CO BR NS OK UM ER ER S SO 20 N 17
MPAMAGAZINE.COM.AU ISSUE 17.5
ALL CHANGE HERE Australia’s leading non-majors, top-rated banks and the MFAA’s CEO discuss ASIC, remuneration and what it all means for your business MIKE FELTON New MFAA CEO on ASIC’s review
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NON-MAJOR BANK ROUNDTABLE On investors, turnaround and more
BANKS ON BROKERS Your top five on the year ahead
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MAY 2017
CONNECT WITH US Got a story or suggestion, or just want to find out some more information?
CONTENTS
twitter.com/MPA_Australia facebook.com/Mortgage ProfessionalAU
UPFRONT 04 Statistics
As calls for a solution for housing affordability intensify, we look at the numbers behind it
06 Head to head
Three brokers on when banks should be able to withdraw a broker’s accreditation
18 COVER STORY
NON- MAJOR BANK ROUNDTABLE
Australia’s leading non-majors pull no punches in a lively discussion about investors, turnaround times and interest rate hikes
08 News analysis
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SPECIAL REPORT
BANKS ON BROKERS
Following on from our Brokers on Banks survey, the top five banks – as chosen by you – explain how they’re raising their game this year
The new MFAA CEO responds to ASIC’s remuneration review, including highlights of ASIC’s proposals
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12 Opinion
Domain’s chief economist Andrew Wilson on whether Australia is on the edge of disaster
MORTGAGE INSIDERS 54 Career path
When private banking met broking: Century 21 Home Loans’ new national manager, Ben Braysich
56 Phil Sampson
THE BIG INTERVIEW
MIKE FELTON
Regulators, lenders and brokers are obsessed by property investors, but what does the future hold for them?
27%
Veteran broker and three-time championship-winning soccer coach on the beautiful game
29% 21%
30
SPECIAL REPORT
CONSUMERS ON BROKERS
Our third survey of Australians who’ve used a broker looks at what different borrower groups want, and whether they’d go online to get a loan
MPAMAGAZINE.COM.AU NOW ONLINE: Highlights from our live-streamed non-major and major bank roundtables Top business strategy advice from our recent commercial lending supplement
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UPFRONT
EDITOR’S LETTER www.mpamagazine.com.au MAY 2O17
TWO LOST YEARS
I
t was a slow Thursday afternoon when the news hit us. Through off-the-record conversations with industry leaders, repeated calls to ASIC and rumours in the national newspapers, we knew ASIC would soon release their review into mortgage broker remuneration, we just didn’t know when. More importantly, we didn’t know what it would say; it could either be the biggest change to the industry since the NCCP, or a damp squib that’d be forgotten the next day. As quickly as one can glance through 243 pages, it became clear that ASIC’s review was certainly newsworthy. Soft-dollar benefits have been taken for granted by many in the industry, yet ASIC sees them playing a corrosive role in the relationship between brokers and customers. Recommendations relating to governance and oversight may yet transform the role of associations and aggregators over the long term. Yet, despite widespread speculation, upfront and trail commission will remain largely unchanged. Speculation around ASIC’s review has paralysed the industry. I’ve been at MPA since 2014 – a short memory, admittedly – and have seen the changes in the industry since ASIC’s review was announced in late 2015. Having to worry about whether commission will even be legal in two years has led many brokers
“Speculation around ASIC’s Review has paralysed the industry” to delay changes to their business, or avoid expanding entirely. Brokers are more professional, better regulated and have a bigger market share than in 2014, yet celebrations and conferences are muted, lest any show of exuberance attract regulator attention. Now brokers can take a sigh of relief and move forward. Whereas ASIC’s review was a closed process, with only certain groups being contacted, the Treasury’s consultation phase, which lasts until the end of June, is open to all. What the Treasury eventually decides is, of course, unknown, yet the limited scope of ASIC’s proposals means these outcomes are unlikely to seriously destabilise the industry. For the immediate future, it seems commissions are here to stay, giving brokers a stable business foundation upon which to innovate. ASIC’s review has cost the industry two years of fresh thinking; it’s time for broking’s innovators, over the next two years, to transform the industry. Sam Richardson, editor, MPA
EDITORIAL Editor Sam Richardson Journalists Maya Breen Contributors Dr Andrew Wilson Production Editors Bruce Pitchers Roslyn Meredith
SALES & MARKETING Publisher Rajan Khatak Account Manager Simon Kerslake Marketing and Communications Manager Lisa Narroway
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UPFRONT
STATISTICS
OUT OF REACH
AFFORDABILITY ISN’T GETTING BETTER, IT’S GETTING WORSE
Affordability is getting worse for current and aspiring homebuyers across Australia, according to the latest Housing Affordability Report by Adelaide Bank and the REIA
= less affordable
GREEN
= more affordable
Notes/source: the colour is based on the Home Loan Affordability Indicator, which is the ratio of median family income to average loan repayments. Figures for the median dwelling value come from CoreLogic Hedonic Home Value Index, February 2017, all others from the Housing Affordability Report, December 2016.
below $600,000. However shared-equity schemes for FHBs have yet to emerge into the mainstream, while parental guarantees and parental grants have struggled to have the positive impact many hoped for. For homeowners, repayments have been relatively low for years, thanks to historically low interest rates. Yet the sheer scale of household debt and stagnant family income is beginning to show, and the proportion of household income required to meet repayments is rising in all states. Worryingly, this has occurred without any rise in the cash rate, at which point many more households will feel the squeeze.
Australia
32.9 $570,000
STATE OF THE NATION
IT’S HARD TO GET ONTO THE LADDER …
In Australia, as of December 2016:
As property prices rise, the loans taken out by borrowers are also rising in value, by almost $40,000 over five years. AVERAGE HOME LOANS FOR FIRST HOME BUYERS AND UPGRADERS
400
Upgraders (excluding refinancing)
300
$389,000
Jun-16
Sep-16
Mar-16
Sep-15
Dec-15
Jun-15
Mar-15
Dec-14
Jun-14
Sep-14
Mar-14
Dec-13
Jun-13
Sep-13
Mar-13
Sep-12
250
Dec-11
Average Loan Size
First home buyers Dec-12
Median Weekly Family Income
350 Loan ($’000s)
$1,681
Jun-12
Median House Price
Mar-12
$743,000
4
RED
Dec-16
AS ADELAIDE Bank general manager Damian Percy puts it, progress on housing affordability has been “glacial”. That’s because there are two sides to affordability: there’s the financial challenge of saving for a deposit, and the financial challenge of meeting repayments. Politicians are adept at responding to one problem while avoiding the other but – according to Adelaide Bank and the Real Estate Institute of Australia – both are getting worse. The struggle of first home buyers is well known, and is finally beginning to have an impact; Victoria has axed stamp duty for first home buyers purchasing a property valued
Median capital city dwelling value
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Northern Territory
46.2 $499,500
Queensland
37.3 $485,000 Western Australia
43 $477,000 KEY: red= less affordable, green =more affordable New South Wales
27.1 $795,000 South Australia
Australian Capital Territory
39.3 $435,000
50.8 $575,500
Victoria
31.4 $610,000 Tasmania
43.1 $374,000
‌ BUT EASY TO STAY ON THE LADDER
SHARED EQUITY SCHEMES
As the RBA has lowered the cash rate, repayments have reduced, as a share of income, although recent out-of-cycle rate increases by the banks are having an effect.
