INDUSTRY ROUNDTABLE Aggregators discuss how they help members achieve success
MPAMAGAZINE.COM.AU ISSUE 22.03
AUSTRALIA’S TOP BROKERAGES MPA reveals the 50 top-performing brokerages of 2022 BROKERS ON AGGREGATORS How brokers ranked aggregators in this year’s survey – and why
STRENGTH IN NUMBERS
Lendi Group is combining the power of Aussie’s large broker network with the market-leading technology of Lendi Brad Cramb Lendi Group
JULY 2022
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CONTENTS
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UPFRONT 02 Editorial
Aussies are putting their faith in brokers
30 FEATURES
23
AGGREGATORS ROUNDTABLE
Aggregator leaders and brokers talk lessons learnt from the pandemic and what the future holds
BRAD CRAMB
With its powerful combination of people and technology created by the merger of Lendi and Aussie, Lendi Group is building the network of the future, says its CEO of distribution
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06 Opinion
Three key issues for brokers are on the FBAA’s radar
FEATURES 17 Alt-doc lending
Alt-doc lenders discuss the solutions they can offer underserved borrowers Tips for tailoring your recruitment strategies to remote hiring
TOP BROKERAGES 2022
BIG INTERVIEW
The housing market is on the move, in spite of a seasonal dip in home loans
58 Remote recruitment
SPECIAL REPORT
MPA reveals Australia’s 50 top-performing brokers who reaped the opportunities of the pandemic to achieve winning results this year
04 Statistics
44 FEATURES
BROKERS ON AGGREGATORS
Brokers have their say on how aggregators are meeting their needs – and MPA reveals the top performers
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SECTOR FOCUS
GUIDING THE REFINANCER
Brokers are in the perfect position to support borrowers as the refinancing boom heats up competition for loans
60 Keeping people on board
The whole-life approach to building employee loyalty
PEOPLE 62 Brokerage insight
Kin Finance owner Taku Ekanayake sees his clients as his “extended family”
64 Other life
With a dual career as a broker and flight attendant, Marita Baracz is flying high
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UPFRONT
EDITOR’S LETTER
Brokers deliver in times of trouble
T
he value of brokers in helping homeowners and businesses get the best bang for their buck has never been more evident than in volatile times. The economy was well on its way to a post-COVID recovery when the nation hit a series of speed bumps that aren’t going to end any time soon. The cost of living is skyrocketing, with inflation hovering above 6%; interest rates are rising, albeit off a very low base; and wage rises are not keeping pace. The Reserve Bank is on a mission to curb inflation and is expected to continue on its path of lifting the official cash rate through 2022 and well into next year. Financial pressure in the form of rising mortgage repayments will continue. A report from Digital Finance Analytics in March showed that 41% of households in Australia
It’s clear how much Australians put their faith in brokers, who wrote 69.5% of all new residential home loans in the March quarter, their highest market share yet were in mortgage stress, and should the cash rate go beyond 2%, around half of all homeowners will fall into mortgage stress. But in the midst of all this turmoil, brokers are in a prime position as trusted financial experts to help mortgage holders and small businesses navigate a myriad of lending options and find a better deal. It’s clear how much Australians put their faith in brokers – the latest MFAA figures show brokers wrote 69.5% of all new residential home loans in the March quarter, their highest market share yet. This issue of MPA looks at how both brokers and lenders are adapting to the needs of their clients, many of whom don’t fit the vanilla profile. The feature on alt-doc lending explores how lenders provide self-employed and SME borrowers with different income verification methods than would normally be accepted for a full-doc loan. We also hear from banks about how they work with brokers to help clients refinance to a better loan rate, which is hugely important given the high number of people expected to come off fixed rate loan terms over the next 12 months. MPA also held its annual Aggregators Roundtable, at which aggregator leaders and brokers discussed rising interest rates, how technology is improving aggregator and broker businesses, and the work broker networks are doing with lenders to streamline loan processes, especially turnaround times. Finally, we reveal the nation’s 50 top-performing brokerages in MPA’s annual Top Brokerages report, as well as how brokers ranked aggregators across a range of criteria, including commissions, technology and CRM support, lender panels, compliance and marketing support in our 2022 Brokers on Aggregators survey.
www.mpamagazine.com.au JULY 2022 EDITORIAL
SALES & MARKETING
Editor Antony Field
Publisher Claire Tan
Contributors Roxanne Calder, Michelle Gibbings, Rowena Millward, Peter White Production Editor Roslyn Meredith
ART & PRODUCTION Designers Loiza Razon, Khaye Cortez Customer Success Manager Andi Zbojniewicz
CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Justin Kennedy Chief Information Officer Colin Chan Director – People and Culture Julia Bookallil
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UPFRONT
STATISTICS ON THE JOB MARKET
SEASONAL DIP IN NEW HOUSING LOANS
In the year to February 2022:
The March 2022 quarter saw a dip in new housing loans, with Victoria recording the highest number of new loans, according to the PEXA Mortgage Insights Report. This reflects the usual seasonal dip in new housing loans as fewer properties settle during the January holiday period.
1.8 million
people were not working but wanted to work (potential workers)
TOTAL NEW PROPERTY LOANS BY STATE – MAR QTR 2022 % change since Dec qtr 21 % change since Mar qtr 21
WA New loans
17,689
1.3 million
employed people changed jobs, the highest annual job mobility rate since 2012
-0.3% -4.3%
HAPPIEST HOME LOAN CUSTOMERS Overall satisfaction of home loan customers with Australia’s top 12 banks in March 2022 was 78.6%, down 1% from a year prior but significantly up from 74.8% in February 2020, the month before the COVID-19 nationwide lockdown. Of the top five banks they were satisfied with, Macquarie and Suncorp saw the biggest improvement, rising 7.8 and 3.2 percentage points respectively.
1.5%
of employees were retrenched, the lowest annual rate on record (since 1972)
TOP 5 BANKS FOR HOME LOAN CUSTOMER SATISFACTION, MARCH 2022
1,570
people aged 15 years and over were underemployed Source: ABS
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Bendigo Bank
91.2%
ING
89.6%
Macquarie
86.4%
Suncorp
86.2%
Bankwest
84.6% Source: Roy Morgan Single Source
MORTGAGES ON THE MOVE
QLD New loans
Of the estimated 3.9 million owner-occupier mortgages in Australia, 541,000 mortgages, or 13.7%, are in motion every year. Deloitte research in 2021 showed that, over the previous three years, 57% of these customers had switched their mortgage by moving home or refinancing, while 43% had opened a new mortgage account.
36,814
-1.7%
NSW
PROPORTION OF CUSTOMERS PER YEAR WHO SWITCHED THEIR PRIMARY MORTGAGE OR ACQUIRED A NEW ONE
New loans
35,303
+0.5%
VIC New loans
38,619
-20.6%
+1.6%
Total dwellings in Australia
Total owner-occupier mortgages
10.7 million
3.9 million
Percentage of switchers to other mortgage providers
Primary mortgages in motion per year
13.7%
541,000
-4.3% -8.8%
-23% Source: PEXA Mortgage Insights Report, March 2022 Quarter
Source: Deloitte, 2021
AUSTRALIANS LOOKING TO UPGRADE THEIR HOMES
CHANGE IN FINANCIAL WELLBEING
One in five people intend to upgrade their existing home in the next 12 months, with 18- to 29-year-olds most likely to upgrade, the latest NAB Behavioural Special Insight Report reveals. Another 15% plan to renovate a property, while 9% plan to upgrade to a new property.
Generally improving economic conditions have seen the proportion of Australians with ‘no worries’ rise, driven by a drop in the proportion of people who are just ‘doing OK’ or ‘getting by’. The ‘struggling’ segment remains unchanged, suggesting they were more affected by the downturn in economic activity in the second half of 2021.
PROPERTY INTENTIONS FOR NEXT 12 MONTHS BY AGE Upgrade existing home
to Renovate Upgrade a new a property property
CHANGE IN COMPOSITION OF FINANCIAL WELLBEING SEGMENTS IN AUSTRALIA
Sell a home
Downgrade/ downsize a home
Sell an investment property
50%
12 months to Mar 2021 vs
All ages
18%
15%
9%
7%
6%
5%
40%
18–29
23%
18%
17%
9%
8%
7%
30%
30–49
17%
18%
10%
8%
7%
6%
20%
50–64
18%
15%
4%
6%
5%
4%
10%
65+
13%
8%
3%
5%
5%
2%
0%
Source: NAB Behavioural Special Insight Report
No worries
Doing OK
12 months to Dec 2021
Getting by
Struggling
Source: ANZ Roy Morgan Financial Wellbeing Indicator, April 2022
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UPFRONT
OPINION
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Seeking a better deal for brokers The FBAA will tackle three issues hurting brokers: clawbacks, net-of-offset commissions, and aggressive retention tactics by banks, says managing director Peter White OUR INDUSTRY has become adept at change. Few would argue that with the royal commission into banking and financial services; COVID; and the housing boom, the last few years have been a roller-coaster ride for the finance and mortgage broking sector in Australia. Steeper-than-expected interest rate rises will see yet another change in our business, and of course we have a new government. Fortunately, the FBAA has been ahead of the game on both. We’ve been in very close
We must again adapt to these new times. Borrowers will require information and guidance, and some will need refinancing in order to manage in a more difficult economic period. Some of the changes our industry urgently needs, however, are outside of our control. The solutions are with lenders driven by selfinterest, reluctant to do the right thing. Therefore it is time to up the ante and ask government to assist if the lenders won’t. I will focus on three issues that are negatively and significantly impacting brokers, and
The FBAA provided federal Labor when in opposition with data that strongly supports the case for this clawback review dialogue with the Labor Party for a long time, so the transition to dealing with them in government has been smooth. The relationships and mutual understanding already exist. We were also the first finance industry group to predict that interest rates would rise sooner than expected. In mid-2021 we commissioned the Australian Mortgage & Rental Affordability Survey. At that time, few people were considering the possibility of an interest rate rise, and even the RBA had implied it would be a couple of years away. But with inflationary pressures influencing rates overseas, we knew a rise was not far off and wanted to gauge the effect. The results made it clear that more than a decade without any rate rise had made many Australians complacent and vulnerable.
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that the FBAA has been actively working on. While most borrowers choose to finance their home through a broker rather than directly, the banking sector continues to treat brokers with contempt in these areas that I refer to as the ‘unholy trinity’.
Clawbacks The FBAA has been campaigning against the grossly unfair clawback system for a long time. We have never wavered from our commitment to see a change, and we won’t stop until it happens. Due to our relationship with the new government, they have committed to meet with me, along with lenders and industry, and have a conversation around reviewing clawbacks with the consideraton of limiting them to one year.
This would be across all clawbacks impacting all consumer lending, not only mortgages. This is far from a done deal, and I am expecting strong pushback from the banks. But it’s a first, and we must hold the government to their word and work hard to bring about this change. The FBAA provided federal Labor when in opposition with a research paper containing data that strongly supports the case for this clawback review. We are on solid ground, and we won’t be giving up.
Net-of-offset commissions It’s time for greater consistency across the industry. There is no excuse for delaying commissions for 12 months. The FBAA recently conducted extensive research that found the number of loans settled where commissions were paid net of offset funds rose by 236% between 2018 and 2021. Over the same time period, the average number of deals where brokers had to wait 12 months to be paid a commission due to the net-of-offset arrangements rose by 339%. The lending industry can fix this, and we will be continuing this fight. Bank retention teams Banks are undermining our sector – the hand that feeds them – through aggressive and unethical retention initiatives. Our research has shown us that between 2018 and 2021, lender-causing cash-back incentives increased by 59%. Ripping business away from the broker who guided the borrower to the lender in the first place is a shocking way to do business. And let’s be very clear: these cash incentives are only offered after the bank has declined to help the customer with renegotiation in the first place. As we enter a new era with a different government and new economic challenges, the FBAA will play a vital role in not only providing support, resources and education for its members but also continuing to bring about the changes that will make a real difference to our industry. Peter White is managing director of the Finance Brokers Association of Australia. He has 44 years of industry experience across the banking, finance and broking sectors.
PEOPLE
BIG INTERVIEW
BRAD CRAMB: CREATING A SEAMLESS BROKER NETWORK In May 2021, Aussie Home Loans and Lendi merged to create a powerhouse player in the mortgage industry. Lendi Group CEO of distribution Brad Cramb looks at how Aussie and Lendi are combining their strengths and capitalising on growth IT’S NO easy task bringing together two very different organisations – Aussie, a household brand in the mortgage finance industry, and Lendi, a leading online home loan platform. But a little over a year after their merger to form Lendi Group was completed, it’s clear to Brad Cramb, the group’s CEO of distribution, that brokers are reaping the rewards. “Brokers have already begun harnessing the benefits the combined group offers, as Lendi Group experiences exceptional growth,” says Cramb. “Marrying Aussie’s extensive retail broker network with Lendi’s market-leading proprietary technology is allowing Lendi Group to create seamless experiences that liberate our brokers, customers, borrowers and lenders from the all-consuming admin of homeownership.” Cramb says Lendi Group knows that to offer a great customer experience, it’s important to facilitate a great broker experience first. “We’re laser focused on creating ‘the network of the future’. With the leading broker value proposition in the market, which is ‘human led and tech driven’, our aim is to attract and retain the best broker talent in the industry.” Cramb is well positioned to drive the successful integration of Aussie and Lendi, with his background in leading sales teams and driving improvements at Toyota and Audi.
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“I joined the Aussie business in 2017 prior to the merger with Lendi to form Lendi Group,” he says. “Homeownership is the great Australian dream, and I was drawn to the mortgage finance industry by the opportunity to help put progress within reach for millions of aspiring homeowners.” Cramb says he started his career close to 30 years ago. “Over the years I’ve had the opportunity to step into diverse and extensive executive roles across highly competitive markets and franchise industries,” he says.
help establish new business models. “Irrespective of the industry, over my career I have found there are key aspects of success that remain consistent – which are having passionate and talented people that work to high standards towards a common goal.”
New processes To address some of the challenges brokers face, Cramb says two Lendi working models – Associates and Client Solutions – have now commenced rollout across the Aussie mobile channel following extensive pilot tests.
“Not only are brokers receiving qualified appointments rather than leads, but the centralising of key operational tasks also affords brokers more time to spend directly interacting with customers” “From driving and growing retail sales teams to [my role as] chief marketing officer with Toyota in the automotive market, to executive in charge of sales and distribution at Aussie – in my time, I have been able to successfully establish innovation divisions, lead company-wide reform projects, and
The aim is to complete the rollout across the Aussie retail network over the next 12 months. Under the new Lendi models, the in-house Associates Team will now field companygenerated enquiries. This team makes first contact with the customer to qualify them before directing them straight into an
PROFILE Name: Brad Cramb Title: CEO distribution Company: Lendi Group Years in the industry: Five, with a 24-year history of senior roles in other industries Career highlight: “Being involved in the merge and witnessing the marrying together of two powerhouse brands in Lendi and Aussie. It’s been wonderful to observe our people embrace change with enthusiasm as they harness the collective strengths and benefits of these two great businesses.” Career challenge: “The onset of COVID-19 proved to be a difficult time as we had to learn to navigate the ‘new normal’ very quickly. The biggest lesson we learnt was that our customers were more willing than ever to come forth and discuss plans with their broker. I’m proud of how rapidly our network adapted.”
