client goes to see them”.

Debra Player said another issue holding back brokers was that of “choice”.

“A lot of them can’t buy into the fact that [when it comes to insurance] they are not offering choice. It’s hard for them to get their heads around that aspect as well.”

through their income, reached their bottom line affordability figure.

“And because these people were borrowing the absolute maximum, the broker decided these people could not afford the insurance.”

Despite it being these borrowers that most need insurance, Lambert said brokers were worried about over committing borrowers and as consequence were not offering insurance for fear of losing the loan or losing the trail.

To which, Debra Player responded that if brokers are worried about losing the loan based on this logic “there is something wrong with their technique”.

Sirianni agreed that pre-judging a client was a problem: “The broker might not know that the father may have passed away and left the mother in trouble with the mortgage and the son may have lived through that – so he desperately wants insurance. “But because the broker never raises it, you’ll never know.”

Even worse, Sirianni said by pre-judging that a client does not want insurance when they might indeed be looking for it, they leave the door open for someone else to offer it, and potentially steal that client.

“So the client leaves you after the interview and goes to someone at say AMP to get it and the guy says to him: ‘hey by the way, while you are here, I can do your mortgage for you’.”

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Top

10 tips

Tips 19

Greening up your workplace The reality of global warming and changing global weather patterns means it’s time for brokers (and everyone else) to do their part. Here are ten ways you can minimise your carbon footprint: 1. Optimise your computer settings If your computer is the centre of your working universe, setting it to energysaving settings and making sure to shut it down when you leave (‘standby’ settings will draw power even when not in use) can have a huge impact. Printers, scanners, and other peripherals that are only used occasionally can also be turned off until needed.

2. Cut down the paper Try to purchase printers and photocopiers that do double-sided printing and print on both sides of the page. Use misprints as notepaper. If your office ships packages, reuse boxes and use shreddhed waste paper as packing material.

3. Go digital Use the virtual red pen – track changes and highlighter functions on PCs save ink and paper. Be a perfectionist. Double check and proofread work before your print. The more digital you are, the less paper you’ll need and that means less expense for you and the environment.

4. Travel smarter Use the bus or train rather than your car.

If there’s no good way to phase out your car, there are dozens of ways to reduce its carbon footprint. These include driving more smoothly, pumping up tyres and not leaving golf clubs in the boot when they’re not needed.

5. Travel less Video conferencing and other innovative workflow tools can make effective telecommunicating a reality. If you can, hold phone conferences, take online classes or work from home.

6. Use low-carbon suppliers Using suppliers that have gone part or all of the way to providing carbon neutral products or services can reduce your own footprint. Not only will you have the environmental benefits but chances are you will share similar business philosophies.

7. Sign up to greener energy Sign up to a Greenpower™ provider who will supply electricity from renewable sources (eg, wind and hydroelectric power). If you buy 100% Greenpower this will reduce your carbon footprint contribution from electricity to zero.

8. Redesign your workspace Greening your desk or workspace has almost limitless possibilities. Furniture can be made from recycled materials and can be recyclable. Low energy light bulbs reduce energy costs and have a longer life.

9. Know your carbon footprint If you are really serious about reducing your carbon footprint you should try to understand the number and how it’s calculated. Measuring your business’ footprint can give you an insight into which factors contribute the most to it, whether it’s electricity, travel or IT. You can then target those specific factors and reduce your carbon footprint more efficiently.

10. Get others in on the act Share these tips with your colleagues, friends and most importantly your boss (assuming that’s not you!).

Ian Ross is director of Carbon Planet. For more information visit www.carbonplanet.com

www.brokernews.com.au

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7/05/2009 4:13:48 PM

20 Feature

Opportunities in diversity A growing Muslim community in Australia and a mortgage market worth nearly US$1 trillion internationally presents opportunities for brokers looking to forge out a new niche. But they will need to understand the religious beliefs that govern the provision of financing for this diverse community. Kit Kadlec reports.

“Those who charge riba are in the same position as those controlled by the devil’s influence... As for those who persist in riba, they incur Hell, wherein they abide forever” – Qur’an 2:275

Instead of making interest payments, buyers pay rent to the MCCA until they are granted full ownership of the property.

T

Founded in 1989, MCCA is the first and one of the leading providers of Islamic finance in Australia, which is a small but growing market. There’s little competition other than a few other organisations such as Sydneybased Iskan Home Finance. While Islamic finance has taken off in Western countries such as Britain and the US, it’s still relatively small here. Aykan says there are about 1,500 MCCA members, membership which equates to just under 2% of the estimated 80,000 Muslim families across the country.

Part of the problem in attracting customers is that the MCCA doesn’t offer the multitude of services and products that larger banks do.

“If we had real banking services, I believe we could easily penetrate 20% of the Muslim market,” says Aykan. He goes as far as to say that 50% of the Muslim market may eventually be committed to Islamic finance in Australia. And the MCCA aims to reach non-Muslim customers as well.

his much is clear – the Qur’an has very strong words against ‘riba’, which loosely translates as interest.