A project by the Victorian government to help first home buyers has made national news and been lauded as a solution to the challenges facing first home buyers. Beginning in 2018 HomesVic shared equity scheme took a share of up to 25% in homes for 400 first home buyers who met the criteria for a bank loan but lacked the deposit. FHBs then needed to save 75% of the original deposit, and HomesVic covered the rest. When the property is sold, HomesVic will recover its share of the equity and invest any profits from the property’s rising value. There are also maximum house price and income requirements. A national scheme, Buy Assist, is also being considered and would be run by the National Affordable Housing Consortium.
HOW THE RELATIVE COST OF REPAYMENTS HAS FALLEN, UNTIL NOW
% of family income
35
Proportion of family income required to meet average loan repayments
30
25
Dec-16
Jun-16
Sep-16
Mar-16
Dec-15
Jun-15
Sep-15
Mar-15
Dec-14
Jun-14
Sep-14
Mar-14
Dec-13
Jun-13
Sep-13
Mar-13
Dec-12
Jun-12
Sep-12
Dec-11
20
Mar-12
Proportion of family income required to meet average rent payments
Source: Adelaide Bank & Real Estate Institute of Australia Housing Affordability Report, December 2016
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UPFRONT
HEAD TO HEAD
When is it acceptable to revoke a broker’s accreditation?
Rachelle Eyndhoven
Jai Martinkovits Managing director Finance Ferret
Owner Mortgage Choice Malvern
Revoking a broker’s accreditation is absolutely the prerogative of the bank or lender, especially in regards to poor quality or misleading information. While I think that volume hurdles are unfair and may be replaced with mandatory training in lieu of submissions, there needs to be standards so that the industry remains professional and processing times are not affected. I have heard the backlash the Commonwealth Bank has received for the culling of brokers who have not submitted a deal in 12 months. With the risk of going against the grain, I believe it could be a positive thing for the industry. I believe the intention was to weed out non-professional brokers, rather than to push professional brokers for more business.
In a free market, it’s important that lenders are able to cancel broker accreditations at their discretion. However, in practice, it’s entirely unacceptable for a lender to cancel a broker’s accreditation without sound reason, such as fraud or other misconduct. We recently saw a major lender cancel broker accreditations en masse, based on the volume of application received. ASIC have made it clear that they are focused on ensuring good client outcomes. The regulator flagged loyalty programs in its review of broker remuneration as exacerbating a broker’s conflict of interest. How much more is this the case where brokers feel their very accreditation is threatened if they don’t write a particular product, with little regard for the client’s best interests?
If a broker does anything illegal they should be stripped of their accreditation and if found to be recommending a particular lender for their own financial gain, they should be investigated. Brokers should also be forced to stay accredited with a minimum number of lenders. If they are removed/unaccredited by one bank, they should be investigated fully and if serious they should have their licence taken away. Mortgage Choice franchisees must stay accredited with all lenders on our panel otherwise we are in breach of our franchise agreement and we’d lose our business. Mortgage Choice brokers are also paid the same regardless of the lender or product that the client selects.
Director Sphere Finance
Greg Campbell
COMMONWEALTH BANK REVOKES BROKERS’ ACCREDITATIONS MPA put this question to three brokers following the Commonwealth Bank’s decision to give a segment of its accredited brokers two weeks’ notice for the revocation of their accreditation, after identifying them as being “inactive”. CBA said in a statement: “As part of an ongoing review of our products and services, we identified a segment of our accredited mortgage brokers who have been inactive with Commonwealth Bank for some time. To ensure we uphold the highest level of professional standards, and continue to meet the needs and expectations of our customers, those mortgage brokers who have been inactive will no longer be accredited with us.”
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UPFRONT
NEWS ANALYSIS
NOT DOWN AND NOT OUT Investor lending has returned with a vengeance, growing at near record levels. MPA editor Sam Richardson asks brokers and industry experts how regulators and the banks might respond and how property investors could be affected
INVESTOR LENDING is fast becoming the RBA’s mission accomplished moment. While Australia’s Reserve Bank and the former US President George W Bush might not seem to have a lot in common, both prematurely declared victory over foes that came back to haunt them. Bush was never able to vanquish Iraqi insurgents and it seems the RBA is losing the battle against red-hot growth in investor lending and, consequently, spiralling house prices. APRA’s 10% speed limit on investor lending growth helped for a while, cooling investor lending from 2015-16. Yet now investor lending is back with a vengeance. As the Australian Bureau of Statistics’ figures for January showed, investor lending had increased by 27.5% in a year, and is coming close to outpacing lending to owner-occupiers. CoreLogic’s Home Value Index showed the effect of investor lending on prices, which rose by 2.6% in Sydney and 1.5% in Melbourne, in the space of a month. Regulators are beginning to concede defeat. In Australia, RBA assistant governor Michele Bullock admitted the effect of the 10% growth cap was fading and that the RBA was “prepared to do more if needed”. APRA chairman Wayne Byres warned that lenders breaching the 10% limit should be under “no illusions that supervisory intervention, probably in the form of higher capital requirements, is a possible consequence”. In Paris, the Organisation for Economic Cooperation and Development
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flagged a risk of contagion and disastrous economic consequences should house prices take a downward turn. These warnings have not gone unnoticed by lenders, who continue to raise investor interest rates out of cycle and tighten policies. The CBA and Bankwest have gone the furthest. At the time of writing, in March, they were refusing to accept broker-initiated refinancing for investor clients. Investor lending appears to be approaching a tipping point, when investors could see a more extreme regulatory response from the banks. Here MPA asks what that response could be, and how it could affect brokers.
they’re saying yes. It’s a challenging environment, and I’ve never seen a time in which the public needs a broker more than now,” he says. Manciameli’s not the only broker to notice a change. Property Investment Professionals
“There’s still ways to borrow more for the very sophisticated client who has good cash flow, experience and a good understanding of the household budget” Ben Kingsley, Empower Wealth Investors on the front line John Manciameli runs Hunterwood Solutions in southern Sydney and has recently set up Slipstream Australia, an aggregator of investment research houses. He has definitely found it harder to finance his investor clients. “We’re constantly seeing appetite changes; one minute they’re saying no; the next minute
of Australia chairman and broker Ben Kingsley is finding borrowers with multiple properties held back by a tightening of servicing calculators by lenders. While Manciameli says he’s still able to finance all his clients, often through second-tier lenders, Kingsley says there’s a small percentage of clients who are now unable to borrow.
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INVESTOR RATE HIKES Out-of-cycle interest rate increases for investors have attracted a lot of media attention. Yet data from CANSTAR suggests that low interest rates that fuelled the original investor boom in 2014 are still very much in place.