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PEOPLE
BIG INTERVIEW appointment with a broker or into a nurture pipeline for specialised contact. Cramb says this bespoke contact results in real-time technology-driven triggers that direct the customer back into a broker’s calendar when they are ready to transact. Further operational burdens are alleviated by the Client Solutions team, which assists with loan packaging. “Not only are brokers receiving qualified appointments rather than leads, but the centralising of key operational tasks also affords brokers more time to spend directly interacting with customers, thereby enabling them to deliver a high level of service,” Cramb says. He says the Lendi initiatives are delivering
leading, proprietary technology of the Lendi platform, Cramb says. The underlying platform and technology that powers the Lendi brand is currently being developed to also service the Aussie network. “The process of making the platform ‘Aussie ready’ has resulted in a series of highly effective tech upgrades, which will benefit brokers across the group, enabling them to deliver better, faster outcomes for customers.” Cramb says there’s no doubt that technology plays an enormous role in improving efficiencies for brokers. When built successfully, he says, it can provide benefits such as easier application processing, greater customer interactions, a
“We’re laser focused on creating ‘the network of the future’. With the leading broker value proposition in the market, which is ‘human led and tech driven’, our aim is to attract and retain the best broker talent” better, faster outcomes for customers and brokers, with the pilot tests “yielding impressive results, including fast-tracked times to lodgement, fewer RMIs, and turbocharged time frames to unconditional approval”. Another benefit that brokers are enjoying is Lendi Group’s market-leading Approval Confidence technology. This indicates the likelihood of a customer’s ability to achieve full approval of the loan. Cramb says it helps customers select the loan option that will most likely fit their situation and therefore achieve approval faster. “Approval Confidence assesses the borrower’s credit profile and personal information, allowing lenders to respond to the customer within seconds through Lendi’s proprietary platform.”
‘Best-in-breed’ technology The primary enabler for enhancements across the group’s broker network is the industry-
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wider range of product options, increased lead generation, reduced operational costs and greater customer satisfaction overall. “While tech-driven efficiencies are key, the people, systems and operations that support it are equally as important,” Cramb says. “Ultimately, our aim is to power our brokers with the best-in-breed technology, data and systems that make them indispensable to both customers and lenders.”
Navigating rising interest rates Brokers are invaluable to borrowers along their home loan journey, particularly in the current rising interest rate environment, Cramb says. “With the first RBA cash rate rise in May likely to be the first in a series of many over the next 12 months, homeowners will need to lean on the expertise of their local mortgage broker more than ever before.” Given that it’s been almost 12 years since interest rates were last lifted, Cramb says there
LENDI GROUP: KEY MILESTONES 1992 Aussie is founded, taking on the big banks and revolutionising the Australian mortgage market forever 2005
Aussie retail is born
2013 Lendi is founded, with a mission to change the way Australians access home loans 2016
The Lendi platform is launched
2021 Aussie and Lendi merge to create Lendi Group Late 2022 Aussie brokers set to be rolled out onto the Lendi platform are potentially hundreds of thousands of homeowners who may never have experienced an interest rate rise. “While lenders are acting faster to pass on an increase, it will be brokers’ responsibility to be proactively on the front foot of this change, connecting with their clients and encouraging them to refinance and navigate the most suitable option to meet their personal needs.”
Connectivity through open banking Given the Lendi Group’s focus on technology, it’s no surprise that it welcomes the next major shift in the mortgage finance industry – to open banking. Cramb says insights from markets such as the UK where open banking is well established suggest that readily available access to data will increase connectivity between brokers and lenders, further simplifying the home loan process for customers. “At Lendi Group, we view innovation as an ongoing process, and we don’t sit still as we strive towards our vision of seamless connectivity and a friction-free property finance experience for all our stakeholders. So we would welcome any opportunity to innovate in the future.”
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FEATURES
SECTOR FOCUS: REFINANCING
Competition for loan customers heats up Loan refinancing volumes have risen sharply over the past few years, and with interest rates rising, it’s the perfect time for brokers to talk to their clients about finance options PLENTY OF mortgage holders examined their financial situation during the pandemic, including their biggest commitment – their home loan. With historically low interest rates in play and the help of brokers as trusted experts, many clients refinanced and secured a better deal. In the 12 months to June 2022, the volume of refinances increased almost 20%, according to PEXA. And now that interest rates and inflation are rising, those who didn’t refinance are making enquiries about other lenders and loan products, opening up more opportunities for brokers. MPA talks to NAB executive – broker distribution Phil Waugh; Suncorp Bank head of broker partnerships Troy Fedder; and Natalie Smith, general manager ANZ Retail Broker, about the refinancing market.
The refinancing boom “Customers are far better educated than they have been previously,” Waugh says. He says the commentary on interest rates – what is a good interest rate, the market’s rate sensitivity, and education on rates – has had a huge impact on refinancing, as well as “the fact that there’s been such a significant shift across home borrowers to leverage the trust and advice of brokers”. Waugh says brokers are educating their customers and enabling them to refinance for a better product and rate. This, along with cashback opportunities, is driving a big
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shift towards refinancing across the industry. Fedder says recent interest rate rises have left some homeowners eager to refinance to a more attractive rate, giving them short- to medium-term security. “The other part to this, of course, is the borrowers who fixed their rates soon after the pandemic began,” he says. “For these borrowers, their fixed rate periods are drawing to a close, meaning they need to make a decision about refinancing into a new loan.” Fedder says it’s also an opportune time for investors to get ahead of further interest rate rises and refinance their property portfolios.
“Just like homeowners, investors are taking advantage of record-low interest rates and the chance to refinance and square away better rates and terms and conditions.”
Navigating rate rises Smith says ANZ has seen an increasing proportion of customers adopt fixed rate loans since the start of the pandemic, with borrowers looking to take advantage of historically low interest rate settings. “As these fixed rate terms end, customers may be looking for additional support to ensure that they have the right product for
their situation and property goals,” she says. ANZ is continually improving the way it supports broker customers, especially as they roll off fixed rate loans. “We’re proactively contacting brokerintroduced customers with expiring fixed rates at different points in their journey, and these customers can choose either to roll over to a variable rate or refix their home loan [as a whole or in part],” Smith says. “Where customers seek to increase their loan or apply for further lending, they’ll be referred to their broker in the first instance.” Smith says there may be some customers who haven’t experienced many rate increases before, given that prior to the May rate rise, the last time the RBA lifted rates was in 2010. “ANZ is here to help, and we have several tools to assist customers who may be concerned about interest rates and their home loan repayments.” Smith says ANZ’s home loan repayment calculator on anz.com allows all borrowers to compare scenarios and better understand how their repayments will change. The ‘Manage your loan’ page on anz.com helps customers get the most out of their home loan, while personalised insights are available to them, including a monthly ‘Spend Summary’ and ‘Your Money Report’, on the ANZ app. Fedder says it’s an important time to support customers, because some may have never experienced an interest rate increase. “We know a lot of customers are considering how repayments could change, and it’s a good prompt to review their circumstances and lending arrangements,” he says. “Some options include refinancing, and we have some strong offerings such as our Life of Loan package fee waivers, cashback offers, and rewards for customers who have solar panels installed on their property.” It’s a competitive market, Fedder says, so it’s worth homeowners looking at what’s available, comparing home loans, and if there’s one that’s better suited to their needs, they may want to consider refinancing. Waugh says NAB’s aim is to be the bank behind the broker. “To be the bank behind
the broker, we’ve got to ensure that the origination process that we’re providing the broker is as easy, clear, consistent and predictable as possible.” NAB has been strong in this area for some time, says Waugh, and now other lenders have come back into the market and lifted their service levels. “It’s a really competitive market now, because everyone’s proposition to brokers is fairly consistent,” he says.
to direct channels, but Suncorp Bank does not differentiate.” Fedder says FASTRefi® is an alternative to the traditional refinance process and allows Suncorp to repay an outgoing lender prior to settlement. This significantly reduces the settlement time frame, makes surplus funds available to borrowers much more quickly, and gives customers faster access to better interest rates and savings. Smith says ANZ recently streamlined its
“To be the bank behind the broker, we’ve got to ensure that the origination process that we’re providing the broker is as easy, clear, consistent and predictable as possible” Phil Waugh, NAB Cost-of-living increases and debt-to-income considerations are becoming more important, Waugh adds. NAB needs to consider how many loans it has that feature DTI ratios of above six times, which affect pricing. “There’s a real focus on ensuring the balance of every financial institution’s book is appropriate.”
Product range Fedder says Suncorp Bank “remains extremely competitive for borrowers seeking an attractive refinance deal”. “Our enhanced FASTRefi® process makes it easy to refinance to Suncorp Bank and lets brokers fast-track the settlement process,” he says. “Many other lenders limit this function
home loan product offering, removing its Breakfree package from sale. “We’ve been talking to customers about what they prefer most in a home loan, and that’s simplicity.” ANZ now offers three simpler home loans: Standard Variable, Fixed and Simplicity+ (which offers a competitive rate for customers who don’t need an offset account). Smith says these three products allow customers to see their options more clearly and make financial decisions with greater understanding and confidence. “Each product comes with no annual package fee so that borrowers can still access great rates and discounts on standard variable loans.” Brokers may have noticed ANZ’s Home
BIG JUMP IN EXTERNAL REFINANCING Year-on-year rise in the value of external refinancing, April 2022 (seasonally adjusted):
23.6%
owner-occupier housing
10.8%
investor housing
2.6%
total housing
Note: External refinancing is when a new loan is taken with a new lender Source: ABS Lending Indicators, April 2022
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FEATURES
SECTOR FOCUS: REFINANCING Loan 300,000 Qantas Frequent Flyer points offer, Smith says. This applies to loan applications submitted by 19 August 2022 and settled by 31 January 2023. Eligible customers can receive 300,000 Qantas Points when they apply for, or switch to, an eligible ANZ home loan (worth $300k or more, with an LVR of 80% or less). Smith says ANZ has also enhanced its policy landscape to assist brokers and customers looking to refinance. Improvements include: • the introduction of an alternative income verification option for self-employed borrowers who receive a regular and consistent wage through their company • luxury property thresholds increased to greater than $5m for houses and townhouses • increased use of desktop valuations in some metropolitan areas for properties valued up to $3m • expansion of the maximum LVR threshold to 95% for new-to-bank customers and investors with a DTI ratio below six times Waugh says NAB has done a great job in the last 12 months of making its loan origination process as easy, consistent and fast as possible for brokers. He believes the challenge for all banks is to make sure they receive the appropriate margin within the loan rate, given that discounts on standard variable rates are increasing in the market.
“We certainly want to be very competitive on price and appropriately priced for a customer’s circumstances, so the focus on rate for risk and customer-based rate will become increasingly important.” Waugh adds that NAB has done a really good job of supporting brokers throughout COVID and into the post-pandemic period. “We’re well positioned, and then it’s just
along with our streamlined processes, provide compelling reasons why customers are well placed with ANZ.” The bank has introduced Simpler Switch – a streamlined ANZ OFI refinance process for eligible PAYG customers switching to a similar home loan amount (with the same or lower repayments) on an eligible ANZ home loan. Customers can cash out up to $50,000.
“Suncorp Bank remains extremely competitive for borrowers seeking an attractive refinance deal. Our enhanced FASTRefi® process makes it easy to refinance and lets brokers fast-track the settlement process” Troy Fedder, Suncorp Bank making sure that brokers [help with the rate position] so each customer is getting the maximum benefit.”
Broker conversations Smith says that in uncertain times brokers are well placed to support customers looking to refinance as they can offer them specialist knowledge and guidance. “We continue to monitor the market to ensure that we remain a competitive option for switchers, and our simplified products,
The process uses a customer’s CCR to confirm their ability to service the loan, without the need for income documentation. Smith says ANZ also recently launched rapid refinancing for dual applications, enabling new and existing small business customers with a satisfactory repayment history to refinance their home or investment loans to ANZ via a simplified dual application process. Brokers are constantly talking to their clients about getting the best product and
TREND IN NATIONAL REFINANCING, YEAR TO JUNE 2022 National refinance volume index, Jul 2021–Jun 2022
220 200 180 160 140 120 100 80
Quarterly change: +14.5%
Jul 21
Aug 21
Sep 21
Oct 21
Nov 21
Dec 21
Year-on-year change: +19.7%
Jan 22
Feb 22
Mar 22
Apr 22
May 22
Jun 22
Note: Volume of refinances as of 19 June 2022: 175,800 Source: PEXA Insights
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SECTOR FOCUS: REFINANCING pricing, and with 69.5% of customers using brokers for home loans, they have become trusted advisers, says Waugh. “I think it’s about optionality and ensuring the customer’s position in a competitive landscape is as strong as possible.” That comes back to macro education about interest rates in the community and brokers being able to explain the benefits and pricing of different products. Fedder says brokers are doing a great job of reaching out to their clients and are getting
looking to refinance into NAB,” he says. “We think refinancing is only going to increase, particularly on the back of an interest rate environment where we’ve seen cash rates go up more steeply and probably get more attention from the media … it’s a pretty compelling proposition for customers to ensure they’re in the right product at the right rate.” NAB also focuses on like-for-like refinancing, and the aim is to use technology to ensure a seamless, fast process.
“We are proactively contacting brokerintroduced customers with expiring fixed rates at different points in their journey, and [they] can choose either to roll over to a variable rate or refix their home loan” Natalie Smith, ANZ even better value for them. The recent interest rate changes mean more customers have shown an interest in refinancing. “It’s about knowing what they need and tailoring options to suit them,” he says. “We hope to earn the right to be more customers’ lender of choice with our competitive rates, improved policies and consistent turnaround times.”
Untapped refinance market Fedder says not only can refinancing save a customer money, but there are many benefits of switching to a new lender. “Benefits at Suncorp Bank include annual fee waivers, cashback offers, and rewarding customers who have solar panels installed in their home,” he says. NAB is very focused on the refinance market, especially on retention of existing customers, says Waugh. “But equally on [customer] acquisition and looking after our customers and brokers; [and] how do we attract as much as we can those who are
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“We’re very hungry to capture more of that refinance market and continue to grow market share,” Waugh says. He says the take-up of fixed rate home loans in the last two to three years has been enormous. Those are all coming up to expiry now and expiring off a rate that is significantly lower than a strong variable rate offer. “The fixed rate expiry bubble coming through up to July 2023 is a massive number.” Waugh says when looking at how to support those customers the focus is on the revert rate to a variable rate, “ensuring we are appropriately priced for that customer with an appropriate rate and an appropriate discount”. Equally, NAB wants to attract customers at other financial institutions who are coming off their fixed rates to take up a loan at the bank. “It’s going to be a fascinating 12 months because of the number of fixed rate expiries but also the cash rate increases flowing through to variable rates, and we’ve already seen fixed rates move really quickly at signifi-
cantly higher rates than predicted four or five months ago,” Waugh says.