This poses a clear difficulty for Muslims in Australia who want to take out a mortgage while still following Islamic law. There were more than 340,000 Muslims in Australia in 2006, and the population is growing. Many of these residents want to live the Australian dream and own their own home. But when borrowing with a traditional lender, they must pay back interest and thus violate Sharia (or Islamic) law.

“The difference between Islamic and Western banking is the notion of interest rates,” says Nail Aykan, marketing manager with the Muslim Community Cooperative of Australia (MCCA).

“In the Islamic beliefs, interest rates are forbidden, so there must be an alternative.”

One way to avoid interest payments would be to pay for a property entirely in cash, but few can afford to do this in Australia.

Another option would be to borrow from friends, but that also is usually not practical.

In order to get around the challenge, the MCCA has followed the lead of other lenders abroad by offering Islamic finance – essentially a process that avoids charging interest by entering into a partnership with each homebuyer and sharing purchase risk.

Slow start in Australia

“I do not see Islamic finance as a passing phase.

It is here to stay.”

In addition, the Muslim community isn’t a homogenous group. Among Australian Muslims there are more than 60 countries of birth and 55 languages spoken, according to the MCCA. Another major reason that growth in Islamic finance has lagged in Australia is that the sector doesn’t have the connections to the Arab world that the US and UK do, says Bala Shanmugam, a professor who holds the Chair of Accounting and Finance at Monash University’s Malaysian campus.

“Britain and the US have always viewed themselves as a major destination for petro dollars – a repository for Arab funds,” says Shanmugam. “Hence, they’re taking steps to do what’s necessary to maintain their stand.

Australia, on the other hand, isn’t exactly a centre for such funds, so I don’t see a rapid take-off in that direction.”

Perhaps the largest issue, however, is the fact that many Australian Muslims see the traditional lending method with banks to be both easier and cheaper and therefore preferable. “Research shows that Muslims as well as non-Muslims view returns as a more important factor in a financial transaction,” says Shanmugam. “This variable outweighs religion in terms of importance for patronising types of banking. Therefore, unless people see actual benefits in terms of returns, the extent of patronising will be nominal.”

Case study

However, there are some Muslims in Australia who place religion first. Mohammad Tabiaat,

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Feature 21

who is of Lebanese descent, chose to borrow through MCCA for his first family home.

He bought a three-bedroom home in Campbellfield, outside of Melbourne, in December for $270,000, paying a 20% deposit. That part isn’t unlike anything other Australians would do in purchasing such a home.

The difference is that Tabiaat isn’t paying any interest. Instead, he’s paying about $1,600 per week in rent through Murabaha. Murabaha, an Islamic term, can be described as a lease-to-own agreement, where the borrower is offered fair market rent.

Murabaha is defined as a transaction where the seller (in this case MCCA) discloses the cost of its commodity, then adds some profit, which is either a lump sum or based on a percentage. This payment must be a fixed amount.

In another option, Ijarah Muntahia Bittamleek, the payments can be either fixed or variable, and ownership of the property is transferred to the client with the last instalment. There are another three MCCA products, and other lenders, such as Iskan Home Finance, have other offers, and all aim to be Sharia compliant.

In his particular case, Tabiaat will pay rent for 180 weeks, which ultimately equates to $288,000, plus the $54,000 deposit. While not everyone can afford such high weekly rents of $1,600, it’s common to have borrowers pay off the amount owed quickly with Islamic finance, says Aykan.

The MCCA has taken on some of the risk in this transaction, as it essentially has made the purchase on behalf of Tabiaat. According to the MCCA, the mortgage can either be seized by the funder or left with the borrower, given that it’s registered for full

You don’t need to be a Muslim to qualify for a loan in Australia with Islamic finance, nor do you have to have any set of beliefs. Just like a Halal butcher in Australia will sell meat in Australia to any client, regardless of their beliefs, so to will an Islamic bank finance anyone wishing to borrow money towards a property.

There’s also little difference in qualifying for the loan. Those looking to borrow money must have a solid employment with a salary large enough to cover the payments. A credit check also applies. But the qualifications are roughly the same as any standard bank would require.

One difference is that the desired property must first be purchased by the Islamic bank before it can be ‘rented’ to you. Thus the bank will require you to sign a note promising to commit to purchasing the property before it purchases the property itself. The deed is then transferred to the borrower from the onset to provide a tax benefit.

Photo: Glenn Barry

How does one qualify for Islamic finance?

mortgage securities entitlement to the funder. It’s also permissible to use a third party’s property as security for the mortgage.

Tabiaat says he realises it would have perhaps been easier to use a traditional Western bank, but he prefers to follow Islamic law. “It’s an individual choice,” he says. “Some people are really conscious about what rate they’re paying, whereas others don’t mind paying the extra amount to do it in a compliant way.”

How much more is it that one must pay in Islamic finance? Aykan says it often is a very similar bottom

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22 Feature

line. “An Islamic bank and a traditional bank may be offering the same rates, but it’s how it’s processed that makes the difference,” he says.

Photo: Glenn Barry

Profit or interest?