4.98%
Average standard variable rate (SVR) for investors in March 2016
4.7%
Average SVR for investors in September 2016
4.69%
Average SVR for investors in February 2017
However CANSTAR’s data does suggest the tide is turning and banks are more likely to increase rates than decrease them: Rate changes over the past 12 months 40
20
0
-20
-40
-60
Basic Variable Rate Standard Variable Rate
-80
-100
-120
Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17
homeowners in Sydney and Melbourne due to increasing property values in recent years. What’s definitely not driving the surge in investors are rental yields, CoreLogic’s head of research Tim Lawless told MPA. As prices rise and rents remain stagnant, yields are now just 2.8% in Sydney and 2.7% in Melbourne; whereas total gross returns from capital gains in these cities are at 22.1% and 16.5% respectively over a year. Investment is still very much concentrated in Sydney and Melbourne, even if specialists such as Kingsley are advising their clients to look elsewhere. Investors continue to pile into high-density off-the-plan apartments, despite concerns of inaccurate valuations and poor quality apartments that owner-occupiers don’t want. “I’d be very surprised if domestic investors hadn’t heard those warnings, whether or not they’re heeding them,” observes Lawless. “But with foreign investors, I just don’t know if those messages or alarm bells are ringing very loudly beyond our shores.” It wasn’t so long ago that foreign investors
Number of interest rate increases (+) and cuts (-)
According to Kingsley, “there’s still ways to borrow more for the very sophisticated client who has good cash flow, experience and a good understanding of the household budget, but we normally have to go to second- or third-tier lenders for finance.” Both brokers say that these difficulties are not putting off would-be investors. Kingsley says his investor-focused brokerage, Empower Wealth, is growing at double digits. Their experience is backed up by the data. Martin North, principal of research firm Digital Finance Analytics, says there’s still “rabid demand for investor property”. In fact, says North, “All of my surveys say there are more people now considering property investment than a year ago.” North says Australians are driven to investing for three reasons: the attractive tax breaks for investors, the low returns offered by deposits and savings and the continued expectation of long-term capital appreciation. To that Manciameli offers a fourth: the considerable equity accumulated by
Source: CANSTAR. Note these statistics apply to principal and interest investor loans monitored by CANSTAR only.
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FEATURE / BROKER EDUCATION UPFRONT
NEWS ANALYSIS were the mortgage industry’s stand-out sector, limits. Furthermore non-banks, who are not changes, given their relatively small existing until regulators cracked down on rule-breaker subject to APRA’s restrictions, would be given investor book. banks and made it near impossible for foreign a major opportunity. In the long term, investor lending could be investors to get finance. However, the experts What’s more likely is that investors will be limited by policymakers as affordability and MPA spoke to didn’t believe regulators would hit by further out-of-cycle rate hikes. These the problems of first home buyers become ever take similarly decisive action against are already being used ad hoc by banks to keep more pressing issues. Although the federal Australian investors. their growth under the limit, but according to government has repeatedly insisted that “APRA is concerned about the strength of JP Morgan and DFA a more systematic negative gearing tax breaks will not be the investment sector and they want to repricing will soon be required. The Basel 4 removed, Labor have made it one of their underscore lending standards, but I don’t see capital requirements will require banks to policies if elected. However, politicians could any intent from APRA to turn off the hold more capital for loans “materially also increase the appetite for property investment sector at all,” DFA dependent on cash flows”, investment. According to Hunterwood broker THE BIGGEST principal North explains. making these loans more Manciameli, major infrastructure projects in GAME IN TOWN “Put those two things expensive, with rate increases the eastern states are creating wealth that together and there really isn’t of up to 300bp. Although people are putting into property. a reason why investment exactly which loans will be Finally, there is the widely held assumption lending should slow down at affected won’t be confirmed that an eventual rise in interest rates will curb all, and I see this trend continuing.” Proportion of total housing loans CoreLogic’s Lawless is less accounted for by investors, convinced that APRA will sit January 2017. The all-time record back: “If we do see investor is 54.7% (in 2015) lending growth continuing to be very strong, then we may see APRA wading in and either further regulatory changes around the speed Proportion of total housing loans limit, or new regulations, like Martin North, Digital Finance Analytics going to first home buyers, what NZ has done by January 2017 until later this year, JP imposing [localised] loan-toinvestor demand. Change is unlikely to come Morgan predicted that valuation limits.” quickly, however: 27 out of the 32 economists seniors, young affluent One possibility is that on Finder.com.au’s panel believe the RBA borrowers and exclusive APRA could lower its 10% won’t raise rates in 2017. Though a rate rise professionals will be among speed limit in an attempt to could catch out certain investors, warns Annual growth in investor lending, the hardest hit groups. reduce growth says North. Kingsley: “Whether that be 2018 or 2019, we’ll despite APRA having a 10% target According to JP Morgan “Ten per cent is way above see who’s been exposed and bought in the for investor lending growth executive director Scott inflation; it’s way above wage wrong markets at the wrong time.” Manning, the rate hikes growth. It is effectively Yet according to CoreLogic’s Lawless: “It investors have seen so far are allowing the housing market depends how much property values are going just a “toe in the water” to continue to run and to cool. Take Sydney, where property values compared with what’s coming. continue to increase house are rising at 18% per annum; if that rate of Median dwelling price in Sydney, More positively, as banks are prices … there is no absolute capital gains falls down to 8% or 9% or 5%, it’s February 2017, up 18.4% in a year forced to further correlate science – there’s no clarity – still a pretty attractive return for an investor.” pricing and LVRs the as to why it’s 10% rather than It’s because of these simple economics that possibilities for refinancing 6% or 12%.” investors, and the brokers that serve them, are will increase, although an A lower growth target looking forward to the future. increasing number of could mean even more chaos “There are generations who’ve seen it be a Median dwelling price in borrowers won’t be able to for brokers, as demand very stable if not very profitable asset class,” Melbourne, February 2017, up refinance. JP Morgan picked rapidly switches from one says Manciameli. “Everyone believes that 13.1% in a year out ANZ as the major bank lender to another as they despite what we’re hearing and seeing overseas Source: APRA/CoreLogic Hedonic Home Value Index, February 2017 best placed to capitalise on successively hit their speed it seems to be a pretty good asset class.”