Keeping brokers informed Smith says in an environment of rising interest rates, ANZ knows that brokers are looking for clarity and communication from lenders. To help them better support customers, ANZ has summarised its simpler home loans, current rates and offers on the ANZ Residential Broker landing page on anz.com. “From here, brokers can connect to the ANZ Broker Portal for detailed information on our policies and processes so that we can continue working better together to deliver for customers throughout their home loan journey.” ANZ’s BDMs also provide important support to ensure that brokers can communicate with their customers quickly, openly and with confidence, says Smith. Fedder says Suncorp Bank’s highly skilled and growing team of helpful BDMs on the ground in Victoria, NSW, Queensland, WA and SA are brokers’ primary go-to for all things Suncorp. “We also ensure that aggregator platforms and the Suncorp Broker Portal include the latest product, policy and process news.” Brokers can also follow Suncorp Bank Broker Partnerships on LinkedIn or watch video updates from their BDMs. “We send regular emails and a monthly digital newsletter, SunEssentials, as well as Business Intuition, a dedicated quarterly small business newsletter,” Fedder says. NAB has a consistent broker communication strategy, Waugh says. This includes its Broker Brief, sent out via email and the NAB broker portal, which provides important information to brokers. He says NAB’s BDMs are also on the ground talking to brokers, especially about the need to attract customers who have a DTI ratio of less than six times. “We’ve also got a broker response centre, whereby brokers can call and get updates on NAB,” Waugh says. “A lot of brokers hear from a lot of lenders, so ensuring we are front and centre and top of mind is very important.”
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SECTOR FOCUS: ALT-DOC LENDING
Lending a helping hand to small businesses With so many SMEs and sole traders operating in Australia, alt-doc loans are a great solution for customers who can’t provide traditional means of income verification
THERE’S NO doubt that Australia is a nation of small businesses. Of the estimated 2.4 million businesses nationwide in June 2021, 1.4 million were sole traders, according to the ABS. In 2020/21, the number of small businesses employing one to four people grew by 92,945 (15.2%) to 699,623. This is a massive market of potential clients for brokers. Sole traders and small business owners don’t fit the same profile as PAYG customers, but that’s where alt-doc lending can provide a solution.
Thinktank general manager partnerships and distribution Peter Vala, Pepper Money general manager mortgages and commercial lending Barry Saoud, and RedZed general manager distribution Chris Calvert discuss how alt-doc loans assist brokers and their clients.
Alt-doc lending explained Vala says alt-doc lending allows borrowers to use other forms of income verification to prove serviceability, rather than tax returns and
financial statements typically covering the most recent two financial years. “Alt-doc can be used for both commercial and residential loans,” he says. “At Thinktank we offer alt-doc products ideal for all selfemployed, SMEs and trusts.” He says borrowers with complex financial situations are particularly attracted to this type of lending, preferring it to a full-doc facility because of the ease of the income certification process – which saves time as well as the cost and inconvenience of producing full financial statements and taxation returns. While Thinktank doesn’t accept creditimpaired applicants, Vala says credit-impaired is a broad term, and often what is considered impaired may be suitably mitigated in the case of minor or explainable defaults. “It’s why we always recommend brokers talk to their Thinktank relationship manager to workshop each transaction to see how we can best assist their client.” Saoud says that with more Australians choosing to start their own businesses, alt-doc lending is becoming more common. “Brokers and their customers should approach alt-doc lending with confidence,” he says. “Just because your customer doesn’t have the standard income documentation, it doesn’t mean they and their family are any less worthy of a loan than any other borrower.” Providing a loan to the self-employed does not mean fewer forms of documentation but
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SECTOR FOCUS: ALT-DOC LENDING involves using alternative documentation to prove serviceability, he says. “Alt-doc simply means the borrower has an alternative set of documents to verify their income, compared to those documents that many traditional lenders require for full-doc loans.” Using the information in these documents, Pepper Money calculates loan serviceability from the business’s earnings at the present time, rather than a tax return that can be over a year old. “Importantly, all loans, regardless of documentation provided, are subject to the same enquiry, verification and assessment, including credit checks and repayment histories,” says Saoud. Calvert says alt-doc lending involves loans made to customers who are typically unable to provide traditional income verification such as weekly or monthly payslips or up-to-date tax returns and notices of assessment, so they provide alternative documentation such as accountant declarations or BAS statements. “At RedZed, the typical alt-doc customer is a self-employed business owner who may not to be up to date with the lodgement of their tax affairs or may have complex business structures,” he says. “We recognise that each customer has a unique set of circumstances, and we cater for this by offering several alternative methods of income variation for our selfemployed applicants.” Calvert says these can include: • • • •
accountant verification two quarterly Business Activity Statements business bank statements interim financials, contracts and invoices
RedZed offers a range of residential and commercial loan products, all with varying levels of credit impairment allowed, says Calvert.
Loan products Pepper Money takes a real-life approach to assessing applications, and there is no auto-
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mated decisioning, says Saoud. Its credit assessors manually review each deal and ask questions to get a more detailed view of the borrower’s circumstances before they start making decisions. Saoud says the non-bank lender considers several forms of alternative documents, including BAS and business bank statements.
RedZed’s commercial alt-doc products are Prime and Reset. These also cater to a range of customer risk profiles, with the added benefit of no annual reviews and up to a 30-year loan term. “RedZed’s constant focus is to deliver an optimal customer experience,” Calvert says. “This is evident in the way we work with
“Our credit assessors understand the nuances of self-employed lending and are prepared to workshop applications with their brokers, which provides RedZed with a distinct point of difference” Chris Calvert, RedZed “A cornerstone of our alt-doc home loan is the Pepper accountant’s letter, which acts as a firm and stringent guide for accountants when verifying the income that their self-employed customer earns. “Our individual assessment of loans and risk-based pricing enables us to be more flexible with our credit policy than traditional lenders in the market.” Saoud says a broker’s client still has to prove they can repay their loan, and Pepper Money still has to verify their income. “The majority of our credit assessment is the same as the banks – we simply have an appetite and flexibility to cater for a broader range of clients.” Calvert says RedZed offers a range of residential and commercial alt-doc loan products. “In the residential suite we have four distinct loan products comprising SE Prime, Reward, Recharge and Refresh, which are tailored to meet different borrower risk profiles.” One major advantage of RedZed’s residential products is that business owners can use their principal personal assets (house or investment property) to assess equity for business use, says Calvert.
our brokers to provide flexible loan options with alternative methods of income verification, as well as our practical approach to credit decisions.” He says the product offering is backed up by RedZed’s target maximum 48-hour turnaround times, its common-sense approach to underwriting, and direct access to credit decision-makers. “Our credit assessors understand the nuances of self-employed lending and are prepared to workshop applications with their brokers, which provides RedZed with a distinct point of difference.” Vala says Thinktank has always offered commercial alt-doc loans in the form of quickdoc and mid-doc options and recently added a mid-doc residential product. “Alt-docs are a great alternative for borrowers who may find it difficult for one reason or another to access funding if they were to rely on their financial statements alone,” he says. Historical financial statements provide an indication of future earnings, but they don’t always provide the most up-to-date picture of the customer’s trading performance and cash flow.
“This was brought into sharp focus during the COVID lockdowns, where trading patterns were significantly impacted,” Vala says. Thinktank’s mid-doc products enable borrowers to provide either one accountant’s letter, their last two BAS statements, or six months of trading statements as alternative means of verifying their selfcertification of income. The non-bank lender’s commercial quick-doc facility relies on self-certification alone. “Our flexible options can either be for the short or long term but are typically written for 25–30 years,” says Vala. “Borrowers can also convert an existing mid-doc product to full-doc at no cost should they decide to seek a slightly lower rate – provided the serviceability support provided meets our lending criteria at the time.”
Loan trends Calvert says the last two years have been extremely challenging for the self-employed sector, with repeated pandemic lockdowns affecting businesses and their ability to borrow. He says despite these challenging times, RedZed has remained committed to helping self-employed Australians realise their dreams. “Non-bank lenders such as RedZed have played a critical role in the survival and growth
“Alt-doc can be used for both commercial and residential loans. At Thinktank we offer alt-doc products ideal for all selfemployed, SMEs and trusts” Peter Vala, Thinktank of the approximately 2.3 million Australians that are self-employed.” RedZed recently commissioned the RedZed Self-Employed Business Index, a first-of-its-kind study to take the pulse of this critical segment of the Australian economy. Calvert says one of the most significant findings was that only 16% of respondents believed it was easy to secure a loan from a bank. A big reason for the self-employed borrower’s poor customer experience at banks is due to these lenders’ systems not being geared up to consider the individual circumstances of this type of customer. Calvert says that unlike the typical PAYG customer who can provide their most recent monthly payslips, more often than not the self-employed business owner has a different financial model. “They require a more specialised lender with credit assessors that possess a more specific skill set to
SELF-EMPLOYMENT IN AUSTRALIA 18% of these solo business owner-managers were in the construction industry
understand the customer’s business.” Vala says the greatest demand in the last two years has been for Thinktank’s mid-doc product, especially from SMEs and selfemployed borrowers looking to purchase, refinance and release equity. “We see this trend only getting stronger, which is why we have revised our offering to the market to now include loans up to $4m per single security for commercial property security with LVRs of up to 80%,” he says. “It’s not surprising that non-bank lenders are extremely active in this market with our ability to adapt and respond quickly to the needs of the broker and their clients.” Pepper Money believes there will be an increase in customer demand as self-employed customers seek alternative solutions that support their goals and look at their current situation, says Saoud. “The market is huge – low-doc lending plays a major part in Australia’s lending landscape,” he says. He adds that research shows that up to 40% of commercial lending is being fulfilled in the non-bank lending space, and a large portion of this is low-doc.
The impacts of COVID
1.388 million
14.5% were in professional services
self-employed Australians 10% were in agriculture 10.6% of Australia’s workforce were owner-managers of enterprises with no employees in February 2021
75% owned an unincorporated enterprise 62% were male 43% worked part-time
Vala says the pandemic and lockdowns have intensified demand for alt-doc loans, with many businesses experiencing fluctuations in earnings. “Rather than preparing a detailed cash flow forecast or a three-way financial analysis, the ease of a self-certification and one form of income verification is a major attraction for brokers and their clients,” says Vala. At Pepper Money, Saoud says, “we’ve been seeing an increase in alt-doc loans in the past 12 months. Plenty of businesses
Source: Ai Group Self-employment in Australia Factsheet, February 2021
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FEATURES
SECTOR FOCUS: ALT-DOC LENDING were impacted by COVID-19, affecting their revenue for the year. “With Pepper Money’s ability to consider alternative sources of income verification, such as the last six months’ business bank statements or BAS, we can gain a solid understanding of the customer’s income and loan affordability as it stands today.” Calvert says that despite COVID, RedZed’s business index survey showed that 72% of
stand the reasoning behind the way it calculates serviceability. Referral partners also play a huge role in this type of lending, says Saoud, with accountants, solicitors and financial planners some of the best referral sources for brokers. Calvert agrees that understanding and utilising alt-doc lending can have many benefits for broker businesses. “It provides opportunities for customers that might have otherwise
“Growth in the alt-doc lending space is really dependent on broker education and understanding of how lenders like us can help their self-employed customers that are looking for loans” Barry Saoud, Pepper Money business owners remained confident about their future, and 87% drew satisfaction from their businesses.
Benefits of alt-doc loans Saoud says that at Pepper Money “we believe small business owners and sole traders are greatly underserved, and providing these types of borrowers with an alternative option is incredibly rewarding”. Helping self-employed clients presents a significant opportunity for a broker to evolve and develop their business to offer more than just mortgage lending. By fully understanding clients’ goals and growth plans, Saoud says brokers can help them navigate the path to achieving this growth through commercial mortgages or asset finance. “We believe upskilling brokers is a critical component of increasing awareness of these solutions for borrowers,” he says. “Our broker support team ensures we’re providing brokers with the in-depth knowledge they need.” A key focus for Pepper Money is helping brokers identify when and why an alt-doc solution may be suitable and under-
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struggled to obtain funding and could also open the door to their accountants and therefore potential future referral opportunities.” He says it also gives brokers access to a segment that is underserviced yet more loyal. It offers them diversified income streams as these customers’ needs are greater than those of most PAYG borrowers. “RedZed has specialised in self-employed and alt-doc lending since inception 15 years ago. Our BDMs are highly experienced and operate portfolios sizes that allow them to be very hands-on with their brokers.” Vala says the greatest value of alt-docs is their ability to reduce the time and complexity involved in arranging finance. “Thinktank is a strong and long-standing advocate for diversification and broker education, and our dedicated relationship managers are always available to make the alt-doc process for commercial or residential loans as seamless as possible.”
Rising inflation, interest rates Calvert says RedZed is seeing signs of some borrowers becoming more cautious with
their lending requirements following interest rate rises. “Many borrowers and even brokers would not have been in the market when we were last in a rising rate environment; however, the fundamentals of responsible lending do not change.” He says brokers and lenders still need to assess borrowers’ capacity to service proposed loans without hardship and ensure appropriate buffers are in place. “This is a time for calm heads and following prudent lending practices. RedZed remains committed to supporting the self-employed sector during this time of uncertainty by providing common-sense loan solutions that are practical and responsible.” Saoud says alt-doc loans can potentially assist customers’ future borrowing as the equity growth in their home can then be used to build a property portfolio, or the client can use that equity to purchase a commercial property for their business. “In order to ensure that self-employed homebuyers are not locked out of the market, brokers have an opportunity to reassure these customers that there are still options for them,” he says. “Growth in the alt-doc lending space is really dependent on broker education and understanding of how lenders like us can help their self-employed customers that are looking for alternatives and looking for loans.” Alt-doc products come at a slight premium in interest rate compared to full-doc and are not immune to rate increases, says Vala. But Thinktank offers the option to convert to a lower-rate full-doc loan when the time is right. Vala says a borrower’s financial position needs to be carefully considered, which may include options Thinktank can offer to improve cash flow and profitability, which are separate to setting various buffers in place in the event that rate rises continue. “We are always here to help brokers find the right solution for their client and encourage brokers to reach out to their aggregator partners to arrange a Thinktank education session or contact their relationship manager direct.”