Nail Aykam

The MCCA and other Islamic finance lenders often define the amount of money they take above the purchase price as ‘profit’. Since charging interest is forbidden, the word ‘interest’ is avoided in most cases, although the Australian government still requires it to be used in the paperwork.

Aykan says while the MCCA aims to offer something under religious guidelines, in the end they can’t offer loans without making their own profit.

“You have to remember that it’s a business at the end of the day; it’s not a charity,” he says.

“But it’s more ethically and morally based banking than just interest based, where it’s just greed. Islamic banking has certain religious values and guidelines.”

The word ‘profit’ is often used to describe the amount paid by an MCCA customer. But that’s not what they’ll see on their official paperwork. “What the MCCA has experienced, because the whole conventional system is based on the understanding of interest, is that our funders, our regulators and a whole heap of other bodies always use the word interest,” says Aykan. “They don’t know an alternative word.”

Yet he says he’s hopeful that in the next few years a new term will be allowed on the official forms for Islamic finance. “We’re not engaging in [charging] interest, but that term is still there, whether we like it or not,” Aykan says. This means an explanation must be given to customers, and Aykan says the term is little more than a formality.

Shanmugam says he’s unsure why there’s even an issue with the wording. “I’m not sure why the mere usage of the world ‘interest’ can cause a conflict between Sharia and Aussie law,” he says. “Islamic finance has devised ways and means of not utilising the interest payment or charging mechanism to undertake financial transactions.

“However, in places such as the UK and Singapore, amendments have been made to existing legislation to cater for Islamic finance.”

Tabiaat says he’d like to see Australia adopt the changes in language sooner rather than later. “Why not adopt these changes and open your heart to it?” he asks. “Look at it as a benefit. If you change the law, it will bring more investment into this country.”

However, no matter how it’s worded, not all Muslims see Islamic finance institutions as true followers of Sharia. Instead, say critics, they’re the

Muslim population in Australia 350

Population (‘000)

300 250 200 150 100 50 0

Source: ABS

1981

1986

1991

1996

2001

2006

Census year

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Feature 23

same as the banks they claim to offer an alternative to, taking a profit, cloaking ‘interest’ under a different name and using external funders that don’t practise Sharia.

There are numerous websites in Australia whose authors take shots at the MCCA and others, claiming these essentially have the same practices as traditional banks but under a different guise.

“This is a matter of opinion,” says Shanmugam. “The same criticism is often levelled at Malaysia as well, from the Middle East. When religion becomes the guideline for economic activity, such comments may be expected, as religion can be interpreted differently by liberals and conservatives.”

While a uniform regulatory and legal framework supportive of an Islamic financial system has not yet been developed in Australia, there’s some overseeing.

Community-based Islamic finance institutions are registered and given licences to carry on cooperative businesses under the Cooperatives Act 1992, and they’re subject to basically the same rules and regulations as other lending institutions. However, there has been a push for more uniform rules and greater level of overseeing specifically aimed towards Islamic finance.

The future

To Shanmugam and other experts, there’s no doubt Islamic finance will begin to expand in the coming years. “Islamic finance has been around for a good 40 years, but after 9/11 it has seen astronomical growth, largely due to a consolidation of Muslim interest, sort of an Islamic renaissance,” he says. “ “With time, it has gained momentum and is progressing at full steam. With complete support from resource-rich Arab nations, I don’t see Islamic Finance as a passing phase. It’s here to stay,” he says. Since

there’s a greater risk in the lending sense, Islamic finance banks often are more careful in what they invest in. That has no doubt helped them, while some traditional banks – especially in the US – have collapsed or needed billions of dollars in government funds after taking on too many bad loans.

Aykan says the MCCA has its sights set on not just filling a small niche, but eventually taking a stake in the mainstream Australian market in the long run.

A lot of it comes with just educating the customers in what Islamic finance is, he says. “At the moment, there isn’t a great awareness about Islamic banking in the Muslim community,” he adds. “Once you have resources and services, word will spread, branches will open up in every city and a domino effect will start.”

Outside of Australia, Islamic banking isn’t limited to cooperatives and small businesses. Even some unusual suitors are lining up for Islamic finance. Most recently, South Korea and Malta were among those countries expressing strong interest in opening branches. Major global banks have also signed on.

“Major global players such as HSBC and Citibank have embraced Islamic finance,” says Shanmugam.

“This has come about due to economic demand and supply factors. If Aussie banks see sizeable profit margins or variable critical masses, then they may consider offering this alternate form of financing.”

NAB has already planned its effort, although it doesn’t offer any Islamic finance products yet. Since 2007, it has offered an annual $25,000 scholarship to allow young Australian Muslims to continue their studies in finance. The scholarship includes an offer of employment at NAB and has the aim of improving the bank’s understanding of Islamic banking.“ There’s an incredible potential in this market,” says Aykan. “It’s growing globally and the only way is up.”

www.brokernews.com.au

20-23 Muslim mortgages.indd 23

7/05/2009 3:23:30 PM

industry

NewsinBrief

24 News

Westpac cuts LVRs for new bank clients

Westpac has cut its maximum LVR for new borrowers who are not already clients of the bank. In a communiqué sent out to brokers, the bank said it found it “necessary” to implement some changes to its existing policy given the current climate.