50.3%
13.4%
“Ten per cent is way above inflation; it’s way above wage growth. It is effectively allowing the housing market to continue to run and continue to increase house prices”
27.5%
$795,000
$610,000
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UPFRONT
OPINION
STOP CRYING WOLF Australia is at risk of contagion from a decline in house prices, says the Organisation for Economic Cooperation and Development, but Dr Andrew Wilson doesn’t agree. Here Domain’s chief economist, in conversation with MPA, calls out several flaws in the OECD’s methodology WE SEE these periodical reports, and the
and that’s usually a product of higher interest methodology really is flawed, comparing rates and there’s no official suggestion of incomes with house price growth. We’ve been higher interest rates that would dampen the getting these types of reports for almost a housing market sharply. What we’re going to decade or more, certainly since we’ve had strong growth in the Sydney market, and I’m quite amused by the repetitiveness of these reports, given nothing’s happened, really, yet we seem to be on the edge of some sort of catastrophe. see is just a very gradual winding back of prices I don’t think they quite understand the growth, as I believe interest rates will now be dynamics of the housing market; really the largely flat into the future. epicentre of strong prices Incomes have nothing to growth has clearly been the do with house price growth. SPILLOVERS, CONTAGION AND The only relevance of an Sydney market, and most other GLOBAL RISKS markets have recorded benign income is the repayment of a at best prices growth since the mortgage. I do an affordability The OECD’s start of the interest rate cycle in measurement that looks at the biannual report 2011. We’ve had a Perth proportion of income that the on Australia has housing market that’s been average home loan requires in caused a stir after it warned going backwards for nearly two repayments, and it’s actually there was a “non-negligible risk years now and if we look at the falling and is below the of a downturn” in the Australian underlying growth rate, Sydney 10-year average now. housing market, caused by has begun to flatten over the The thing that separates “spillovers, contagion and global past year and most other Australia from other markets risks”. The report looked at price markets are at 3%-4% a year. internationally is the very to income ratios, as well as It’d be interesting if these robust and rigid lending historical downturns in Australia predictions of doom could be environment that we have. and worldwide. held accountable, because Banks are very risk averse in we’ve had them for a while this country; even when the now and not one of them has been close to the market’s rising they won’t take risks such as truth. When we have seen prices growth raising LVRs or easing income requirements because of low interest rates, we’ve seen for a loan. It’s that common sense around our quarterly correction phases following that, housing markets that keeps us in these
orderly correction and growth phases. My concern at the moment is that we’re seeing increased interference in market dynamics from banks and regulators. I think regulators and policy makers have the capacity, with these market incursions, to cause disruptions. Banks really need to stick to what they do best and lend on these rigid conditions and let the market rise and fall as it will do naturally according to these local drivers. Now we’re starting to see some banks in the business of picking winners in terms of where they’ll lend; units versus houses or investors versus first home buyers. I think this is fraught with danger and can create the very risks it’s supposed to offset. I hope regulators see the flaws in the OECD’s methodology, but I think there is a particular bent in our regulators to embrace the bubble theory. They’ve accepted this is a possibility, when the probability is very low.
“It’d be interesting if these predictions of doom could be held accountable”
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Comparing prices to incomes: to me it really is an indictment on the research capacity of the people who produce these reports, and I think they should be called out for using this as some sort of benchmark. It’s the same when they look at overall levels of debt; they say Australian debt has risen to record levels, but this is nonsensical because obviously people have been able to borrow more with lower interest rates, but if you look at the balance value it’s improved because prices have risen. We shouldn’t have macroeconomic policy that’s a product of high Sydney house prices and high numbers of Sydney investors. It’s a real concern that we’re a hostage to these policy outcomes. Dr Andrew Wilson is the chief economist for the Domain Group and one of Australia’s leading housing market experts. He holds a PhD and master’s by research in housing market economics, and has been appointed an advisor to the government funded Australian Urban Research Infrastructure Network.
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PEOPLE
BIG INTERVIEW
“You’ll have a number of bites of the cherry on this one; it’s unlikely we’ll get it right first time around” 14
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MIKE FELTON: BROKING POST ASIC ASIC’s remuneration review has been released and now the real battle begins, according to the MFAA’s new CEO Mike Felton. He talks to MPA editor Sam Richardson about what’s likely to change, and where the association’s drawing a line in the sand
THURSDAY 16TH March was a day the industry has been dreading for over a year. ASIC’s Review into Mortgage Broker Remuneration has been the topic of endless speculation. Would commission be banned? Would it spell the end of the broker channel? As ASIC has finally published its report, brokers can finally move from speculation to action, and give their views on ASIC’s proposals. MPA spoke to MFAA CEO Mike Felton to find out what happens next. As Felton sees it “this report coming out is not the end of the process; it’s the start of the process.” The industry now needs to respond to ASIC’s six proposals (which you can see in the inset) and the MFAA has launched a consultation process, including six broker roundtables across the country. Brokers who can’t make the roundtables can contact the MFAA or their aggregator – Felton recommends you do both – and there will be months of consultation before they submit their response in June. “You’ll have a number of bites of the cherry on this one; it’s unlikely we’ll get it right first time around,” he says. Felton has reasons for optimism, as ASIC’s review provides a tremendous opportunity for the MFAA. When Felton arrived at the MFAA in December, the association was in trouble: leaderless since May, it had ceded the media limelight to the FBAA, who promoted themselves as a standard-bearer for beleaguered brokers. Yet the outcome of ASIC’s review has been far from disastrous
Felton sees ASIC’s proposal as simply an for brokers – Felton considers it an “incredibly interest in tweaking commission structures, well-informed and well-considered outcome” – emphasising that the basic structure of as ASIC calls for lenders, aggregators and upfront and trail commissions are not up for brokers to work together. That gives the MFAA discussion. On being asked whether an advantage, Felton believes: “We represent all commissions had a role to play industry groups … that gives you in macro prudential policy a great deal of credibility when ASIC’S SIX (which would involve LVRs), you are involved in going to a PROPOSALS Felton replied that commission regulator, with a position that structures should drive represents the entire industry 1 Changing the standard competition and consumer and you have a voice that is commission model (to take choice. Nevertheless, he says listened to and heard.” into account factors other the industry would have to be than loan size) Changing commission prepared to work with structures government to produce a more 2 Moving away from bonus Although the MFAA will consult balanced scorecard for commissions and bonus members, they’ve already set remuneration. Felton doesn’t payments out initial responses to ASIC’s anticipate any disagreements proposals. Proposal one calls for arising between the MFAA’s 3 Moving away from lenders to change commission broker and lender members soft-dollar benefits arrangements so brokers are over commission. not incentivised by loan sizes. “I don’t think the different 4 Clearer disclosure of ASIC doesn’t present a clear member groups will have vastly ownership structures within alternative, beyond suggesting different views of what things the home loan market that commission could reflect should look like,” he says. the LVR of the loan, or possibly 5 Establishing a new public Soft-dollar benefits compliance metrics. The MFAA, reporting regime of consumer Tweaking is one thing, but however, isn’t supportive outcomes and competition in ASIC’s second and third of a commission structure the home loan market proposals, if implemented, determined solely by LVR levels. will certainly be noticed by Felton says: “It’s too early to be 6 Improving the oversight many brokers. ASIC wants the prescriptive. We need to sit of brokers by lenders industry to move away from down with our member groups and aggregators bonus payments directly to and say, ‘How do you feel?’ ”
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THE BIG INTERVIEW
BIG INTERVIEW brokers and soft-dollar benefits, but defining the latter is a potential minefield; elite broker schemes, overseas conferences and even training are under scrutiny. The question Felton and the industry need to answer is whether these benefits drive volume to a single lender and compromise consumer outcomes. Of ASIC’s proposals, one seems most likely to become reality: the end of volume bonuses paid directly to brokers. Brokers should prepare for change within 2017, warns Felton: “If there is a broker who’s receiving a volume bonus to support a specific lender or product then that’s likely to be done away with. [However] we feel that if there is a payment that is going to the aggregator and
KEY FINDINGS FROM ASIC’S REVIEW Consumer outcomes: Broker customers get the same interest rate as direct customers 75% is the average LVR for broker customers, compared to 70% for direct customers Commission $2,700 upfront / $700pa trail – average commission received by a broker on a $500,000 loan 0.46% – average upfront commission paid by lenders to referrers 1.2 to 4.4x increase in deal flow experienced by lenders who offered extra commission to brokers $54,000 average salary for salaried loan writers, in 2015 Competition Four lenders get 80% of the loans written by the average broker 37.3% – CBA’s market share through Aussie Home Loans, which they own, compared to overall market share of 20.9% 22% NAB branded and NAB-funded white label loans’ market share with Choice, FAST and PLAN, compared to overall market share of 13.2%
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not the broker level, where a recommendation for a particular lender is being made, that is still acceptable.” Elite broker schemes, such as CBA’s Diamond Brokers or Westpac’s Platinum Brokers, could also be seen as an open-andshut case: elite brokers get faster turnaround and other benefits for putting a large amount of business through these lenders. The MFAA believes these schemes need to be looked at, but Felton holds back from a complete denunciation: “In some instances these clubs
that also benefits consumers. Banksponsored training should be encouraged, argues Felton “As long as it’s training across the board and everyone’s entitled to benefit from the training, it can only be good in strengthening outcomes in the consumer’s interest,” he says.