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SPECIAL REPORT
BROKERAGES 2022
Still riding high but more cautious about the future, the winning brokerages are those that maximised their opportunities during the pandemic
CONTENTS
PAGE
Feature article .............................................. 24 Methodology ................................................ 25 Top Brokerages 2022................................... 27 Profile ............................................................ 28
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SPECIAL REPORT BUSINESS STRATEGY
TOP BROKERAGES 2022
ENJOY THE VIEW, BUT WATCH YOUR FOOTING ANYONE looking at the graph of total housing loan commitments for the past two years can see that the market is at an important inflection point. The data snapshot that the MPA Top Brokerages report covers, from March 2021 to February 2022, shows a 12-month period when the value of total loans for new housing consistently hovered around the $30bn level. Telescoping back to the few months just before this one-year segment reveals a very different pattern, with a sharp rise from a low of $16bn up to the $30bn plateau. It is as if a group of climbers were moving along the mild incline on the Yosemite Valley floor, reached the base of El Capitan and began ascending.
The question now becomes whether the comparatively lofty view represents the foothills of higher lending spikes, a stable highland valley stretching to the Rocky Mountains, the beginning of a mild descent, or an outcrop awaiting a Wile E Coyote moment. The data that is available so far, for March and April, the two months after this snapshot period, suggests the plateau will continue with lending still holding above the $30bn mark – just. The data for May and June will be the real test. But let’s face reality – the data shows that financing for owner-occupier loans peaked in May 2021, and new investor lending is now keeping the overall market at high levels.
TOP BROKERAGES BY LOCATION
ACT
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1
National
2
NSW
10
QLD
7
SA
2
VIC
22
WA
6
“Optimism around the stronger economic growth that makes higher interest rates necessary is fading as inflation fears rise” Michael McCarthy, Tiger Brokers New loan commitments for owneroccupiers dropped 12.8% from $23bn in April 2021 to $19.9bn a year later. The effect of government incentives for first home buyers appears to have run its course, with the number of loans for this group plunging 34.3% in the same period and their total value dropping 34.6%. Offsetting this, the value of loans to housing investors jumped 37.1% year-on-year but fell 4.8% month-on-month in April – the first drop since June 2021.
A healthy breather? With the Reserve Bank recently ushering in a rising interest rate environment unfamiliar to anyone who has been active in the market for less than 12 years, both homebuyers and investors are likely to become more wary. “Optimism around the stronger economic growth that makes higher interest rates
FROM THE SPONSOR
Bankwest is proud to sponsor MPA’s Top Brokerages 2022 Special Report. Bankwest makes no secret of the significance it places on brokers as it strives to be the best bank for brokers in Australia. About 80% of our home loan customers come to Bankwest via our critical broker network, emphasising the significance customers also place on brokers. Brokers represent a trusted and knowledgeable source of expertise and guidance during one of the most significant financial decisions of a person’s life. I’m proud of Bankwest’s strong and collaborative relationship with our broker
network, which helps ensure the best possible experience for customers who own – or aspire to own – a home.
Bankwest is committed to creating a brighter future for all, and our critical broker network plays an invaluable role in that goal.
On behalf of Bankwest, I extend my congratulations to the brokerages recognised in this report, which reflects on loan book size, settlements, and conversion rates.
We look forward to continuing our collaborative relationship with brokers as we work together to deliver the services, tools and support that simplify your jobs and enable you to deliver the best possible experience to customers.
The past 12 months have been incredibly busy, and the outcomes achieved for the customers of these brokerages have ensured thousands of Australians have been able to put a roof over their heads – and after the past two years, that’s something pretty special. So, again, I congratulate the efforts of the leaders, brokers and support staff in making it into this prestigious group.
“We’ve now got the refinance market about to kick in, so we’ll get a second tailwind there” Damian Brander, The Australian Lending & Investment Centre necessary is fading as inflation fears rise,” says Tiger Brokers’ chief strategy officer, Michael McCarthy. This is translating into a ‘good news is bad news’ dynamic as central banks move to rein in credit-fuelled growth with more aggressive monetary policy, he says. But there are reasons to welcome higher rates. One is that brokerages will be kept busy by the refinance market. Managing director Damian Brander at this year’s number one brokerage, The Australian Lending & Investment Centre, says the trend is welcome as the property market and the purchasing market are cooling due to saturated property prices versus affordability. “We’ve now got the refinance market about to kick in, so we’ll get a second tailwind there,” he says.
External refinancing data over the 12-month period captured by MPA’s survey peaked in August last year but is still holding above levels seen at the start of 2021, suggesting steady demand as borrowers adjust to the post-pandemic economy and recalibrate positions to higher rates. Whether refinancing is enough to outweigh the balance of other downward pressures remains to be seen, but from the current vantage point, the prospect of any mid-air foot peddling and coyote-shaped craters in the desert seems unlikely. Even less so is scaling to new heights. First home buyers will also not disappear and may even have the chance to buy at lower prices. The question is whether they will have the financial power in their corner. “Borrowing capacity will be a large factor in the increase in rates while individuals
Ian Rakhit General Manager Third Party Banking
METHODOLOGY To recognise the Top Brokerages of 2022, MPA invited Australian brokerages to submit their figures for the period 1 March 2021 to 28 February 2022. The online form also asked for details such as the number of active brokers working at each brokerage, as well as the total loan book value and conversion rate. To be eligible, brokerages needed to have five or more loan writers in a single office headquartered in Australia. Aggregator information was also provided by the applicants, and their aggregators were then required to verify the details submitted. The final ranking was weighted across three areas: total loan book size, total settlements in the specified 12-month period, and conversion rate. Each brokerage was ranked in each of these areas, and the ranks were then combined to produce a final tally.
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SPECIAL REPORT BUSINESS STRATEGY
TOP BROKERAGES 2022 TOP BROKERAGES BY THE NUMBERS
$1.27bn
Average total loan book value
$508.26m
Average total settlements from 1 March 2021 to 28 February 2022
83%
Average conversion rate
13
Average number of loan writers
12.2
Average number of years in operation
“Borrowing capacity will be a large factor in the increase in rates while individuals such as first home buyers still try to enter [the market]” Omar Moussa, St. George Bank
such as first home buyers still try to enter [the market],” says broker distribution business development manager Omar Moussa at St. George Bank. More caution towards property purchases may also be a trend that counterintuitively benefits the broker channel as borrowers are likely to seek informed advice about a wider range of financing options amid market dynamics that will be unfamiliar to all but seasoned players. Rather than a full-scale retreat, there simply seems to be a growing and prudent wariness of tighter monetary conditions
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among borrowers. Taking the higher-rates medicine early may also lead to a faster curbing of excesses and a corresponding earlier easing cycle down the track. This is a healthy sign in terms of the unnatural amount of credit that the markets have been awash with over the last two years.
Top Brokerage figures When it comes to credit, the highest value of total settlements in the year covered by the 2022 Top Brokerages award was $2.1bn by Shore Financial. This was up by a whopping $500m from the same reporting period
last year when Shore also topped the tables. That performance was also a $500m improvement on total loans settled in the 2020 awards period. The fact that the top company in this category was able to double its total yearly value of loans settled since early 2020 shows what a remarkable period of growth the pandemic has been for the finance industry in Australia. Other comparisons with the 2020 awards period also reinforce what a tear bank lending has been on since COVID hit. In the 12-month period covering the 2020 awards, only one company wrote over a billion dollars in loans, but there are five that top this level in the current rankings. The highest total loan book of any single brokerage this year surpassed $4bn for the first time, and there are two other brokerages with totals of over $3bn. Conversion rates remain high this year at an average of 83%, roughly in line with the average of 82% last year. Nearly half the number of brokerages on the list have conversion rates above 90%, suggesting that mortgage brokers are well acclimatised to bank scrutiny and better able to submit the right paperwork than they were a few years ago. This can perhaps be put down to technological improvements as well as the time dividend generated and spent on more customer interaction as one silver lining of the pandemic. By region, the spread among the 50 Top Brokerages is more evenly distributed than the very heavy skew towards Victoria seen in the top 25 ranking last year. Even so, nearly half of the brokerages on the list are still from Victoria in the latest ranking. There is no doubt that the easy money of the pandemic years allowed brokers to ride to new lending heights. The Top Brokerages this year represent those who maximised this opportunity and leveraged all the latent fintech efficiencies that were perhaps less urgent in the pre-pandemic environment. The upcoming year will require a sure footing as the fog closes in to obscure the terrain ahead, and borrowers will continue to need help navigating the uncertainties.
BROKERAGES 2022
Australian Lending & Investment Centre 1
Phone: 1300 254 228 Email: enquiries@alic.com.au Website: www.alic.com.au
2
Shore Financial
3
Keylend
4
Tiffen & Co
4
17
Empower Wealth Mortgage Advisory
18
UFinancial
19
Inovayt
20
Masters Broker Group
Mortgage & Finance Solutions Australia 34
Phone: 1300 857 762 Email: stacey@mfsa.com.au Website: mfsa.com.au
35
Loan Market Sharon and Balpreet Bal
36
AAA Mortgages
37
M8 Finance
21
Entourage Finance
Simplicity Loans & Advisory
22
Advanced Finance t/a Better Choice Mortgage Services
38
Cinch
6
Green Finance Group
23
Astute Melbourne City South/Gippsland
39
InReach Finance
7
Smartmove Professional Mortgage Advisors
24
FINANCIA
40
Axton Finance
7
The Loan Company
24
Link Capital Finance
41
Rethink Financing
9
Acceptance Finance
26
Invest Blue
42
Absolut Financial
10
Loan Gallery Finance
43
Loan Market Toby Edmunds and Associates
44
Crunch Finance
45
Uniq Finance
46
The Financiers Group
47
Mortgage Choice in Belmont
48
Mortgage Choice in Indooroopilly
27 11
12
Clarity Home Loans 28
Aqua Financial Services
29
Loan Market – One Network Broking
Oxygen Home Loans
12
Ausun Finance
14
My Mortgage Freedom
30
15
15
Catalyst Advisers
Ayers Financial Group
XIN Mortgage
30
Loan Market – Paul Hixon
Phone: 1800 896 817 Email: info@xin.com.au Website: xin.com.au
32
Mortgage Choice Brisbane City and Sunnybank
49
Real Estate Investment Finance
Azura Financial
33
Pivotal Financial
50
Mortgage Choice in Nunawading
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SPECIAL REPORT BUSINESS STRATEGY
TOP BROKERAGES 2022 AUSTRALIAN LENDING & INVESTMENT CENTRE Phone: 1300 254 228 Email: enquiries@alic.com.au Website: alic.com.au
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he Australian Lending & Investment Centre (ALIC) has made it two years in a row as MPA’s Top Brokerage and is looking well placed to continue its winning streak. Last year saw a strong market lift bottom lines for many brokerages, and ALIC managing director Damian Brander says coming top of the pile again is a pleasant surprise given that a lot of other businesses would also have done very well. “The buoyancy in the market, particularly Sydney, with the higher house prices probably allowed for larger amounts of lending being written than ever before,” he says. But Brander’s focus is now firmly on the future, as 2022 is shaping up to be a very different beast. Three main tenets stand out in ALIC’s approach. The first is making sure that there is consistent performance across all brokers in terms of productivity. “It’s one of the key things that we focus on internally,” he says. “We use that as our sort of true north, where, if everyone’s contributing, then we know that the numbers take care of themselves.” Brander is putting his money where his mouth is and hiring a full-time broker training and development manager who starts in late June. While such roles are common at major financial institutions, committing funds to a non-revenue-generating role is unusual at a mid-tier broker firm. Brander says the new appointment is part of a long-term strategy as the market shifts to a different dynamic from the credit-fuelled pandemic years. “[Training] will be a lot more structured, better designed or compliant in terms of how we want it to focus on certain areas like responsible lending and best interest duty,” he says. Investing in the role now ties in with what is happening in the market. Brander sees the
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rapid changes taking place as becoming more of a constant state rather than a discrete period followed by an equilibrium. “We’re actually going very much into a change environment, a consistent change environment,” he says. “We’re in this rapid state of evolving change, because the whole digitalisation of our environment and market is occurring, whether we like it or not.” This will benefit the type of broker who thrives on learning new things and staying abreast of choppy conditions. But Brander wants to make sure that ALIC also takes care of people such as subject matter experts who prefer stability to bring their skills and knowledge to mastery. “Our technology is constantly changing as we look to evolve and become more efficient. Essentially, we’re all going down the pathway of a digital mortgage solution, whether we like it or not.” This is where the second theme comes into play in terms of having a forward-looking view and proactively updating the business to anticipate market conditions. Investing heavily in technology has helped insulate ALIC from some of the earliest effects of a rising interest rate environment and a cooling property market. “I definitely feel that further increases in interest rate forecasts and a less-than-certain and more volatile property market [is leading to] anticipation that we should expect a bit of a slowdown.” As the market continues to decelerate, investment in people, branding and technology will act to alleviate any rough patches down the track. “What we do now lays the foundation to see how much we can insulate and buffer that,” says Brander. The market direction isn’t all bad news. Investors, for example, are grateful that
property prices are more easily readable now with less unpredictability on the upside. Rental yields are also up in some spots, such as Western Australia, where supply is not matching demand. ALIC aims to add another positive factor to the equation by upping its focus on ethical investing. It recently signed an agreement with the WLTH platform committing to cleaning up 50 square metres of ocean or beachfront for every new loan signed. “We like to now be able to say that we can help clean the world’s oceans one loan at a time,” says Brander. ALIC, which is the trading name for Ethical Lending Concepts Pty, has always had a focus on ethics and is now bringing this aspect of its corporate personality more to the forefront as a third key focus for 2022. Brander says there ought to be more emphasis on ethics in the broking industry as a whole, and linking concrete steps to restore the environment as a built-in part of ALIC’s loan product is a good example of structuring ethical action into the business. Imagine if all home loans directly tied the fate of the environment to the main way Australians seek financial security – both the natural world and the mortgage market would be more resilient.
$3.20bn
Total loan book value (all loan types)
$1.05bn
Total value of settlements (all loan types) from 1 March 2021 to 28 February 2022
96%
Conversion rate of loans settled/written
Damian Brander (seated, right) and his team have led The Australian Lending & Investment Centre to its second consecutive win as MPA’s Top Brokerage. This year, ALIC is highlighting a more ethical approach to business by linking environmentally friendly efforts to its mortgage lending operations. Ian Rakhit, of Bankwest, which sponsored Top Brokerages, is pictured top right.