As part of the changes, on 25 April Westpac’s maximum LVR dropped to 92% (inclusive of LMI) for non-Westpac clients. A maximum LVR of 97% remains available for existing Westpac customers. The bank also scrapped its non-genuine savings policy.

Going forward 5% in genuine savings is required for LMI deals, and rent is no longer accepted as genuine savings.

Study: UK brokers face major shift by 2020

The relationship between brokers and banks will become increasingly cosy, according to a study by the UK’s Building Societies Association.

The report, compiled by Peter Williams, predicts that by 2020 UK brokers will be assessing borrowers’ credit ratings for lenders.

According to Williams, “links between the lender and the broker will be much closer than at present” as brokers assume responsibility for assessing potential borrowers on behalf of the lender.

Williams also predicts that borrowers with the best credit records will be segmented as “super prime” borrowers and will tend to use direct channels over financial advisors.

Westpac results: lending book up 9%

Half year results for Westpac revealed that it grew its lending book by 9% for the six months ending 31 March 2009.

This growth included $27.1bn of new lending in Australian mortgages. The bank said slower growth rates were the result of declining economic activity.

The half year report pointed to greater stresses in commercial lending, “particularly in commercial property, pubs and clubs, mining services, retail and some financial services companies”. Consumer loans by comparison continued to perform well with “modest losses”.

CEO Gail Kelly reported that the initial integration with St.George had progressed “smoothly and to plan”.

“St.George has shown significantly improved momentum since completion of the merger. Pleasingly, customer retention and satisfaction results have also been strong, reflecting the benefits of our new operating model,” she said.

The bank reported pro forma cash earnings of $2.3bn, down 6% for the six month period. Net profit after tax was down 1% to $2.18bn.

NSW worst state for defaults

The looming recession and rising unemployment have made NSW Australia’s highest defaulting state, according to recent UWS research.

According to data obtained by The Daily Telegraph, of the twenty postcodes in which the largest number of mortgages are more than a month in arrears, 19 are located in NSW. In reaction, the RBA funded a University of Western Sydney Urban Research Centre study into the defaults.

The analysis found that areas along the M4, Windsor Rd and Canterbury Rd corridors, along with the Central Coast, were the hardest hit by the threat of the upcoming recession. The hardest hit region was in Sydney’s west, in the Fairfield and Liverpool area, where unemployment jumped to 10.5% - well above the NSW jobless rate of 6.9%.

The top area in NSW for mortgage defaulting was Nelson Bay, followed by Raymond Terrace, Katoomba, Greenacre, Guildford, Fairfield, Cessnock and St Marys.

New non-bank product bucks trend

Yet another non-bank has taken the fight to the majors. With mortgage exit fees a hot topic at the moment, non-bank lender Collins Securities launched a product with no deferred establishment fee or early repayment fees.

The new product, which has a 95% LVR with 5% non-genuine savings, stands in contrast to recent moves by major lenders to reduce LVRs. The lender said is has also streamlined its approval process and offers same-day conditional approval with fast-track settlements within five days of approval.

Consumer action group suing NAB

The Consumer Action Law Centre (CALC) is taking legal action against NAB, after the bank allegedly failed to assist a customer despite pledging to offer relief to people in financial hardships.

According to CALC solicitor Tom Willcox, NAB ignored all approaches by a client when she tried to resolve her debt problems.

Willcox said that despite formally writing to NAB twice, as well as emailing and telephoning the bank to request copies of his client’s credit card contract and a statement of the amount she owes, NAB had not responded.

A spokesperson from NAB said the bank was seeking to investigate the matter.

Russell wields axe at Mortgage Choice

One of the first things new CEO Michael Russell has done at Mortgage Choice is give staff their marching orders.

The listed franchise group revealed today that five staff had been retrenched while another vacant role had not been replaced.

The retrenchments along with the restructuring of a number of departments “for improved alignment” were the result of a “reassessment of staffing” by Russell and his executive team.

The latest job cuts follow four senior staff being retrenched in September last year, and the surprise decision of long-standing CEO Paul Lahiff to stand down in April. The new round of cuts reduce the Mortgage Choice’s Group Office workforce by 7%.

As a result of these job cuts, the company will save approximately $997,000 in the 2009/2010 financial year while making a saving of $348,000 in this financial year. This incorporates one-off costs involved in the restructure.

Explaining the decision to shrink the team, Russell said: “After much deliberation and careful consideration, the executive team and I agreed that this restructure was the responsible move to make for the company.

It is one that re-aligns and refocuses our resources for robust growth”.

Russell said the remaining team was committed to sharpening up the company’s service proposition to its franchise network.

www.brokernews.com.au

24-25 NIBs, Letter.indd 24

7/05/2009 4:27:12 PM

25 th september 2009 • sydney

NOMINATIONS

CLOSING SOON cast your vote now!

last chance to nominate for AMA09 The Australian Mortgage Awards return to Sydney this September.