Improved oversight of brokers ASIC’s final proposals, on disclosure of ownership structures, public reporting of consumer outcomes and improving oversight
“We represent all industry groups … that gives you a great deal of credibility” improve the speed of turnaround, and speed of approval might be the most important criteria a customer has.” As ASIC has identified nine lenders who offer such schemes – and as most elite brokers are members – it’s shaping up to be one of the biggest discussion points of the review. Extravagant conferences have also been highlighted by ASIC as a soft-dollar benefit. AFG’s now infamous cruise ship conference has come in for some criticism from consumer groups, and it’s noticeable that almost all aggregators decided to hold their conferences in Australia this year. However, Felton refuses to judge where aggregators hold their conferences: “We need to look at what the incentive is for and not what the incentive is.” As AFG executive director Brett McKeon pointed out with regard to the cruise ship conference, the importance is who pays – in that case AFG – rather than one particular lender. According to Felton “as long as it’s not undermining competition and choice that should be the key issue”. Therefore, says the MFAA, conferences should reward brokers’ performance across the full panel of lenders and products. This rather black-and-white definition of soft dollar held by Felton and ASIC becomes more difficult to justify when it comes to training. Many lenders have long offered training to brokers at reduced rates, if not for free, and these could be seen as an incentive to use a particular bank, albeit an incentive
of brokers, all require industry-wide cooperation. In its review, ASIC continually referred to the Sedgwick review by the Australian Bankers Association as a potential basis for new rules, but the MFAA has said it “does not support unilateral action”, adding that the ABA does not even represent all lenders. Could the MFAA play a coordinating role? Felton is reluctant to speculate: “There may be [a role for the MFAA], we’re not going to focus on that right now. Clearly we do have a position of representing the entire industry; if the regulator wanted the MFAA to take a greater role in this we would certainly give it greater consideration, but we do see ourselves in a facilitating role to get to the outcome of what the final policy looks like.” At present the MFAA is just a voice at the table, alongside other industry associations, aggregators, lenders and consumer organisations, who will all be trying to make their voices heard before submissions close on 30th June. At the time of writing, consumer advocates have made the most noise; CHOICE’s head of campaigns and policy Erin Turner saying, “I hope this is the first report of many”, and calling for reform beyond commissions, including the not unsuitable obligation for mortgage brokers. By 30th June Felton’s message, and that of the MFAA, will need to be louder and clearer, to ensure brokers play a pivotal role in determining broking’s viability into the future.
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SPECIAL REPORT
NON-MAJOR BANK ROUNDTABLE 2017
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NON-MAJOR BANK ROUNDTABLE ASIC, investor lending, turnaround times: Australia’s non-major banks have a lot on their plate and MPA’s latest livestreamed roundtable provided the perfect opportunity for a candid discussion of the industry’s most pressing issues
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2014 IS not exactly ancient history. That was the year in which we ran our first non-major banks roundtable, bringing together Australia’s leading challenger banks to discuss the biggest issues in broking. All those banks are still around, and some have attended every roundtable since. Yet few of our panellists back then would have envisaged how different the lending landscape looks today. At our 2017 roundtable, our fourth, held at the Sofitel Sydney Wentworth, panellists had to contend with a new set of challenges: ASIC’s Review into Broker Remuneration, for instance, wasn’t announced until 2015. Furthermore out-of-cycle rate hikes may not be novel, but their use on specific borrower segments – mainly investors – certainly is, while APRA’s 10% lending cap would have seemed absurd to our panellists three years ago. Technology, which was meant to end turnaround delays forever, has for many brokers failed to do so, despite the banks spending millions of dollars on new systems. There are also new angles to old challenges. How would
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non-majors respond, for instance, to our MPA Brokers on Banks finding that two-thirds of brokers prefer an extensive bank branch network? Or ASIC’s finding that most brokers send 80% of their business to just four banks? While non-majors have been chipping away at the majors’ market share – particularly in certain sectors – they still have a long way to go. 2017’s roundtable was also the second non-major banks roundtable to be broadcast live online – during viewers’ lunchbreaks – and viewers were able to text in questions to be answered at any time by the panel. You’ll find a selection of those questions and the non-majors’ answers in the sidebars throughout this article. As with all our roundtables, you can watch them again on our website, entirely free. Finally, please note that this roundtable took place the day before ASIC published the results of their Review into Mortgage Broker Remuneration, so at the time of speaking neither MPA nor the banks knew what that review would include.
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SPECIAL REPORT
NON-MAJOR BANK ROUNDTABLE 2017 THE PANELLISTS
Adrienne Smith, general manager third party distribution, Bank of Queensland
Damian Percy, general manager third party banking, Bendigo and Adelaide Bank
Glenn Gibson, head of sales and marketing, AMP Bank
Lino Pelaccia, general manager broker sales, ME
Mark Vilo, head of bank intermediaries, Suncorp Group
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Should ASIC’s Remuneration Review recommend restrictions on broker commissions, how would you help brokers maintain a sustainable business model? For the past 18 months, the future of commission has been a talking point for the entire industry, and this panel was no exception. We put this particular question to our recent major banks roundtable and the comparison with the non-majors – who have been more open in their defence of brokers – makes for interesting reading. While our panel spoke just before ASIC published their review, non-major banks will play an important role in the Treasury’s consultation process before any new rules are drafted. Damian Percy, general manager of third party banking at Adelaide Bank, kicked off the discussion. “I don’t think they have come with an agenda, nor do I think the fundamentals of commissions lead to poor customer outcomes,” he said. “I’m hopeful we won’t see any material or systemic changes, so banks won’t need to react in a systemic way.” The panel largely agreed with Percy, arguing that the review was unlikely to cause any seismic changes, and the conversation looked forward to how the industry could influence the
urged. “That’s probably one of the things other industries haven’t done as well. There does tend to be a degree of apathy … take a view; don’t sit back and assume everything will be OK.” Similarly, Bank of Queensland’s general manager of third party distribution, Adrienne Smith, argued that “everybody should seek to understand what it means for them. Speak to your aggregators; speak to your peers in other industries and see how people have reacted.” Glenn Gibson, head of sales and marketing at AMP, said that “everybody has a role” in contesting ASIC’s proposals, although he was confident the industry was adept at responding to change. Lino Pelaccia, ME’s general manager of broker sales, added that “the most important thing is about being transparent. We need to be transparent about the way we pay brokers and what support is provided by brokers.”