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AGGREGATORS ROUNDTABLE 2022
BACKING BROKERS WITH THE TOOLS FOR SUCCESS Aggregators have provided valuable support to brokers since the pandemic hit. A group of aggregator leaders and brokers met up at MPA’s annual roundtable to discuss the lessons they have learnt and what the future holds
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FROM ADJUSTING to new technology and work patterns through the COVID-19 pandemic to lobbying the federal government to protect broker remuneration, aggregators have had a lot on their plates over the past two years. As the property market boomed and there was a huge increase in loan volumes, they worked hard to assist their broker members in getting the best finance deals for their clients. MPA’s annual Aggregators Roundtable recently brought together aggregator leaders and brokers at Café Sydney to discuss the pandemic, technology, streamlining applications and turnaround times, channel conflict, the broker remuneration review and female broker numbers. In attendance were Tanya Sale, CEO, outsource Financial; Brad Cramb, CEO distribution, Lendi Group; Blake Buchanan, manager of aggregation, Specialist Finance Group; Theo Chambers, CEO of brokerage Shore Financial, and brokers Mhairi MacLeod, managing director, Astute Ability Group, and Mario Reyad, lending specialist, Expert Mortgages. Brendan O’Donnell, managing director, Liberty Network Services, was unable to attend in person but provided his views in writing.
The COVID-19 pandemic seems to be firmly behind us. What are the biggest lessons learnt, and how do you operate differently now? Tanya Sale said a lot of people in the industry had learned how to operate differently during the pandemic. “Virtual was the new buzzword back then, and it’s probably still the buzzword today,” she said. “We also see the flexibility in the working environment. For all of us who were working at home for such a long time, and I know for outsource, the productivity went through the roof.” Sale said outsource Financial soon found that the team was working at all hours. “Whilst it was a good thing for the business, it wasn’t such a great thing for one’s mental health or your morale.”
Coming out of COVID, she said staff had maintained a balance, splitting time between home and the office. “We have two to three days that our team must be around face-to-face or on the road; the other days we allow the team to work from home, allowing more flexibility.” MacLeod said it was clear that lenders had the technology pre-COVID, but some weren’t giving it to brokers. “You have to ask the question, ‘Why did it take an event such as COVID for many to release digital solutions that were already available and have been asked for by brokers for quite some time?’ “Potentially, lenders were going to lose huge market share if they couldn’t wet-sign [borrowers] on glass and they couldn’t do face-to-face interviews,” she said. “So again, why did they put us through that pain for years prior when they had the technology already available? Perhaps they have been protecting their market share against the best interests of the customer?” MacLeod said it begged the question as to what other technology is coming that lenders are going to push back on. “I think we as brokers or aggregators probably need to ask those questions: Who’s not signing on glass? Who’s not giving us the flexibility? And if you guys aren’t doing that, how can we work together to solve the problem and get on with helping our customers more efficiently?” Necessity is the mother of all innovation, Cramb said, so there was a period when everyone was forced to change. “I agree, Tanya, that the learnings from our point of view – agility and speed were the differentiator. Number one: those that moved quickly obviously took market share, and that hopefully will echo through the future.” Cramb said the second point was that the workplace had changed forever. Brokers held virtual meetings, and Aussie and Lendi team members had a hybrid work model: the Lendi Group’s Flex First policy enables a balanced approach with some time working from home. “The third key point was that technology should enable human interaction and can’t
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AGGREGATORS ROUNDTABLE 2022 THE PANELLISTS
Blake Buchanan Manager of aggregation, Specialist Finance Group
Brad Cramb CEO distribution, Lendi Group
replace it,” he said. “So how do we find the hybrid between the two? And we saw some great technological innovations.” The great news was that customers’ expectations had totally changed and not just in the mortgage industry, he added, so brokers and lenders were judged on customers’ tech experiences in other industries.
home. It’s a very case-by-case situation. We’ve got maybe 60 people on our team; half the team are able and still efficient whilst working from home, the other half not so much – some unable and some decreasing in efficiency. “Some people might have kids and a partner in the background running around, and it’s distracting,” he said. “Some people
“We see the flexibility in the working environment. For all of us who were working at home for such a long time, and I know for outsource, the productivity went through the roof ” Tanya Sale, outsource Financial
Brendan O’Donnell Managing director, Liberty Network Services
Tanya Sale CEO, outsource Financial
BROKERS
Theo Chambers CEO, Shore Financial
Mhairi MacLeod Managing director and principal broker, Astute Ability Group
Mario Reyad Lending specialist, Expert Mortgages
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Buchanan said, “Technology advancements have built a better way for us to transact. Human interaction and what we learned throughout COVID have brought us closer than ever to our members. It’s become abundantly clear that empathy, compassion and high engagement with our group are paramount to a great business relationship.” He agreed that technology couldn’t replace humans. “You can’t replace that validation – that structuring and that comfort you get from an expert who knows what they’re doing by validating the structure and solution to your need.” Buchanan said SFG brokers working from home went from doing eight- or nine-hour days to 12 to 15 hours a day. For those who were finding it hard to balance this change in arrangements, SFG needed to ensure they were supported. “It’s really [about] engaging with our members to make sure that they’re taking care of themselves and knowing that we’re available should they need us,” he said. Chambers said technological advancements, efficiencies with online documents, and being able to VOI via FaceTime had all saved time. “However, I don’t 100% agree on some brokers, some staff working better from
who are young might be room sharing, and they’ve got flatmates that they’re having to try and work around as well.” Chambers said Shore Financial’s culture and camaraderie were affected by COVID, and he tried to maintain it with, for example, virtual drinks on a Friday afternoon through FaceTime or Zoom, but “it didn’t quite work”. So he took the opportunity to find a bigger office space during COVID that was “more new-age” and featured private rooms for Zoom meetings, a podcast room, hot-desking and a breakout room to encourage people to come into the office, share ideas and collaborate. “We found the new office did drastically improve the culture and camaraderie again, bringing the team back together to collaborate and work as one,” he said. “The team was partly fragmented prior to this.” Sale said she had never been a fan of people working from home. “But in COVID it changed my mind because we have a great team, and they’re as passionate about outsource as I am. But what I didn’t change my mind on is wanting balance. Connectedness is imperative and something I never want outsource to lack; I want the team out and about seeing the members.” At Liberty Network Services, O’Donnell
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AGGREGATORS ROUNDTABLE 2022 said one of the key learnings was the value of flexibility. “While Liberty Advisers have always prioritised customer convenience, the pandemic required us to rethink our standard business practices and introduce greater online support options,” he said. O’Donnell said these accommodations had proved particularly vital for those in Melbourne and Sydney who endured multiple lockdowns, but the benefits extended much further than initially expected. “For many customers, flexibility truly is paramount – not just in terms of their loan options but in the way they engage with their mortgage broker and other professional services,” he said. Reyad, who has been a mortgage broker for four years, said there had been a lot happening since he started in the industry, with the royal commission and then COVID. “I see that as a blessing and a bit of a curse. The blessing was definitely the fact that this was it for me,” he said. “I came in and I deep dived and understood the lay of the land, whereas I think for some other brokers, it was a big shift. “My wife and I had a baby during COVID, which all parents will know is a massive shift in your normal routine. Add lockdown to that, and I found myself working more than I normally did, and I was putting in extra hours.” Reyad said he really focused on having conversations with his clients, emphasising to
them that after COVID “anything can happen”, and they needed financial buffers in place.
Technology is changing rapidly. How is technology helping improve aggregator operations and broker businesses? Buchanan said SFG was blessed as it already had a great system with VOI and video conferencing systems built into it. “So with COVID, we didn’t have to make any changes to our system and technology, which was a fantastic thing.”
“We’re providing a more holistic digital solution for every area of the finance application – cost of living, validation of income, validation of other debts, and credit history” Blake Buchanan, Specialist Finance Group Some lenders enforced new ID and other metrics, but SFG brokers were already doing that anyway through a digital process. “We’re always looking to the future of broking and to deploy new technologies, partnerships and processes today so that our businesses are future-proofed and tomorrowready,” Buchanan said. “Having COVIDready systems and processes available
HOW TECHNOLOGY HELPS LNS ADVISERS Brendan O’Donnell, managing director, Liberty Network Services: “One of the ways that LNS has been able to continue to achieve consistently strong results throughout the last two years is by focusing on technology and taking advantage of the latest innovations. While Liberty Advisers already had access to the technology required to work remotely, we quickly realised that we needed further technological upgrades to provide opportunities to continue building strong professional relationships. With this in mind, we made some integral upgrades to Spark, our custom-built CRM and loan management tool, and introduced a web-based customer self-serve feature called Know Your Customer (KYC). These tools supported our advisers to further engage with customers and streamline processes, resulting in enhanced quality and professionalism.”
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pre-COVID is great evidence of this.” He said technology hadn’t stopped shifting: SFG saw more innovation coming, including direct access through CRMs to lender gateways and decisioning tools. Now a broker would go out with loan options they might recommend for a client or they might choose, but in the next three to five years you would see them coming back as conditionally eligible loan options for their customers. “That’s only going to happen through digitisation and the ability for a broker to
pick up a loan application and put that into the decisioning system of a lender that talks straight back in real time,” Buchanan said. CDR (the Consumer Data Right, or open banking) would also come into play, and Buchanan said this would place downward pressure on SLAs and provide a better service to brokers and their customers. At present brokers were looking at data, compiling an application and giving it to a lender to validate. “When CDR comes into play, the data that the broker looks at is exactly the same as what the lender looks at, and it can’t be compromised. It’s going to speed up those efficiencies as well,” Buchanan said. Sale said the lenders and aggregators now had more advanced systems in place, which allowed them to identify circumstances much more efficiently that involved fraud. “At the moment, we’re seeing a big thing in the industry on salary staging, but the aggregators and the lenders are able to jump on that quite quickly because of all recent technological advances that have enabled us as business partners to be more connected and
to stamp out this kind of behaviour within our industry,” she said. Chambers said fraud had increased during the pandemic because more people went online and seized information. However, Sale added, technology meant the industry was able to deal with it a lot quicker. Buchanan said that when one-touch payroll systems and validation by a broker were eventually introduced, a broker would not only be able to see clients’ credit history through CDR but would also be able to validate that income through the payroll system. “We’re providing a more holistic digital solution for every area of the finance application: cost of living, validation of income, validation of other debts, and credit history.” Cramb said Lendi Group was in a fortuitous position because its platform, especially the proprietary knowledge, was fit for purpose. “This industry is famously disjointed, overly complex, stressful; it’s hard. It’s hard for customers, and therefore it’s hard for brokers.” Cramb said the average loan was 600 pages long and took 18 hours to reach settlement, which were long times and led to big costs for broker businesses. He said Lendi obsessed about these things every day and tried to remove the costs and minute processes and automate them as much as possible through ID verification and validation of income and expenses. Lendi has five lenders already using its Approval Confidence tool, which hardcodes the lenders’ pricings and policies into its systems. Cramb said there were moves afoot for this to be included in the lenders’ decision engines. “So we can give brokers and customers confidence that that loan is going to be approved … we want to create that seamless environment for our customers and of course for our brokers as well.” Sale said outsource, along with SFG, was using the Salestrekker CRM, and as an aggregator it met regularly with Salestrekker to predict things in advance. She said some outsource members were concerned about the impact of fintechs and digitalisation of the industry. “So in conjunction with Salestrekker, a system was
developed called a WebLoanQ.” This gives outsource Financial’s brokers who choose to implement WebLoanQ an advantage because it links into the broker’s website and allows them to be “a little bit of a fintech, in accompaniment with being a mortgage broker”. “They diversified into a generational demographic that they were previously missing out on,” Sale said.
How do you work closely with lenders to streamline loan applications and reduce turnaround times? Buchanan said that out of 10 loans submitted, fewer than seven were settled. “That means that three loans are worked on, and that time is wasted looking at those three loans; they’re never going to go anywhere. It’s never going to be perfect, it’s never going to be 100%, but can we increase that rate to eight out of 10? Absolutely.” Those loans that were never going to succeed contributed to the delays in SLAs for lender assessments. Buchanan said brokers needed to get better at handling those loans, and this could happen through training and education but also with access to digital technologies and crucial areas of data that helped a loan go
through to the right lender the first time. “One of those areas of data would be credit checking,” he said. “So 10% of the time, files fail simply because of adverse credit scoring, unknown discrepancies, whether it be judgments, defaults or bankruptcies.” Brokers could improve processes, turnaround times and the customer experience by running soft-touch credit checks on those clients so that information was known before supplying the loan. Buchanan said brokers were also relying on the lenders getting better too, and the only way to do this was through improved transparency of lender reporting – informing brokers about things “they couldn’t see”, such as disclosures on living expenses. “We can take that information to train and educate our brokers so those instances are reduced.” Sale added that in the future it was likely to become compulsory for all brokers to have either Equifax or illion or bankstatements.com to ensure that they were contributing to streamlining applications and not lodging deals with a lender where they were never going to be a good fit. It would also be important to ensure that brokers did their due diligence on applications, as this would in turn limit reworks
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AGGREGATORS ROUNDTABLE 2022 still chasing conditional approval 19 days later. “I think the velocity of change that we’ve had across lenders, across portals, across product, the BDMs unfortunately have been given bigger patches and more information to absorb but with less time to be able to get on top of it. The pressure on BDMs is enormous at the moment.” Reyad said it was clear from the discussion that everyone was trying to bridge the gap between broker and lender. “There’s clearly a gap there,” he said. “Generally speaking, I have found the lenders that allow brokers to have direct access to assessors typically allow things to move much faster. To give an example, when I’m dealing with complex deals that require more communication with the lender, having direct access to the assessors enables us all to and further reduce turnaround times. Cramb agreed, saying technology played a massive role. “All loans processed through the Lendi platform today have a credit check – it’s automated,” he said. “We have automated all of the verification of identity; we’re looking at automation internally for verification of income, etc., so those brokers are benefiting from that.” Cramb explained that Lendi would carry out specialisation checks on each of those files to make sure they weren’t going to the wrong lender. “So we have a technology platform that has a hardwired process to ensure that we’re identifying the customers going to the right lender.” Lendi Group also calculates across all of the panels in real time against serviceability as well as policy. “Approval Confidence is a fantastic tool to go through all of that,” Cramb said, “because we’ve not only worked with the lender to understand their policy; the lender is giving us specialised cues for our deals.” He said Lendi had a depth versus breadth strategy for its lender panel, with 28 lenders on its panel, fewer than a lot of other aggregators had. “We believe that’s enough – that’s 99% of customer types that we can deal with, but it allows us to have deep integrations with the lenders.”