Ensure you nominate the individuals and companies you think should be recognised as best in the Australian mortgage industry.

Cast your vote online at www.australianmortgageawards.com.au AWARD SPONSORS

OFFICIAL ONLINE PARTNER

OFFICIAL PUBLICATIONS

ORGANISED BY

www.australianmortgageawards.com.au AMAAdvert_AB6_9.indd 1

7/05/2009 4:40:11 PM

Speaker’sCorner

26 News

Online chatter: Industry bodies’ roles questioned Australian Broker reports on what readers are saying about the hottest industry topics via Brokernews’s online forums

Greg Campbell with business partners Leith Yelland and Flynn Sullivan

Greg Campbell Company: GLF Group Holdings Pty Ltd, a Mortgage Choice multi-fran-

chise operation.

Current role: Principals/Directors and loan writers.

Years in broking: Six (24 years in Banking and Finance all up).

Where has the majority of your business come from over the past six months? First homebuyers, investors and refinancing (top ups).

What is the highest selling product over the past six months?

Basic variable loans.

Where do you intend to increase business over the next 12 months? Diversification into insurance, commercial lending and

personal loans.

What is the most effective form of advertising for your business?

Word of mouth and customer referrals. 70%–80% of our business comes from repeat business and/or customer referrals.

Where do the majority of your referrals come from? We have a

widespread network but most come from existing happy clients who are happy to sing our praises and pass on our details.

Number of loans settled per year: Approx 650 per annum.

Record month: $16m in submissions, $12m settlements.

Average month: $9m.

Average loan amount: $230,000.

Short-term goal: To stay afloat for the next 12 months and to get

through the decreasing commission environment without loss of staff or clients. Possibly to add two more loan writers to our existing team of five.

Preferred lender and reason: We prefer to have a large lender spread for obvious reasons. CBA, ING and Westpac would be the top three at present but we still have reasonable spread based on the customers’ needs and the current environment. For us it’s all about the client and not the service the lenders provide to us as brokers.

Everyone knows that all lenders are currently providing average service and turnaround times; however some are clearly better than others. It’s not even about interest rates at the moment as the cheapest lenders will change from month to month each time the Reserve Bank meets. We listen to our clients and set them up with a lender and loan from our panel with which they will be best suited in the long term.

Biggest career challenge and how was this overcome?:

Commission cuts and the internal restructure of our business to ensure our long-term viability in the current market. Although impossible, trying to maintain a level of work life balance, as our individual families are of utmost importance to us, and they are the reason why we do what we do.

The release of the exposure bill outlining the new credit protection laws saw brokers debate the future role of the MFAA and FBAA in light of the new licensing and enforcement powers to be granted to ASIC. Brokers read our story: Draft bill: ASIC expects 10,000 to apply for new licence (www.brokernews.com.au/news/34990/details.aspx) and had plenty to say on the matter, though not everyone shared the same opinion.

‘Bruce Finch’ commented: “Now that ASIC is taking over the administration and responsibility of “surveillance and compliance” of brokers, do we still need the MFAA? The MFAA doesn’t represent or help brokers in any tangible way and only appears to be the banks’ puppet. With our commissions and trails reduced and with no united voice to defend us (which I believe the MFAA and FBAA was supposed to do…), we’re probable better off without the MFAA. At least we’ll save on multiple annual membership fees.”

In agreement was ‘a broker’ who said the MFAA and FBAA are a “complete waste of time and our money. About time these organisations were put to rest...for good”.

‘JCB, SA’ did not quite agree, arguing that the MFAA “was doing a fine job (as a regulator) albeit the only job it was seen to be doing” and questioned the need to spend $66m on ASIC funding and hire an extra 200 full times employees to “‘proactively administer & vigilantly enforcing the new laws’!

Santa Maria have mercy!”

‘Bob said he thought the MFAA would “be lobbying hard to stay in the loop. If compliance is with ASIC where does that leave the MFAA?” ‘James’ said despite ‘self regulation no longer on the agenda’ there was still a place for a broker’s representative body, as distinct from the “industry bodies which were dominated by the lenders”. He said the MFAA had not been effective as a voice for brokers.

‘OzBoy’ expressed a sentiment which is likely to grow as the day approaches for ASIC to assume its regulatory duties: “There is not doubt the role of the MFAA and FBAA will have to change to be relevant. I think they will become training and lobbying organisations and if we are forced to join (as is the case at the moment) then I think ASIC will have to look seriously at third line forcing. No doubt both these organisations will have their work cut out for them moving forward trying to win back their members. I wish them all the luck in the world.”

And ‘Bruce Finch’ popped up again to offer more sobering news: “Now that the MFAA stands to lose money (just like us brokers) lets see how ‘proactive’ they’ll now become. If they do, then I’ll be extremely disappointed to say the least as it will then appear that they will have only become vocal to save their own hides!! Let’s see what they do now.”

Have your say Do you have a strong view that is not being heard?

Brokernews is by far the most popular place for thoughtprovoking 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!

Every broker needs… An understanding family and an awesome team

of support staff. We are fortunate to have both (99 days out of 100).