In our 2017 Brokers on Banks report, 63% of brokers said extensive branch networks helped their business. Why should those brokers consider writing a loan with you? Our second question for the roundtable came from our recent Brokers on Banks survey, the results of which you can read in MPA issue 17.04. In our survey, we asked brokers whether
“If there are any recommendations brokers and aggregators are uncomfortable with, don’t be shy about putting your voice forward … don’t sit back and assume everything will be OK” Mark Vilo, Suncorp Treasury’s consultation process. Suncorp’s head of bank intermediaries, Mark Vilo, brought personal experience of navigating regulatory changes to the table, having headed Suncorp’s wealth and life intermediaries team, a sector that did see seismic changes in recent years. “If there are any recommendations brokers and aggregators are uncomfortable with, don’t be shy about putting your voice forward,” Vilo
banks with an extensive branch network were a help or a hindrance to their business. The results were surprising: 63% of brokers said extensive branch networks were a help to their business. This has particular ramifications for the non-majors, many of which have limited branch networks, or are in fact branchless. AMP is one of those branchless banks, and head of sales and marketing Gibson was
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AUDIENCE QUESTION What is the future of brokers now that customers can apply direct to lenders via internet applications? Adrienne Smith: “Right now I don’t think a broker should be worried about this development; they have a great role to play in the market … there will be a tipping point at some point, where the whole process is so commoditised and it truly is digital, but as it stands right now there are too many complex lending applications – that is the bread and butter of brokers.” Lino Pelaccia: “I agree; it’s about customer choice. I think what brokers provide is a roadmap to help the customers avoid the landmines of getting a loan. Not all loans are simple and vanilla, and you may need some assistance, and I think what brokers provide is assistance in meeting customer expectations.”
sceptical about the result: “It’s interesting. I looked at that stat and asked myself, ‘What is it that brokers like about that?’ Our brokers like the relationship we hold with our customers; they like the fact we’re not really involved in that process at all; it’s a customer relationship with the broker directly.” As the electronic means of verifying clients improve, the need for branches is declining, argued Gibson: “I’m very curious as to why 63% said they’d like that relationship, because for me, personally, I can’t remember the last time I went into a branch of any bank.” Representing ME, which is also branchless, Pelaccia didn’t see any advantage in a bank having a physical presence. It was more important that the bank work through brokers, he explained: “I think what you’re seeing now as we see the evolution of digital and technology that’s going to be even more paramount. If we can provide the tools to brokers to help their customers, then there’s no reason at all for a branch.” Not all roundtable participants agreed with this argument. Bank of Queensland and
Suncorp have limited branch networks within the Sunshine State and both explained how they were getting these branches to work better with brokers. At BOQ a pilot has been introduced for branches to provide post-settlement service for broker-introduced clients if desired. “It doesn’t suit everybody; some are happy to do things on the phone or digitally, but in terms of a way forward, we have to be openminded that clients will choose where they want to go,” said Smith. “If you get collaboration it works both ways; the client is fulfilled; the broker’s happy; everybody’s happy.” While Suncorp does most of its home lending via brokers and online, Vilo explained, he saw a use for branches in other areas. “The main way we see this opportunity is through commercial lending space on the retail side. We do a great job with brokers; the engagement a broker has with a commercial lender, in handing those relationships over and making sure we’re collaborating and communicating well is paramount. We’re starting to make some good inroads with commercial broking and SME lending.”
Glenn Gibson: “I think there’s got to be a seismic jump before there’s any impact with brokers. Until online turns into an app-type process, consumers are going to say they’re sick of it.” Mark Vilo: “The challenge of channel conflict is not yet alive in this market around direct yet. As a lending fraternity, if we start to think about offering lending products that are sharper rates or better than what’s on sale for brokers to use with their clients, that’s an issue.” Damian Percy: “With technology there seems to be an assumption that the kind of thing that would enable a lender – that flash technology – is somehow out of reach to the broker fraternity, and all of these technologies hit every channel … that particular technological tide has raised all the boats. I don’t think it’s an and/or question at all.”
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SPECIAL REPORT
NON-MAJOR BANK ROUNDTABLE 2017
Taking a middle view, Adelaide Bank’s Percy said he understood the history of channel conflict, but noted that many branches had improved. While Adelaide Bank lends through the third party, brokerintroduced customers can go into Bendigo Bank branches, Percy explained. Nevertheless, “most consumers are like Glenn and myself and don’t go into a branch too often and I’m a little surprised that 60% [of brokers] would see a branch network [as a positive]. I suspect their customers aren’t behaving that way, but it’d be interesting to dig into it.”
Banks often justify rate increases by referring to the cost of funds. How will the cost of funds affect interest rates over the coming year? Australia’s cash rate hasn’t changed since August 2016, but it seems every other interest rate has. Aggressive discounting by some banks has run simultaneous to multiple rate hikes – often by the same banks – with investors particularly targeted by rate increases. Given the cash rate has not recently increased, we wanted our panel to explain why they were raising rates anyway, how long this would continue and who’d be most affected. First up was Bank of Queensland, and Smith traced the rising cost of funds back to the global financial crisis: “When you look at all the
ripple effect and that, coupled with regulatory change and the costs associated with that, is going to cause some challenges. We’ve got regulatory changes in the US shortly and that’s going to have some impact.” Nevertheless, Australia consumers are still taking advantage of very low interest rates, which are unlikely to increase substantially.
“I can’t imagine – don’t want to imagine – the type of economic disaster that would encourage the RBA to ease monetary policy even further” Damian Percy, Adelaide Bank regulations post-GFC, banks have taken a more conservative approach to their funding, and certainly their risk appetite. I think that’s something that’ll be ongoing as there are changes in credit growths and risk appetites.” According to Suncorp boss Vilo, the cost of banks securing funds internationally is rising: “What’s going on internationally is having a
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Said Vilo: “I don’t think we’re going to see 100bp changes in the next 12 months or two years, but more stability before we see change.” Adelaide Bank’s Percy also pointed to securing funds: “The securitisation is still open and happy, but it’s probably costing you $0.40 or $0.45 over bills to securitise at the moment, so that’s a cost of funding of about
3%. All of those are keeping a floor on the cost of funds that is well above the cash rate. Most people appreciate there’s no real connection, and if anything it’s ticking up because of those regulatory requirements and the needs to keep your depositors happy.” Percy certainly doesn’t see the cash rate going down: “I can’t imagine – don’t want to imagine – the type of economic disaster that would encourage the RBA to ease monetary policy even further, and I don’t think it’s good for house prices; it’s been too low for too long.” Domestically, both Gibson and Pelaccia flagged the challenges the non-majors have in attracting depositors, who provide the funds for lending. Mum and dad depositors at the majors have become accustomed to earning hardly any interest, but AMP needed to work harder, said Gibson: “We have to attract those deposits, and the only way to attract depositors is to offer higher rates. So cost of funds has always been a challenge in terms of offering competitive products, but you know what? We always have, and we’ll continue to offer competitive products.”