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“Brokers play an essential role in helping Australians secure competitive loan options – and it’s terrific to see our government leaders recognise this” Brendan O’Donnell, Liberty Network Services MacLeod said that lately there had been a lot of movement among BDMs. “We’ve had a few issues with BDMs not being up to speed on their own product, and requests for more information or assistance are often not to a standard that you would expect,” she said. ‘Yes, yes, yes, yes, yes’ is the answer. I hate the yeses when I know there’s something behind the scenes that’s telling me this is too easy for a yes, and this means it needs to have a discussion. By transacting on a yes that should have been a no, we waste the lender’s time, our time, the client’s time, and often do reputational damage through no fault of our own.” MacLeod said BDMs who had moved around a lot needed more training. She had experienced a few loan deals where a BDM had said yes, it was on track, and then she was
work together towards an efficient and positive outcome for my client. This is something that I would love to see implemented more broadly by the lenders.” When it came to quality BDMs, Chambers said it all depended on the individuals. He said his brokers would call some BDMs several times and never receive a callback. “The only time we hear from some BDMs is when they’re doing their review for their bonuses and then all of sudden they’re calling us every day. Sometimes our brokers refuse to give the review, and this person says, ‘Why won’t you give me a review?’ Well, you don’t pick up my calls whenever I call you about anything else, so why would I give you a good review?” Reyad said he agreed with Chambers about BDMs, but he had seen models that some
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AGGREGATORS ROUNDTABLE 2022 “We have a technology platform that has a hardwired process to ensure we’re identifying the customers going to the right lender” Brad Cramb, Lendi Group lenders used in which BDM calls were answered within a team, not just by particular individuals, and this worked well. “But [being a BDM] it’s a tough job – there’s so much policy,” Reyad said. “I’ve made it a priority to focus more on understanding lender policy particularly, because in some instances it’s not black and white. I think this is crucial for brokers to do, as educating ourselves more on this will not only help ensure our clients are getting a more optimum and relevant solution to suit their financial needs but also ensure that we [brokers] are doing our part in submitting quality and streamlined loan applications.” Buchanan agreed that policy wasn’t always black and white; it was sometimes grey. “This is a tip for brokers that I’ve been speaking about for 20 years: if you have a conversation with a BDM and they say, ‘we can make that work’, put it in writing to them so at least you’ve got it in a memorandum that’s what the BDM has offered you. So when it comes to challenging it with the credit officer, you’ve got it in writing that they’ve already said yes.” Cramb said Reyad was spot on when it came to the interface with lenders. “For a broker, I can’t imagine how you can keep up with all the policies and all of the different permutations and taking the notes and all the rest of it.” At Lendi Group, brokers don’t do loan packaging on their own. The file is handed to a team that specialise in HSBC or ANZ or whatever lender is involved, so those teams get to know the lender’s specific policies and credit processes. These processes are also being rolled out to Aussie brokers so loan applications come through one central point. “Reworks currently in the industry are anything north of 40%,” Cramb said. “We currently run it at less than half the industry
average. The reason we can do that is because we have both digital and human operational processes that are specialised to create that high efficiency. It’s a different support model. Into the future the industry sees these challenges; I’m not saying it’s the only answer, but it’s one solution.” Chambers said what Cramb was suggesting was that no matter the size of the aggregator, the applications should land in one spot. “It should be a standardised process that’s scalable, right? So even if you have five people in an office and two of you are processing, it should be the same standardised process. You might not have that fancy tech that does the credit checks on your behalf, but it should be that same due diligence.” He said there were different aspects to streamlining: BDMs supporting brokers, the
upfront credit work, and the back-end processing of applications. “We’ve got two different teams to do that, some of it onshore, some of it offshore.” Chambers said his biggest frustration over the past year was being unable to get feedback from lenders about who in his processing and packaging teams was doing a great job. “I can’t get visibility from most lenders on any of that rework and application quality data.” Buchanan agreed that aggregators needed data back from lenders. Of the 60 lenders on the SFG panel, only a minority provided those reports. “We can see conversion statistics; we can see the good brokers that are converting well. At a broker level, you’re not getting that data back,” he said. Chambers said CBA and Macquarie Bank were the better lenders when it came to data – identifying how many times applications were touched and how many one-touch approvals occurred, which enabled Shore Financial to provide good feedback to its brokers. “But that needs to be more of an expectation of all lenders to give us that on a quarterly basis where we can actually utilise that and implement it in our business.”
BROKER CONVERSION RATES ON THE UP
81.2% 73.7%
73.7%
Apr 16– Oct 16– Sep 16 Mar 17
75.6%
Apr 17– Sep 17
72.1%
Oct 17– Mar 18
73.6%
73.8%
Apr 18– Oct 18– Sep 18 Mar 19
69.1%
72.2%
69.2%
68.7%
Apr 19– Sep 19
Oct 19– Apr 20– Oct 20– Apr 21– Mar 20 Sep 20 Mar 21 Sep 21
Source: MFAA Industry Intelligence Service Report, 13th Edition, April to September 2021
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AGGREGATORS ROUNDTABLE 2022
“Aggregators have come a really long way from being recognised as a clearing house to actually [being] a valued partner to a broker” Mhairi MacLeod, Astute Ability Group Sale pointed out that ASIC had said the banks had a responsibility to give aggregators that data. It was a hot topic about a year ago, with ASIC asking aggregators, “where’s the data?” “Well, we don’t have that data because we rely on the banks to provide it,” she said. “There was a big push for the lenders to get their systems right to provide the aggregators the data. We’re still waiting.” Buchanan said it was vitally important to remember that the broking industry was only 30 years old, and a lot of progress had been made in the last 10 years. “We’re imperfect, and there’s a lot of changes and innovations still to come.” He said banks and lenders should be providing better data sooner, but they had just gone through COVID, with thousands of people working offshore that they’ve had to bring onshore. “So I admire that they’re moving in the right direction. Do we want it
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sooner? Yes. But I’ll caveat that by saying we are only 30 years old as an industry, and we’re getting better every single day.”
How are you lobbying banks to remove channel conflict for brokers? Chambers said there was some conflict with the banks that didn’t want to support aggregators in improving their processes because they wanted to take back market share. “They don’t want you to become too good at your job.” Sale’s view was that in the past channel conflict was a big deal, but not now. “Whilst you have branches and brokers and the third party, you’re always going to have some sort of channel conflict, but I think it’s improved out of sight,” she said. Buchanan advised brokers to have “as many facts written down as possible”. “We’ve had great success when brokers present channel conflict to us and we’ve got
it in writing. We present it to the bank; they honour the commissions,” he said. “[Channel conflict] is a rarity now.” Buchanan said banks had got better at stopping channel conflict, and it came from the banks’ leadership telling staff at the branches not to take customers off brokers. “When these matters arise, we lobby; we take it to the tops of our lending partners and make sure they know that it’s not on, you can’t steal people’s customers, and largely they’ve been honouring it.” Reyad said there was less channel conflict now. “Personally, when it has happened with me, I write it off and say, ‘well, like every business, if you open up a burger shop and McDonald’s opens next to you, you’re going to lose a little market share’.” Cramb said there were areas that the industry should focus on and lobby on – not the front end of channel conflict but loan discharges. “[Discharges] have gone north of 40 days last year to probably 15 to 20 days now on average,” he said. “It needs to be a lot better than that – the ACCC said 10 days was the standard that the lenders need to work to.” He saw retention as another big issue that was connected to discharges. “We’d obviously like to make sure that there’s parity in the channels, and that should
FEATURES
AGGREGATORS ROUNDTABLE 2022 given us the seal of approval. And once they’ve done that remuneration review and stamped, they can’t take that away from us.” Sale said it was imperative for Labor to say it would not pursue a remuneration review – “like Blake says, we need a rubber stamp”. For Cramb, self-regulation in the industry had validated that there was no need for a review. “We need to continue that – it’d be great to formalise that. I just don’t think there’s any ongoing into-perpetuity sort of guarantees. “What you’ve seen in the last five and eight years has been a remarkable effort by the industry to do that self-regulation. That type of validation is there, but we need to continue it.” Sale said the aggregators were working together to ensure that the broking industry was protected. “The royal commission changed the whole dynamics of our industry be the overall push from our point of view … discharge should be two days.” Chambers said he would be the outlier on channel conflict. “I don’t think it’s dissipated at all. I’ve had some serious issues in the last year or so with channel conflict. Last year, so many people would go into a branch, and we’d be told our SLAs were two or three weeks before they pick up the application; they go into the branch, and they say, ‘we’ll do it in two days’, and we lost a lot of business that way.” Chambers said he was dealing with two cases of channel conflict right now – one in which he got the major bank to pay the commission. “They had told our clients we can do this deal, but we can’t do it through the broker – they don’t even hide it.”
What does the decision to drop the broker remuneration review mean for the industry? O’Donnell said the government’s move to discontinue the review was fantastic news for the industry. “We know that brokers play an essential role in helping Australians to secure competitive loan options, and it’s terrific to see our government leaders recognise this.” He said brokers had embraced the changes introduced after the royal commission and continued to increase their professionalism
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“I can’t get visibility from most lenders on rework and application quality data. They need to give us that information on a quarterly basis so we can implement it in our business” Theo Chambers, Shore Financial and improve their services. “This is clearly reflected in the most recent industry survey, with the broker Net Promoter Score far exceeding the service the banks have provided.” Buchanan said broker behaviours had been validated by the decision to drop the review. “We’ve implemented BID; we were largely already doing BID anyway. Everything else has met the checks and balances – our distribution market share has grown to 60% and above, and it’s well on track to 70%.” He thought it was great that the government had dropped the remuneration review, but it meant that brokers didn’t get the rubber stamp, and a review could be revived by a future government. “It just means there’s nothing to see here; we’re happy to let it lie – whereas if we did go through a review, I’m extraordinarily confident that they would have
– we banded together and said we’re not going to cop this at all … to this day there’s still a group of us aggregators through the FBAA really ensuring that we keep these politicians honest.” MacLeod added that aggregators had come a long way, proving to brokers that they weren’t just clearing houses. “I can validate with 24 years in the industry, I think aggregators have actually come a really long way from being recognised as a clearing house to actually [being] a service provider [that’s a] valued partner to a broker.” MacLeod explained that she had changed aggregator groups because she wanted a service provider, and she believed there would be a lot more movement in that space in the next 18 months as brokers sought out aggregators that offered better systems and support.
“I’ve made it a priority to focus more on understanding lender policy particularly, because in some instances it’s not black and white. I think this is crucial for brokers to do” Mario Reyad, Expert Mortgages Buchanan said aggregator leaders had spent a lot of money out of their own pockets, lobbying politicians on behalf of brokers. “I spent countless hours in Canberra in Parliament House lobbying politicians, as did a number of people in this room, and brokers don’t always see that. Like then, and into the future as matters need addressing, we will continue to go into battle on behalf of our great industry and members to achieve the best possible outcomes for the future of the broker offer and their clients.”
The latest MFAA report shows that the proportion of female brokers has fallen to 25.6% – the lowest figure yet. What are you doing to encourage more women to become brokers? “Being a woman and co-founder of a femaleowned aggregator, this question gets asked over and over, year upon year,” Sale said. “I can’t see the stats shifting too much from this; they haven’t for years, so I think this question should stop. I really do. What I’d like to see us focusing on is the women in our industry that are doing amazing things now, because that is a component that will motivate more women to join our industry.” O’Donnell said 25.6% was a disappointing statistic and one that the industry needed to work together collectively to change. “At Liberty and LNS, we have several programs dedicated to fostering diversity within our business, and for LNS, recruiting more women into broking is a key strategic focus,” he said. “Over the past year, we have made some good progress in this area through several important initiatives, including our partnership with Work180’s female recruit-
ment platform. We have also launched our Adviser Assistance Program to support advisers with the challenges and demands of their work and personal lives. And we run comprehensive diversity and inclusion training for all members of our business.” MacLeod said the issue was not about losing female brokers; it was about retention. “Where we lost most of these women was in the last two years. COVID is going to be a natural cull, because who is predominantly in the household looking after children? My husband’s a fly-in, fly-out [miner]. I’ve got two teenage boys, but does he stop his job to come home because of COVID? No. I’m home, I’m female.” She said it was just an expectation that
women would remain at home, which she labelled “an unconscious bias that none of us can avoid, yet with continued awareness can change over time”. “Being female, whether you have children or not, your responsibility is obviously clearly in the home, according to most people. So I think there was going to be a natural fallout anyway during COVID,” MacLeod said. Chambers agreed that female participation in the workforce was not an industry issue but a society issue. “I don’t think women have a disadvantage in our industry,” he said. “I think they have an advantage over my male brokers because society, especially in financial services, will trust a woman more than a man.” Cramb said, “I see broking as a viable opportunity for women. The relative flexibility broking affords can make it somewhat easier to find balance and schedule work around life’s other commitments. “Of our new recruits last year, 43% were women, well above industry average. We’re committed to fostering diversity and inclusion in our network and removing barriers of entry for women into the industry.”
NATIONAL AVERAGE BROKER REMUNERATION, 2016–21 $189,000 $186,000 $183,000 $180,000 $177,000 $174,000 $171,000 $168,000 $165,000 $162,000 $159,000 $156,000 $153,000 $147,000 $144,000 $141,000 $138,000 $135,000 $132,000 $129,000 $126,000
$188,046
$161,894 $151,772 $142,440
$141,329 $133,406 $132,800 $132,793 $133,365 $128,709
Apr 16– Sep 16
Oct 16– Mar 17
Apr 17– Sep 17
Oct 17– Mar 18
Apr 18– Sep 18
Oct 18– Mar 19
$131,402 Apr 19– Sep 19
Oct 19– Mar 20
Apr 20– Sep 20
Oct 20– Mar 21
Apr 21– Sep 21
Source: MFAA Industry Intelligence Service Report, 13th Edition, April to September 2021
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SPECIAL REPORT FEATURES
BROKERS ON AGGREGATORS
2022
BROKERS ON AGGREGATORS MPA’s annual survey reveals how brokers ranked Australia’s aggregators in 2022, across areas such as commission payments, IT and CRM support, lending panel quality, compliance support, marketing support and more
THE MORTGAGE broking industry is not a profession for worrywarts. Over the last three years, there were certainly a variety of elements that kept brokers awake at night at around the time that MPA sent out its annual Brokers on Aggregators questionnaire. There was the royal kerfuffle over the royal commission in 2019, then the scary first few months of 2020 with the ‘novel coronavirus’ aka COVID-19 (remember when it was just the OG version of the virus straight outta Wuhan and only classical linguists cared about letters of the Greek alphabet?). And last year, brokers were chewing their nails over a tsunami of new IT systems essential to doing business remotely. Thankfully, we are past all that now. The banking royal commission has been put to bed on a pile of 20 mattresses like the princess and the pea, we are all familiar with Alpha, Delta, Omicron and its bratty
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offspring, while digital signatures, online CRM systems and the 39-minute Zoom meeting are second nature to even the most tech-phobic of mortgage brokers. So, what are the main concerns in 2022? The overall theme seems to be a fading of concern around IT as people get more comfortable with tech solutions, and a return to worrying about getting paid the right amount at the right time. Broker satisfaction with aggregators as measured by their propensity to jump ship to a rival is at the same level as 12 months ago. Aggregators have clearly competed hard to keep their brokers happy during a year in which training in newfangled systems was intense for many. Only 7% of brokers surveyed said their aggregator had not done enough for broker development. But this was an increase from 4% last year and is a possible indication that some feel like they are still ill-equipped to
handle this brave new broking world. While concern about getting paid being at the top of the list of priorities could be interpreted as brokers apprehensively eyeing what rising interest rates will mean for markets, another take is that we are simply back to more familiar problems and a more even keel than in the last three years. One clue that this may be right lies at the bottom of the list when it comes to services from aggregators. Languishing in last place for the second year running is lead generation, with a significant gap to the second-to-lastplaced white label offering. The cementing of lead generation as the service brokers are least concerned about aggregators providing may suggest that they don’t expect extra leads and most brokers feel generally comfortable about their business prospects. Read on as we dive into each of the categories and reveal the results in more detail.