In my spare time, I like to…: Sleep, spend time with my family (wife

and twin four year olds), work, play golf and fundraise for Camp Quality. Business partners Leith and Flynn also have young families so I am sure they would agree. I will be walking the Kokoda Trail in May 2009 to raise money for Camp Quality.

24-25 NIBs, Letter.indd 26

7/05/2009 4:27:14 PM

25 th september 2009 • sydney

NOMINATIONS

CLOSING SOON cast your vote now!

last chance to nominate for AMA09 The Australian Mortgage Awards return to Sydney this September.

Ensure you nominate the individuals and companies you think should be recognised as best in the Australian mortgage industry.

Cast your vote online at www.australianmortgageawards.com.au AWARD SPONSORS

OFFICIAL ONLINE PARTNER

OFFICIAL PUBLICATIONS

ORGANISED BY

www.australianmortgageawards.com.au AMAAdvert_AB6_9.indd 1

7/05/2009 4:40:11 PM

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19/01/2009 10:28:28 AM

28 Profile

Off the cuff

Mark Forsyth Chief executive officer, Firstfolio What was the last book you read? The Inheritance: The World Obama Confronts and the Challenges to American Power by David E Sanger If you didn’t live in Australia where would you like to live?

San Francisco. Skiing, wineries, ocean – all on your doorstep!

If you could sit down to lunch with anyone you like, who would it be? Barack Obama – how’s the ‘in tray’ going?

What was the first job you ever had? paper round, delivering papers door to door What do you do to unwind? run on Bondi Beach, followed by a swim What’s the most extravagant gift you ever bought yourself? a David Bromley painting Which CD is currently playing in your car stereo?

Robbie Williams If you could give anyone starting out in business one piece of advice, what would it be? try new things – don’t be afraid to fail If I was not working in the mortgage industry I would like to be… a ski bum Where was the last place you went on holiday? Aman Resort in Phuket, Thailand What’s the one thing most people would not know about you? I worked in a fish yard filleting fish when I was between 12 and 16 years old

Credit bill gets thumbs up from industry

From page 1 “One unified approach to credit lending standards for an industry that sources mortgages for almost 40% of Australians is a tremendously positive step, and one that is sure to benefit consumers by providing guidelines for improved operational standards for lenders and mortgage brokers,” he said.

“It will also mean less statebased red tape for the industry to wade through and highlight the high degree of quality care and transparency provided by brokers, who so many Australians choose to entrust with organising their mortgage commitments.”

He added that Mortgage Choice was “enthusiastically awaiting” the arrival of the national regulation administered by the Australian Securities and Investment Commission (ASIC).

“Robust licensing administered

by ASIC will…deter any unscrupulous operators from entering and tarnishing our industry,” he said.

MFAA CEO Phil Naylor agreed, saying that in general the industry body was happy with the “thrust” of the draft bill and that he remained hopeful that the MFAA’s involvement in the Minister’s Working Party had alleviated the need for material changes to the draft.

However, he confirmed that the MFAA’s legal advisors were currently “ploughing” through the details to highlight and lobby on any concerns they come across.

“Additionally we are holding seminars around Australia to get members’ views over the next few

Have your say

Join the discussion at our online forum: www.brokernews.com. au/forum

weeks before we finalise a submission,” he said.

Also pleased with the launch of the draft bill, president of the FBAA, Peter White, said that while his industry body was currently canvassing members for feedback, he didn’t expect anything to come as a surprise due to his involvement with the bill up until this point.

“The simple reality is that I have been involved in preparing the draft. Flicking through it at this point in time, there’s nothing in there that should come as a shock,” he said.

He went on to say that while it is unlikely anybody will call the document perfect, the draft bill is a good starting point for the industry.

“The thing to remember is that this is just the beginning – it’s just phase one of the plan,” he said.

“I think some challenges still lie ahead in getting it up to scratch, but there is a certain reality in what can be done and what can’t be done… some things will be open to discussion, others won’t.

“We’re going from an unregulated regime to a regulated one and that’s not an easy step, but - whether right or wrong - people are going to be in a ‘like it or lump it’ situation, and we’re going to have to get used to it,” he said.

Brokers heading for 50% of market

From page 1 In agreement, Mortgage Choice national lending manager Debra Player said borrowers still needed “their hands held” through the mortgage process.

Encouraging as these predictions are, Foley tempered his remarks by warning that the only “unknown” was “manipulation of supply by the banks” - by which he meant banks differentiating their product offering across their various distribution channel (and in theory offering better deals via their branch networks).

Foley though warned brokers to leave their issues with the banks behind them when seeing a client: “Leave commission cuts behind when you talk to a customer – customers don’t care, nor should they care.”

www.brokernews.com.au

28 Off the cuff, run-on.indd 28

7/05/2009 4:25:30 PM

Reviews 29

De-bug your life Justin Herald, author of Forget the elephants, watch out for the fleas, says it's easy to focus on the big crises in life, but the flea-sized problems can drag you down.