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SPECIAL REPORT
NON-MAJOR BANK ROUNDTABLE 2017 AUDIENCE QUESTION You talk about commercial lending, but when are lenders going to offer a competitive suite of commercial products? At present most offer a product for bricks and mortar, but then can’t provide a business overdraft so for my clients that’s useless. Damian Percy: “We’re probably a prime example of that, and at Adelaide Bank we offer bricks and mortar lending because that’s a part of the market that we understand; that’s a part of the market we believe is aligned to most of our brokers, who are traditional bricks and mortar people. We can’t be all things to all people, and we don’t try to be.”
“We’ve significantly reduced our turnaround times, but we’re still not there yet. It’s still a work in progress” Adrienne Smith, Bank of Queensland Despite APRA and bank restrictions, investor lending is booming. Are we likely to see further restrictions coming from APRA and banks over the coming year? Following rampant house price growth in Sydney and Melbourne, APRA was meant to have solved the problem of investment in 2015, with the introduction of a 10% growth limit for lenders. Yet in late 2016 house price growth returned with a vengeance, as did investors, causing many lenders to abruptly limit lending to investors to avoid going over 10%, and giving regulators a reason to take action. What did our panel think would happen next? ME’s Pelaccia said his bank wasn’t concerned: “I can’t speak on behalf of APRA or other lenders, but what I can say on behalf
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of ME is that we actually are open for investor business, as long as it meets lending criteria and as long as it’s within our growth targets we are surely there to write investor business.” Next up was Gibson. AMP was praised by many brokers for its investor lending policies in our Brokers on Banks survey, despite having pulled out of the market in 2015 and later re-entering it. The 10% growth cap was a big challenge for non-majors, Gibson said: “We’re a small player compared to Commonwealth Bank; if you look at 10% growth they can have compared to the 10% growth we can have; we deal with the same number of brokers and deal with the same number of aggregators; the market’s the same.” Furthermore the bank’s strength in the SMSF sector added to its investor lending
Glenn Gibson: “The non-majors have always been a great competitor in the marketspace in giving that choice of products, and being able to widen that to commercial is a logical question. From our perspective, I agree with Damian that we’d rather specialise in things that we’re good at. We could dabble in commercial and dabble in business banking, but I’d rather we not do that. If we’re going to do it, do it well.” Mark Vilo: “I think it’s a fair point, and from our perspective that’s our current foray into that market and we’re working our way through it, in the SME space, and we’re looking to improve the sharpness of our offer.”
numbers, added Gibson. AMP was conscious of staying under the 10% limit and consequently “as opposed to being aggressive we’ll just be consistent through the year”. A 10% growth cap is an imperfect method of controlling demand, said Adelaide Bank boss Percy: “That’s like grabbing a water balloon at one end; it just migrates elsewhere. I think over time as the regulated lenders get
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SPECIAL REPORT
NON-MAJOR BANK ROUNDTABLE 2017 AUDIENCE QUESTION What are you doing to educate brokers? Mark Vilo: “We’ve entered the SME space, and what we’re doing is educating brokers to help diversify their businesses into the small business space. We’ve been running a series of masterclasses over the years, with 800 brokers just in the last few months. SME for us is a really neat way to diversify as a broker in a market where the competition is strong.” Adrienne Smith: “The BDM team will sometimes go into offices and talk one-on-one or in groups, or bring together like-for-like brokers from the same aggregator to do training. One of the issues we’ve got is we have brokers who might use us in July and the next time in December, and what we pick up from the data we get is the quality will be lower.” Lino Pelaccia: “What we do for new brokers who come on board, we’re in contact with them for the next eight weeks; weekly contact, tracking the first application that comes through, to see if there are any holes there, and empowered our BDMs to have quality conversations with brokers, such as if information was required for reworks. It’s important for lenders to have these refresher workshops.” Glenn Gibson: “I’d like to encourage anyone listening or watching to send their ideas through to my direct email: glenn_gibson@amp.com. There are 12,000 brokers out there and the challenge is how do we get information out to 12,000 brokers? We do BDM training, webinars, for new entrants all the way through, but with that refresher how do you deliver that to 12,000 who may or may not be interested?”
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closer to their limit, then the shadow banking sector will pick it up. It’s not working the way APRA would like, so it seems to me if they remain unhappy with investment lending growth in Australia, they will be inclined to do something else.” Exactly what that could be was unclear, said Damian. Regulators abroad have used LVR caps to cool property price growth. His own view was that the solution lay in making speculation in property less attractive. Percy’s water balloon analogy works another way: like a water balloon, brokers have experienced the banks’ rapid changes to investor lending as a rude shock. So how could banks better communicate changes in policy? “I feel the pain of that,” said Suncorp’s Vilo. “As an industry, and in my short experience talking to brokers and lenders, we have a habit of being on sale and not being able to manage volumes, and then having to flip the switch back the other way.” The solution was in building scale to manage demand, also being more transparent about the longevity of a particular offer, he
said: “I think that really upsets the market, when you’ve something on sale and then all of a sudden it switches off and there’s no notice.” Despite all the changes in investor lending, our panel didn’t believe brokers should necessarily avoid this sector. “I think it’s on a case by case basis. I don’t think you could say that as a general comment,” said BOQ’s Smith, adding that brokers need to be open-minded on “which ponds they play in” and how it could impact their business model.
Faxes are gone, replaced by expensive new IT systems, yet we still see multiple-week turnaround times with certain banks. Is technology really reducing turnaround times? At each of our four non-major banks roundtables, turnaround times have featured as a topic of discussion, and at every roundtable at least one bank has announced a multimillion dollar IT improvement project. Yet in 2017, brokers continue to experience huge turnaround time blowouts, often seemingly predictable, with special offers driving spikes
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“Banks in the last few years have invested millions, if not billions, on technology, but brokers have prospered in that time because they’ve kept customer relationships at the centre of everything they do” Glenn Gibson, AMP Bank in demand. In fact, turnaround time blowouts are often cited by brokers as their reason for not using the non-major bank sector. Suncorp is one of many banks to experience turnaround time blowouts, and Vilo was apologetic to brokers. “Are we solving the problem yet? Absolutely not, but over the next two to three years we’re going to start to see an acceleration of customer improvement, and that will continue to accelerate, but right now we’re in the tradition of building new systems, getting rid of antiquated systems and making sure we can build better front ends to work with the broker,” he said. “It’s a work in progress; the investment
is going to pay off, just not right now.” When Smith arrived at Bank of Queensland from Commonwealth Bank in 2016, turnaround times were poor, she recalls. But concentrating on BOQ’s processes and the capacity of the staff has paid off. “We’ve significantly reduced our turnaround times, but we’re still not there yet; it’s still a work in progress,” she said. “It’s been my every day in the 12 months I’ve been in the gig.” More work needs to be done when it comes to identifying customers and improving the understanding, accuracy and collection of supporting documents from brokers, she said. ME was another example of turnaround
times being improved, Pelaccia claimed. Twelve months ago the bank struggled to deal with a spike in demand, but since “we’re better at forecasting numbers; we’re better at resourcing for numbers. More importantly, we had to go to the market and educate our brokers when they are submitting an application to use the checklist.” As a result, despite experiencing another spike in the September-December quarter, the bank was able to maintain turnaround times, Pelaccia explained. He added that the recent introduction of auto-decision making offered a quicker turnaround for brokers. Investment in technology had also produced results at AMP, Gibson argued: “Last year we had a record year for the bank; we didn’t go beyond 1.9 days turnaround time for an answer. Last month, we had the biggest application month in the history of the bank: it was 40% over our plan for the month and our turnaround times blew out to 2.4 days. I think that’s fundamental with investment in technology; it pays off.” Taking a different angle, Adelaide Bank boss Percy argued that while banks needed to get better at forecasting when a special offer might lead to spikes in demand, the real solution involved brokers: “A good clean deal that’s well put together will rip through a lot faster than it did three years ago, but clean deals aren’t the problem … where this sector needs to get better is reducing the number of deals that aren’t well put together.” Percy’s point triggered a wave of discussion on our panel. “I don’t think brokers appreciate just how large a percentage of the broker community don’t package deals as they should,” said Gibson. “There are some excellent operators out there and they come through clean every time, but when you’ve got to retouch 60% of the loans that come in, and you’ve got to retouch them more than once because they’re not packaged properly, it’s a real challenge.” Some poor applications were understandable, retorted Smith, given brokers used non-majors infrequently. Pelaccia suggested more education could solve the
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SPECIAL REPORT
NON-MAJOR BANK ROUNDTABLE 2017
problem. Yet all panel members pointed out that applications without supporting documents were a major problem for their businesses, particularly when brokers lodged incomplete deals to get in the queue. AMP once received 100 applications in a single day without documentation, Gibson recalled. BOQ’s solution was to introduce a hard stop for incomplete applications, explained Smith. Percy agreed, adding that standardisation could make it easier for brokers to get the application right: “For a residential mortgage, which is not brain surgery, it should not be the case that there is so much variation at the front end in terms of what’s collected and how it’s collected. The complexity is created by us as members … they shouldn’t be that different, but they are, and that drives me nuts!”