TYPICAL RESPONDENT
Gender Aged between 46 and 55
Male
77.61%
Female
22.14%
Other
0.25%
Years in the industry
Resides in Vic (34%), NSW (30%) or Qld (19%)
METHODOLOGY
Less than 2 2 to 5 6 to 10 Over 10
11% 18% 19% 52%
$60m+ 16%
In this year's survey, brokers were asked to rank their aggregators across 11 categories: accurate and on-time commission payments; IT and CRM support; quality of lending panel; communication with brokers; BDM support; compliance support; training and education; additional income streams; marketing support; white label offering; and lead generation. Brokers could rank their aggregator with a score out of five in each category. Due to the varying sizes of aggregator groups and the disparity in the number of respondents per aggregator, only those that achieved a response rate of at least 10% of brokers for each aggregator were included in the final list. MPA also asked brokers a series of questions relating to their aggregator's service and other needs, but these did not have an effect on the overall score.
$40,000,001–$60m
10%
$0–$10m
21%
Settlement volume 26% 27%
$10,000,001–$20m
$20,000,001–$40m
What services are most important to brokers? Accurate and on-time commission payments Quality of lending panel IT and CRM support Compliance support Communication with brokers BDM support Training and education Additional income streams Marketing support White label offering Lead generation
Performance indicator ranking
4.756 4.710 4.650 4.645 4.515 4.495 4.389 3.913 3.737 3.576 2.997
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FEATURES
BROKERS ON AGGREGATORS
BROKERS’ TOP PRIORITIES Loyalty remains unchanged, but broker concerns are shifting from tech support to payments BROKERS ARE loyal to their aggregators, with little change seen from last year in their inclination to jump ship to a rival. The percentage of brokers who are extremely unlikely to change aggregators in the next 12 months remains roughly the same as in 2021, at 78%. There is a slight decrease at the other end of the scale, with the number of those extremely likely to change at 3% this year versus 5% last year. The top reason that brokers picked in 2022 for contemplating any change in aggregator was ‘poor accuracy and timeliness of commission payments’. This was the second-to-top reason in 2021, suggesting that payment is now being seen as a higher priority by some brokers, perhaps as the economy faces new challenges. On the other hand, the top reason for
HOW LIKELY ARE YOU TO CHANGE AGGREGATORS IN THE NEXT 12 MONTHS?
Extremely likely
Extremely unlikely 78%
3%
Likely 4% 6%
Neutral
9% Unlikely
TOP 5 REASONS TO LEAVE YOUR AGGREGATOR Poor accuracy and timeliness of commission payments
60%
Poor IT and CRM support
57%
Poor BDM support
51%
Poor compliance support Poor quality of lending panel
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46% 43%
FEATURES
BROKERS ON AGGREGATORS
HIGHLIGHTS: MONEY AND IT SUPPORT (AGGREGATORS WITH >600 BROKERS)
Accurate and on-time commission payments
Finsure
Loan Market
Connective
Finsure
outsource Financial
outsource Financial
Connective
Additional income streams
Loan Market
IT and CRM support
Loan Market
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contemplating a change in the previous two years – poor IT and CRM support – was relegated to number two this year. Commission payments were ranked as the most important aggregator service again in 2022, followed by quality of lending panel, with IT and CRM support in third place, after coming in second last year. The winner of the ‘accurate and timely payment of commissions’ category among aggregators with over 600 brokers goes to Finsure, just edging out Loan Market in a close race. Connective took bronze in this category. For aggregators with under 600 brokers, the top spot went to National Mortgage Brokers, followed by Liberty Network Services and MoneyQuest. Comments around the issue of commissions show that some brokers continue to have grievances in this area, with multiple responses asking for higher commission splits, automatic commission payments, more frequent commission payments or more user-friendly commission payment systems. “They are very aggressive when you question anything about missing commissions and consistently blame the broker for it,” one broker said. While grumbling over commission splits remains evident, the slide in the number of brokers who are very happy with their split appears to have paused. In 2022, 64% said they were ‘very happy’, which is the same number as in 2021. The proportion of brokers who are ‘somewhat happy’ remains roughly the same at 33%. In terms of annual settlement value, 21% of brokers settled less than $10m, 26% between $10m and $20m, 27% between $20m and $40m, 10% between $40m and $60m, and 16% over $60m. The ascendence of commission payments and drop in rank of IT and CRM support across both service importance and reason for contemplating a switch of aggregator
may reflect the strides that aggregators have made during the pandemic in providing better tech support. For example, one broker said the aggregator they used was very proactive in generating loan products in the fintech space and with digital lending. “These will be the battleground in coming years, and the preferred channel for the next generation coming through,” the broker said. But brokers still see room for improvement in IT and CRM support. Many commented on the need for simpler systems that were based online, although some noted that their aggregators were in the process of rolling out such steps. Among aggregators with over 600 brokers, the reigning champion for IT and CRM support over the last two years held on to the top spot but in a nail-biting photo finish. Loan Market edged out outsource Financial and Connective with a miniscule 0.02% difference in rating between first place and third. For the smaller aggregators with under 600 brokers, the gold medal for IT and CRM support went to MoneyQuest.
HOW HAPPY ARE YOU WITH YOUR AGGREGATOR’S FEE/COMMISSION SPLIT?
HIGHLIGHTS: MONEY AND IT SUPPORT (AGGREGATORS WITH <600 BROKERS)
Accurate and on-time commission payments
National Mortgage Brokers
Liberty Network Services
MoneyQuest
Liberty Network Services
National Mortgage Brokers
Liberty Network Services
National Mortgage Brokers
Additional income streams
MoneyQuest
IT and CRM support Very happy
Somewhat happy
Not happy
64% 33% 3%
MoneyQuest
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FEATURES
BROKERS ON AGGREGATORS
WISH LISTS AND FRUSTRATIONS Brokers reveal their dream lending panel and pull no punches on compliance matters THE QUALITY of an aggregator’s lending
ARE HIDDEN COSTS IMPOSED BY YOUR AGGREGATOR A PROBLEM?
panel is ranked as the second-most-important aggregator service in 2022 and the fifthmost-likely reason for contemplating any switch to a rival. Loan Market won gold for its lending panel among aggregators with over 600 brokers, followed by Finsure and Connective. Among aggregators with under 600 brokers, the top spot went to MoneyQuest, while Australian Finance Group and National Mortgage Brokers won silver and bronze. Many brokers said they were satisfied with the number of lenders on their aggregator panel, but having more was a
Problem
4%
14%
82%
Major problem
Not a problem
MAIN OBSTACLES TO LEAVING AN AGGREGATOR Lender reaccreditation
56% 47%
Data migration/IT issues 37%
Lack of time
35%
Clawbacks/trail issues 17%
Contractual obligations
50
Upfront commission issues
12%
Loss of marketing services
12%
Licensing issues
10%
Loss of back-office services
10%
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common suggestion for boosting broker share of the lending market even higher. When asked which lenders they would like to see added to their panel, the most frequently mentioned financial institutions on the wish list were HSBC, Liberty, 86 400 (now ubank), Bendigo Bank, Bank Australia, Newcastle Permanent Building Society and Athena Home Loans. Compliance support moved down to fourth place from third on brokers’ priority list and remained at fourth on the list of hypotheticals for why a broker might leave an aggregator. While compliance appeared to be less of a concern than last year, some of the most revealing comments focused on this issue. One broker wished for “better feedback on compliance – instead of just sending a note to say an area needs improving or fixing”.
TOP 6 AGGREGATORS BROKERS WOULD PICK IF THEY HAD TO CHANGE TOMORROW
Connective 18%
Loan Market 11%
Australian Finance Group 11%
Finsure 7%
“It is becoming increasingly difficult to place deals via the broker channel with current compliance and regulation” Others voiced concerns around the cost of compliance as well as its complexity, asking for help from aggregators in this area. “I feel that their current compliance offering is not as good as it should be,” said one broker. Another said, “It is becoming increasingly difficult to place deals via the broker channel with current compliance and regulation, and brokers needing to complete due diligence well in excess of what the lenders themselves require.” Compliance was seen to be taking valuable time away from looking after clients, and brokers urged aggregators to make systems
National Mortgage Brokers 4%
Specialist Finance Group 4%
HAS YOUR AGGREGATOR DONE ENOUGH TO SUPPORT YOUR PROFESSIONAL DEVELOPMENT THROUGHOUT COVID-19?
Definitely
Probably
Probably not
71%
22%
7% www.mpamagazine.com.au
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FEATURES
BROKERS ON AGGREGATORS
HIGHLIGHTS: LENDING PANEL AND SUPPORT (AGGREGATORS WITH >600 BROKERS) Quality of lending panel
Loan Market
Finsure
Connective
outsource Financial
Connective
Connective
Finsure
outsource Financial
Connective
Compliance support
Loan Market BDM support
Loan Market Marketing support
Loan Market
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on this front as simple as possible. “Further streamlining the loan application and compliance process [would] free us up further to do business,” said one broker. Several also asked for more pressure on government to remove red tape in this area. Faith in aggregators appears to have taken a hit in 2022, with a drop in those saying hidden costs are not a problem to 82% from 90% last year. Those who said it was either a major or a minor problem rose from 10% to 18%. Once again, concern about hidden costs suggests worries about money in general may be starting to rise. Among those who said hidden costs were a problem, several reasons were given. One broker said they never heard from their BDM, and the only contact was “email blasts from our aggregator, which is content on patting themselves on the back”. Another cited lack of meaningful consultation about setting up another franchise in the same area. “I would confidently say that my aggregator has gone out of their way to undermine my business by establishing a new franchise within my commercial space without any communication to me that they were planning to do this,” the broker said. “Rather than supporting long-standing businesses within the group, they are more about feet on the ground and have no genuine interest in looking after the longestablished businesses.” Asked what the main obstacles would be to leaving their aggregator, the majority of brokers pointed to issues related to lender reaccreditation. This is a major change from last year when reaccreditation was lumped into the ‘Others’ category as an also-ran. The top obstacle last year – data migration and IT – was relegated to second, with lack of time said to be the third-biggest obstacle. When it came to which aggregator brokers would pick if they had to change tomorrow, the top choice this year was Connective at 18%, followed by Loan Market and
FEATURES
BROKERS ON AGGREGATORS
HIGHLIGHTS: LENDING PANEL AND SUPPORT (AGGREGATORS WITH <600 BROKERS) Quality of lending panel
MoneyQuest
Australian Finance Group
National Mortgage Brokers
National Mortgage Brokers
Liberty Network Services
Compliance support
MoneyQuest
BDM support
MoneyQuest
National Mortgage Brokers
Liberty Network Services
Liberty Network Services
National Mortgage Brokers
Marketing support
MoneyQuest
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Australian Finance Group, both at 11%. Connective was praised by many brokers for its flat-fee model and easy-to-use CRM system. Word of mouth also seems to factor strongly for Connective, although some reasons may be more sentimental. “My wife is currently with them, and other brokers always have positive feedback and praise for them,” said one broker. Loan Market was praised for its BDMs as well as its leadership, with one broker
One broker said they never heard from their BDM, and the only contact was “email blasts from our aggregator” saying “the CEO was a very good advocate for the broker industry during the fallout from the royal commission”. Australian Finance Group was cited for its broker support, broad lending panel and commission split. Finally, despite the increase in business for brokers over the course of the pandemic, it seems that even the finance industry has become a bit jaded with all things COVID-19. Brokers’ perceptions of the support received from aggregators for professional development during the time of COVID slipped to only 71% saying their aggregator had ‘definitely’ done enough, versus 80% last year. Those saying they had not rose from 4% to 7%. Taking an optimistic view, this may simply show that brokers are ‘people’ people, and professional development always benefits from in-person interaction in relaxed social settings.
14 OCTOBER 2022 • THE FULLERTON HOTEL SYDNEY
THANK YOU FOR YOUR NOMINATIONS Australian Broker and Mortgage Professional Australia would like to thank their readers for the incredible response to the call for nominations for the 21st annual Australian Mortgage Awards. Excellence awardees will be announced in August. Winners will be selected by an esteemed, independent judging panel and revealed during the celebratory awards show on 14 October. BE PART OF THE CELEBRATION For table reservations and sponsorship opportunities, contact awards@keymedia.com.au.
australianmortgageawards.com.au #AusMortgageAwards
Event Partner
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FEATURES
BROKERS ON AGGREGATORS
WHAT YOU'RE SAYING With broker market share of residential loans at record levels, MPA asked brokers whether their aggregator was doing enough to lift their share even higher
“There should be more advertising from all aggregators to make the public aware of the advantages of engaging with a broker.”
“I feel aggregators’ most important role is dealing with our regulatory bodies and advocating for us.”
“Lobby on behalf of the brokers that the cost of originating a loan has risen by at least 40% but commissions paid by the banks have not increased at all.”
“It is not an aggregators job to increase share, it is an industry job.”
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“They're doing so much already that I don't have the time to take up all the great offerings from marketing support, recruitment, training, support services, etc. There is so much available, and I have barely scratched the surface.”
“Obtaining business is not the issue – we have more enquiries with self-generated leads than we can handle. The main obstacle to writing more business is the time spent on rectifying bank errors.”
“Lobby more with government around key broker issues – primarily channel conflict and clawback policies.”
“Demand the removal of all clawback from all lenders. Promote the lenders who don't apply this barbaric commercial practice.”
“Technology to make touchpoints with existing clients more seamless.”
“Look at growth markets and structure knowledge base with changing demands.”
“Overall, the industry needs better consumer awareness. That said it is becoming increasingly difficult to place deals via the broker channel with current compliance and regulation, and brokers needing to complete due diligence well in excess of what the lenders themselves require.”