Agnes Gajewska looked though the book for de-bugging tips…

Fleas are little creatures that belong to the order of insects called the Siphonaptera. They have a series of combs and bristles all over their body which allows them to hang on, and due to their size can easily move around Title: Forget the – they have been responsible for such things as elephants, watch out for spreading the bubonic plague and killing 25 the fleas million people.

Author: Justin Herald They are also the metaphor that entrepreneur Publisher: Allen & Unwin and motivational speaker, Justin Herald, uses RRP: $18.95 for the issues we have to address in life in order to reach success and happiness.

According to Herald, bigger (elephant-sized) problems are often easier to resolve as they are easier to see, whereas the flea-sized problems can gnaw away beneath the surface until they cause a mass of unexpected problems.

In order to help readers rid their lives of ‘fleas’, Herald uses his 110-page book to highlight some of the ways they are manifested – impatience, frustration, lack of self-belief and reactions and overreactions to situations – and advises the reader about how to solve them before they lead to serious consequences.

Across seven chapters, that cover everything from finding and identifying life’s ‘fleas’, to letting go of past problems in order to move on, Herald uses real-life examples and a ton of analogies (though often strange ones) to offer simple problem-solving solutions.

The book is a quick and easy read that serves up a high enough dose of energy to enthuse the reader. However, this quality is also the book’s main downfall – Forget the elephants, watch out for the fleas is at some points painfully simple and overreaching. Although it does not take long to read, Herald often takes a very round-about way to explain straightforward ideas.

Overall however, Forget the elephants, watch out for the fleas is a stimulating read that may just get you to tear your attention away from the recession and onto the small things that may already be burrowing into your business and personal life.

Techie talk

Australian Broker’s resident web expert Sam Benjamin provides answers to readers’ technologyrelated questions Saving paper on excel printouts

Question: Is there a way to save on paper

wasted when I print excel files? There always seems to be pages which print out with very little data on them and it is very wasteful?

(Peta, Clovelly NSW)

Ocean of taste What could be better than tucking into 11 different varieties of sashimi while watching ferries and boats drift into Circular Quay. Larry Schlesinger reports from The Ocean Room If you’re lucky enough to get a table near the window, the first thing that will impress you about The Ocean Room is the view. Located on the ground floor of the overseas passenger terminal at Circular Quay, the restaurant offers great views of the Opera House and the passing maritime traffic. Of course the second thing Cuisine: Japanese Prices that will stick in your mind is the food, Sushi & sashimi: $15–39 mostly seafood prepared by award-winning Mains: $36–75 Japanese chef Raita Noda.

Chef’s menu: $90 Having secured our table by the window, Address: Overseas Passenger we kicked off the evening with a pair of Terminal, Circular Quay West dangerously fruity wild forest martinis.

For entrees, I could not resist the intriguing Phone: 02 9252 9585 Website: www.

Ocean’s Eleven sashimi shooters, while my oceanroomsydney.com companion went for the ‘starter collection’ Email: oceanroom@ (five miniature starters selected by the chef oceanroomsydney.com including soft shell crab tacos and bangbang-ji chicken – steam chicken fillet with spicy sesame sauce and cucumber salad). The bowl is filled with 11 shooter glasses, each with a different sashimi inside including oyster, wild salmon, trout and tuna to name just a few. Each has their own acompanying sauce, expertly selected by Noda to match the raw fish.

To help decipher all 11 combinations, a mini menu card is attached listing the fish and accompanying dipping sauce– the fun part is tasting each shooter and figuring out which is which.

As the Manly ferry sailed into view we tucked into our mains – baby snapper acqua pazza, a simmered whole baby snapper served in its own juices (herb infused spring water and extra virgin olive oil); and one of its specialities, roasted tuna wing, a rather enormous piece of slow roasted fish (complete with fin) served with ponzu dipping sauce and micro green salad.

Both the fish dishes were delicious and the hearty portions meant we almost had no room for sweets. Almost, but not quite – we rounded off the evening with the Ocean Room assiette, a selection of miniature desserts. These included a decadently rich dark chocolate mousse and crème brulee.

Sam: Excel will automatically insert page

breaks in your document. However, you can choose to manually insert page breaks. To see exactly where the page breaks are so that you know what you are working with, click on the view menu and choose ‘page break preview’.

You will see a view of your entire worksheet.

The page breaks appear as either dashed blue lines (automatic page breaks) or solid blue lines (manual page breaks).

You can move the page breaks around by moving your mouse cursor to them, then clicking and dragging them. When you are satisfied and want to turn page break preview off, go back to the view menu and choose normal view.

Is IE8 any good?

Question: Should I install the latest web

browser from Microsoft, Internet Explorer 8? What do you think of it? (Mike, West End QLD)

Sam: I’ve heard some good things in various reviews, but I’ve also heard that there’s no great rush to install it either. Personally I am

hooked on the Firefox Web Browser, so will take a lot for me to switch!

I have heard that people find that after installing IE8, it can disrupt other functions.

So, I would be inclined to wait. If you don’t want to wait to see if the teething problems get ironed out then backup first.