FINAL RESULTS MPA presents the final ranking of Australia’s top aggregators in 2022 based on brokers’ votes across 11 award categories
AGGREGATORS WITH >600 BROKERS
2nd
1st
3rd
8
3
1
5
1
1
1
5
GOLD
SILVER
GOLD
SILVER
BRONZE
GOLD
SILVER
BRONZE
AGGREGATORS WITH <600 BROKERS
2nd
1st
3rd
8
2
1
1
5
4
2
2
6
GOLD
SILVER
BRONZE
GOLD
SILVER
BRONZE
GOLD
SILVER
BRONZE
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FEATURES
RECRUITMENT
How to hire the best remote workers There’s more to the post-pandemic labour revolution than just working from home, says Roxanne Calder. It’s also about people working for companies that are in a different country altogether
THE PANDEMIC had us all doing acrobatic feats. There was a swift somersault to remote working, which, for most of us, meant working from home. The common thought was that we would soon be back in the office when “the pandemic is over”. Not so, said Delta and Omicron, and remote working established itself as our new working norm but with a twist. Home can now be 12,000km away as we work from anywhere and, often, like in the gig economy, at any time. If you’re still reckoning with the concept of remote work, consider the statistics. After just one year, there was an 87% increase in people working remotely compared to pre-pandemic, and 56% of companies around the world offered some form of remote working. What of hiring for these remote positions? Pre-pandemic practices won’t suffice. It requires a backflip to reboot recruitment strategies. Remote recruitment must be innovative, entrepreneurial, fast, and must
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factor in retention. Here are some key tips for getting it right.
Remain realistic Remote recruitment offers a seismic opportunity to source talent further afield, including in emerging markets. However, it is still competitive, and regardless of the international sourcing pool, you can’t ask for the world.
of tasks, etc. Remote working job descriptions amplify and concisely speak of requirements, communicating clearly what success now looks like. New hires may be from different cultures,
Sensitivity, understanding, reserving judgment, and being attuned to your own cultural frame of reference can avoid misinterpretation and missed hiring opportunities Revisit job descriptions Business models have changed, and that means so too must job descriptions to harmonise with business objectives. Abandon dull job descriptions, bullets, lists
and English may not be their first language. Be creative in conveying the job description so the job is fully understood. A video of the job description as well as a written one may ensure this. Such strategies will improve retention.
ties. Understanding people’s living conditions and family situations will assist with strong engagement and future retention. We need to know people’s stories better than ever before. Design interview questions that are specific to job descriptions and success markers. Suppose accountability and responsibility are now higher requirements – ask questions to identify these attributes. Use different scenarios to test critical attributes. If flexibility of hours is a criterion, book interviews that require the interviewee to be flexible. Panel and multiple interviews provide a broader scope for accurate assessment. The advantage of our remote world is convenience. Use this to conduct interviews succinctly and efficiently. Involve colleagues who can provide different perspectives, such as a designated observer who can take notes on all aspects of the interview, for example on body language. Introducing multiple people assists with the engagement of your potential new hire. And remember, it is two-way!
Gain efficiences from technology Depending on recruitment volume, you may need a recruitment-specific customer relationship management system to track communication and traction. Artificial intelligence is valuable for efficiently screening and identifying talent as well as reducing the impact of human bias. However, as AI uses algorithms, it can also unwittingly make the problem worse by baking in and deploying biases at scale in sensitive application areas. Use tools such as LinkedIn to verify résumé details and common networks.
Refine job ads Choice job ads are attractive, alluring and not necessarily too specific. The job ad is not a job description. It should be open enough
to encourage applications and not be used to screen candidates out. Research appropriate job boards according to industry and country. In the current market, there is no guarantee a job ad will source suitable candidates, so, concurrently, headhunt or use a recruitment agency with the knowledge and reach to help you find them.
In 1969, before it became our reality, the idea of remote work was predicted by Allan Kiron, who wrote about how computers and new communication tools could change life and work. And here we are now. What if we had clued into what Kiron was advocating 50 years ago? Perhaps we would have been well ahead of the curve. Don’t let the attachment to habitual norms and pre-pandemic/prehistoric thinking and recruitment methods hold back the future potential of your business.
Use virtual interviews wisely Enlightened virtual interviewers consider culture and language. For example, in some cultures direct eye contact is frowned upon, and yet in Western culture it is expected. Sensitivity, understanding, reserving judgment, and being attuned to your own cultural frame of reference can avoid misinterpretation and missed hiring opportuni-
Roxanne Calder, author of Employable: 7 Attributes to Assure Your Working Future, is the founder and managing director of EST10 – one of Sydney’s most successful administration recruitment agencies. Calder is passionate about uncovering people’s potential and watching their careers soar. For more information, visit www.est10.com.au.
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FEATURES
EMPLOYEE RETENTION
Motivating staff to stay on board More than a fifth of all professionals have changed jobs in the last year, so employers need to learn what they can do to ensure workers are fulfilled and want to stick around, says Rowena Millward
THE GREAT RESIGNATION was one of the biggest after-shocks of COVID-19. While during the early days of COVID-19 employees were grateful to keep their jobs, in the postpandemic era the market has seen massive growth in resignations. ABS statistics show that in the year ending February 2022, 9.5% of employed people changed jobs. Among professionals, the proportion was as high as 22%, despite the overall market retrenchment rate of 1.5% being the lowest on record. It seems contradictory that at a time of great change and job insecurity, more people than ever are resigning. So, what’s behind this trend? What are people really looking for?
Lockdown created a mindset shift – at scale One of the biggest mindset shifts during COVID-19 came from the disruption of our pre-pandemic lives. Between juggling work, families, inevitable curveballs and everyday life, there was little time to stop and consider what we actually wanted. Lockdown led to people asking questions such as, “Am I satisfied with my life choices? Do I have the right balance for me across work, family and life? Is this what I really want?”
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Adding to this were high levels of burnout, with a 2021 study reporting that 77% of employees in Australia and New Zealand had experienced burnout at least once in the prior 12 months, reinforcing the conviction that their life choices were not right. So the burning platform for change was there, and more people responded by resigning, but do people really know what they want? And do employers really know how to help? Before we can answer that, we need to recognise the seismic shift in how people perceive work, and understand their different motivations pre- and post-pandemic.
The new employee motivation While engagement is still the accepted measure of employee health today, employees’ needs and expectations have evolved. The pre-pandemic model of engagement as the driver of motivation set the employer up as responsible. Inherent in this model was the reality that work and life were largely separate, and that most work happened in a controlled office environment. Employers focused on how benefits, skills development and career progression would engage and motivate employees. In that environment, employees responded positively to engagement initiatives. Post-pandemic, however, the focus and ownership has shifted. Employee motivation is based on work and career as part of a wholelife approach. They are more than willing to be responsible for outcomes but not how they deliver them – they want individual flexibility as to how they do that. They expect employers to empower them (not just engage them) as they look to navigate their whole life, not just their career. If employers choose not to support them, then there are plenty of different options to consider: new jobs within their current industry or even new careers outside of it. To summarise using an old expression, people are now working to live, rather than living to work.
Employees expect employers to empower them (not just engage them) as they look to navigate their whole life, not just their career What can leaders do to improve retention? Flexibility within a framework and a wholelife approach is required to meet the needs of both individuals and organisations. By helping employees define and then implement work by design, you will empower them and build commitment and loyalty. Some tips for doing this: • Provide employees with education that empowers them to identify what’s important in their life. Work is part of it, but so is family, community and personal growth. For example, what are their personal values and priorities over the next 12 months? How can work support their personal goals? Is the work culture inclusive, allowing the whole person to thrive? • Ensure your workplace has the right technology and culture to empower hybrid work. Flexibility is an expectation, but a major pain point is ensuring that flexible working is easy to implement so employees are still set up for success. Talking it but not empowering it will create frustration and be seen as disingenuous. • Provide leaders with the education and tools to have the right conversations with their employees. If an employee resigns without any prior conversation, then this
is a sure sign that managers are not encouraging employees to have the right conversations, and upskilling is required. • Ensure the voice of the employee is visible and actioned. In a high-change environment, qualitative feedback will be more valuable, as your previous engagement surveys may not be asking the right questions for now. • Engage employees to co-create solutions. The future blueprint will require flexibility within a framework. Make them part of the future solution by collaborating on how their needs and the company’s needs can be met. While the pandemic raised the question ‘What do I want in my life?’, employees don’t necessarily know the answer. Don’t hide from this question; help them answer it, and empower them to live it.
Rowena Millward is the author of Uncomfortable Growth: Own Your Reinvention and a global leader in business and personal growth. After 25 years working in Top 500 companies, she now provides consulting and capability services to many of the world’s most admired brands. Her full white paper, Blended: The Post COVID Rules on How We Work, Lead and Live, can be found at macmorgan.co/resources.
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BROKERAGE INSIGHT
Top customer service drives growth A passion for property and an ability to form great relationships with clients has helped Taku Ekanayake build a successful career as a broker after just five years in the industry IT’S NOT uncommon to hear of mortgage brokers who started out as property investors. Taku Ekanayake, who set up his own Sydney brokerage, Kin Financial, in 2017, embarked on his career this way. He says his journey started in 2015 when he was building a property investment portfolio. “My mortgage broker at the time, Michael Xia of Mortgage Channel, had mentored me on my investment journey,” says Ekanayake.
cate and build meaningful relationships with my clients,” he says. “I believe broking and business is all about building and maintaining meaningful long-term relationships.” Ekanayake says his innate passion for property and investing has helped him create such strong relationships with his clients and stakeholders. During his first 18 months as a mortgage broker, he moved from Sydney to the Gold
“SFG’s software and support from their team have been invaluable, and we wouldn’t have been able to more than double in volume as effectively if it wasn’t for their help” “The impact he made on my growth and development in understanding investing, property fundamentals and finance really sparked my own desire and passion to build my own mortgage brokerage and deliver a high level of service based on the guidance Michael had given me.” Ekanayake says he was fortunate that Xia offered his time to mentor him as he built his brokerage. Prior to setting up Kin Financial, he didn’t have any formal industry experience or qualifications in finance or mortgage broking. “I had a career in various sales roles in the tech industry. I believe my previous roles in various sales positions helped me communi-
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Coast where Xia lived and worked (at the office of his mentor, Rolf Latham of ASAP Financial) so he could be mentored by Xia.
He says the opportunity to be able to watch and learn alongside some of the industry’s best operators was invaluable, and it helped accelerate his development as a broker. “It was an immersive experience working seven days a week averaging over 80-hour work weeks. We all lived and breathed property and mortgage broking – I liken it to a Silicon Valley of mortgage broking where we were all just hustling to build our respective businesses in a collaborative environment.” In his first six months of broking, Ekanayake says he leveraged the power of traditional media such as the Sydney Morning Herald, news.com.au, the Australian Financial Review, Domain and 2GB, as well as podcasts. “I was able to share my investing journey of building my own residential portfolio across multiple nationwide platforms for free … my first 70 to 80 clients which I converted came through these free platforms.” Ekanayake says most of his initial clients were young professionals who were looking at
WORKING ON THE BUSINESS Taku Ekanayake says his goals for Kin Finance over the next 12 months include hiring a dedicated post-settlement and compliance officer and an operations manager to help improve workflows and daily operations. “Currently, there are inefficiencies in our back-end processes which can be improved to enable us to provide a more streamlined approach for our staff and clients,” he says. “Streamlining such bottlenecks will ultimately enable us to write more volume and provide a better customer experience.” In the next three years, Ekanayake wants to have three to four brokers writing their own loans and bringing in their own leads. “This will allow me to work on the business and not in it.”
KIN FINANCE AT A GLANCE Owner: Taku Ekanayake Location: Market St, Sydney Year founded: 2017 Services offered: Home loans, investment loans, SMSF loans Number of employees: 3
“I believe broking and business is all about building and maintaining meaningful long-term relationships” purchasing their first or second property. “I think my story resonated with this demographic. However, over the past couple years, the demographic has expanded as our clients have referred their family and friends.” By focusing on a high level of customer service, the brokerage now operates on a strong word-of-mouth model, says Ekanayake. Ekanayake is the sole broker at Kin Financial, which offers home, investment and SMSF loans. He says he chose the name Kin because “our clients are like our extended family”. Also, ‘kin’ means gold, or money, in Japanese, and Ekanayake has Japanese heritage.
Ekanayake employs three support staff – Janine, Mel and Kei – who assist with the dayto-day operations of the brokerage. “They are invaluable to the business, and they help free up my time so I can focus on building and maintaining relationships with our new and existing clients. “The goal by the end of this year is to add two new additions to the team – a dedicated staff member for post-settlement and compliance, and an operations manager to assist with workflows and managing backend support.” Looking back at the last two years, Ekanayake says the market has undergone
incredible growth, and Kin Financial’s business has doubled in volume. “For this current financial year 2022, the business would have settled over $100m.” Just as the first COVID lockdown hit, the brokerage made the decision to change aggregators to Specialist Finance Group. “It’s been one of the best business decisions I have made. SFG’s software and support from their team have been invaluable, and we would not have been able to more than double in volume as effectively if it wasn’t for the help of the team at SFG.” Property market growth has led to big increases in equity for Kin Financial customers, enabling them to refinance and access significant equity to upgrade their homes and/or continue on their investing paths. “We’ve had an influx of first home buyers; however, our bread and butter has remained investors,” Ekanayake says. It’s an exciting time for the industry, he adds. When he set up the brokerage in 2017, mortgage brokers were settling about 50% of home loans. “Today, almost 70% of loans are written by mortgage brokers, with the trend continuing to increase.” Ekanayake says the scrutiny the mortgage industry has been under since the royal commission has only instilled in clients more trust and confidence in brokers. “However, it’s not a time for us to get complacent, with interest rates increasing and many markets predicted to cool off,” he says. “As a business owner, my goal is to buck the trend and continue to serve more clients and grow volume in a softening market.”
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PEOPLE
OTHER LIFE High on Ba ra cz’ travelling list is a retu rn to Japa n with the fa mily a nd a trip to Costa Rica
TELL US ABOUT YOUR OTHER LIFE Email antony.field@keymedia.com
ONE BROKER’S FLIGHT TO SUCCESS When she’s not on the ground working as a broker, Marita Baracz takes to the skies as a flight attendant MARITA BARACZ is a mum of two with a dual career as a broker and a Virgin Australia flight attendant. Travelling the world wasn’t initially high on Baracz’ list of goals while growing up in Dalby, Queensland. After deferring her business degree, she began her aviation career at Virgin Blue in 2004, which took her on a path of adventures and new experiences. Her international lifestyle saw her live in three different countries and visit 30. This was halted, however, by COVID-19. It was then that Baracz’ lifelong personal interest in finances and property led her to the broking industry and Crew Financial. Baracz still flies part-time on domestic routes, is a full-time mortgage broker, and manages to be present and available to her two young children. “COVID, especially, has highlighted that life is so much more than money and belongings,” she says. “The true wealth in life comes from experiences and relationships, and I feel that travel makes you appreciate and understand your privilege.”
6,000
Number of flights Marita Baracz has flown 64
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18
Number of years she’s been a flight attendant
30
Number of countries Baracz has visited
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