By backup, I mean take an image snapshot of your entire system, so that if you run into problems with IE8 you can easily revert the machine's complete state to what it was before the installation. The reason I recommend a backup is simple: a common theme among people having problems is that they can’t revert. Perhaps the uninstall fails, or isn’t even present, but regardless of why or how, they seem unable to cleanly remove IE8 and return to their pre-update version. Having a full image backup will guarantee that you can do so.

If you have a question please e-mail 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

29-30 Reviews, techie talk, insider.indd 29

7/05/2009 4:16:55 PM

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 The wonders of technology…

Swan & Rudd… your trusted financial advisors

An aggregator breakfast held in Sydney brought together the minds of some of the industry’s best to discuss the current challenging environment.

As the dust settled, conversation turned to the current industry bugbear: bank service levels to brokers. The grimaces around the room were almost audible.

It was though at this point that Smartline director Joe Sirianni got the biggest laughs of the morning when he reminded everyone of the irony of the current crisis in processing.

Despite all the technological advances made over the last few years, the fact remained, Joe said, “that 30 years ago a loan written by hand and sent via fax was getting approved faster than today”.

Now that’s progress for you!

Insider reckons that when their respective political careers come to an end the prime minister and federal treasurer should team up together and start their own financial advice business – clearly the demand is there!

Readers may recall that toward the end of last year the prime minister had to reprimand the ABC’s Kerry O’Brien when he asked Rudd to provide some much needed financial advice to viewers of The 7.30 Report.

“Kerry,” the PM said, “I don’t provide individual financial advice to individual investors or mortgage holders…”

Most recently it was the turn of Wayne Swan, who was asked by Channel 9 breakfast host Karl Stefanovic whether he had any advice for borrowers about choosing a variable rate or fixed rate mortgage.

In a tone which suggested he’d practised the response with the PM before, Swan told Karl he could not give financial advice, but reminded viewers there are “financial advisers out there” who can.

Stefanovic though wasn’t giving up quite so easily, buttering up the Treasurer with his remarks that he was in fact a “smart bloke” who understands the economy (let’s hope so!)

And it worked…with Swan “advising” borrowers to “shop around” for the best mortgage deal.

From broking to Hollywood to… poker?

Insider recently found itself reading what it thought was a misdirected press release about a new Australian “candy horror film” called Prey.

It must have been a slow morning because even the B-grade cast (including former Neighbours star Natalie Bassingthwaighte) and ridiculous plot line (“the story of six friends who head to the outback on a four-wheel drive adventure and come face-to-face with an ancient supernatural evil” ) could not stop Insider taking a sneaky peek at the movie website.

And it was here that we learned that the role of the “motel clerk” is played by one “Joe Hachem”.

The name instantly rang a bell… where had we heard it before?

A more detailed search of the website cleared up the confusion after it revealed that “Joe Hachem,” plays an “enigmatic poker-obsessed motel operator”.

By now readers may recall the name Joe Hachem he’s of course the former Melbourne mortgage broker who got the biggest commission cheque of all ($7.5m) when he won the 2005 World Series of Poker.

And while we’re not quite sure the role will see Hachem break into the Hollywood elite, you can judge for yourself by viewing the trailer for Prey (and perhaps catch a glimpse of Hachem) at http://www.prey-the film.com/.

Crossing paths indeed

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

Drop us a line at insider@ausbroker.com

Insider should have known all along that Michael Russell had already been lined up as Paul Lahiff’s replacement at Mortgage Choice, when his resignation was announced on 1 April.

A message left by one “Michael Russell” on Brokernews the day the announcement was made sung the praises of the man he was destined to replace: calling him an “absolute gentleman and a “champion of the mortgage broking proposition”.

Most telling though was this remark by Russell: “…I dare say we will cross paths again soon”.

Indeed they have, though not even Insider suspected that this would be via the revolving door at Mortgage Choice. Go to: www.brokernews.com.au/news/ breaking-news/lahiff-resigns-from-mortgagechoice/34652?keyword=Lahiff to read his remarks in full.

www.brokernews.com.au

29-30 Reviews, techie talk, insider.indd 30

7/05/2009 4:16:56 PM

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

RP Data www.rpdata.com page 24

Melbourne Racing Club Caulfield Spring Racing Carnival 1300 GO RACE (46 7223) caulfieldracing.com.au page 15 Property Match Up 1800 463 462 www.propertymatchup.com.au page 23

Residential Mortgage Fund 1300 632 737 www.residentialmortgagefund.com.au page 9

The House Price Information People

Short term lender

Debtor finance

St George 1300 308 129 page 3

Other services

Pepper Homeloans 1800 737 737 www.pepperhomeloans.com.au page 8

Eurofinance 02 9252 8311 www.eurofinance.com.au pages 17 & 19

Mortgage Manager /Non- Bank

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

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

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

31-32 SD, ad.indd 31

Non-conforming

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

Lender

Bank

Aggregator/ wholesale broker

Services

Challenger 1300 786 552 www.challenger.com.au pages 11 & 13

7/05/2009 2:27:30 PM

31-32 SD, ad.indd 32

7/05/2009 2:27:33 PM