When it comes to products it can be difficult to tell the majors and non-majors apart. What one thing makes you stand out? Our final question for 2017’s roundtable went to the core of the non-major banks’ value proposition: that these banks offer something the majors don’t. As mortgage products become increasing commoditised, the difference between majors and non-majors can be difficult to spot, begging the question of why should brokers use non-majors at all. This was our panel’s chance to change that perception. “In our view, we’ve got the best integrated offset account going around,” replied Adelaide Bank’s Percy. “We think that the primary objective after you get the thing that a borrower wants is to get them out of debt as fast as you can, so our whole product scenario is really based around that premise of a lowrate credit card, with an offset account offsetting repayments as much as possible.” Suncorp’s Vilo took a different approach in his answer: “If it wasn’t for brokers, we wouldn’t have been able to be as successful as we have been, and a lot of that comes down to relationships. The focus is on how do we get closer to the broker and the aggregator and start to deepen that relationship and asking them what they need as a customer.”
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“One thing we had when we compared ourselves to the majors is the lowest standard variable rate since we got our banking licence back in 2001” Lino Pelaccia, ME First home buyers and their brokers should consider Bank of Queensland, according to Smith: “We’re still doing 95%+ LMI, up to a maximum of 99.99%. From the service side, one of the things that I’ve been trying to do is keep the portfolio sizes manageable for my BDMs, because I do want to have BDMs that have an intimate relationship with brokers that want to use a non-major.” Pelaccia took the conversation back to price, arguing this was an area in which ME had always been competitive: “One thing we had when we compared ourselves to the majors is the lowest standard variable rate since we got our banking licence back in 2001, so that’s very important for us. We’ve got good
products, pricing; we do lend to first home buyers up to 97%LVR inclusive of LMI, and we are open to the investor market.” AMP Bank’s Gibson had the final word, arguing that brokers should look beyond his bank’s traditional strengths: “SMSF obviously everyone knows us for, but one thing we do at AMP is be a goals-based organisation, and one of customers’ largest goals is to be debt free, so we introduced last year multiple offsets: you can have up to 10 offset accounts per split, basically. We have a very large financial advisor network and wealth creation is about why have bad debt, and bad debt is anything you can’t deduct, so let’s have an offset on as many accounts as possible.”
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SPECIAL REPORT
CONSUMERS ON BROKERS
2017
CONSUMERS ON BROKERS Our third annual survey of consumers looks at the threat from online lending and why understanding the needs of different borrower groups is essential for today’s broker
HOW MANY times have you been told, “What the consumer wants is …”? Lenders, experts, other brokers – everyone has an opinion, and they are entitled to them. Where they’re going wrong is generalising, because the consumer doesn’t exist; instead, there are Australians of all circumstances looking for different loans for different reasons. There may be no single answer to the question of what consumers want from a broker, but there are multiple answers, and that’s what our third edition of MPA Consumers on Brokers is all about. This survey includes all the key questions – how consumers find a broker; why they use a broker and how they’d
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like to deal with a broker – and then divides up the responses by the type of borrower concerned. Our results show borrowers certainly aren’t all the same. For example, an investor’s reason for using a broker (access to specialist lenders) is quite different to that of someone refinancing (a complicated deal). Beyond the usual questions, this year’s survey also includes a number of questions related to online mortgage applications, which are nearing reality and could allow consumers to bypass brokers. Our results suggest the online threat is real: two-thirds of consumers aren’t against going online and higher-income borrowers are more
comfortable than most with going online. We believe this survey has produced a range of insights that could really help your business, but it’s up to you to take the next step. Go back to your database and look at your own clients: which borrower groups do they fall into, and should you be targeting them with more relevant marketing? What is the predominant borrower group in your local area and how can your brokerage stand out? It’s easy to find this data, but that doesn’t stop it being valuable. It’s time to stop chasing the non-existent average Australian consumer and, instead, look at the very different real people who come through your door.
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SPONSORED BY
METHODOLOGY
Run on the website of MPA sister title Your Investment Property magazine (yourinvestmentpropertymag.com.au)
The survey was open for five weeks and advertised through banner adverts, direct messages and newsletters
Only Australia-based consumers who had actually used a mortgage broker were allowed to answer most of the questions
Consumers were not paid to take the survey, but a prize was awarded for best comment
Over 600 consumers took the survey
A MESSAGE FROM OUR SPONSOR Knowing your customers, and meeting more of their needs, plays a defining role in shaping your service proposition. At Suncorp, our priority is to create value for our customers and partners by putting them at the heart of our business. Many of our customers engage with brokers for their home, investment and small business lending needs. The value lies in knowing why. With this in mind, Suncorp is once again proud to partner with MPA to bring you the Consumers on Brokers survey, providing valuable insights into customer behaviour. We know that customers value their relationships with brokers, seeing them as a trusted partner. At Suncorp, we strive to support this partnership by providing transparent and consistent information to our brokers when they need it most. Exceptional service is central to this, with our national team of business development managers and local call centres staffed with lending experts providing on-the-ground, dedicated support. At Suncorp, we are committed to making sure our products are flexible and competitive, our processes are simple, and we are
reliable so brokers have no hesitation in using us to meet their customers’ needs. Feedback is one of the most powerful tools available to our industry. We’re looking forward to reviewing the Consumers on Brokers survey for 2017, which will no doubt provide valuable insights, information and intelligence to support you to enhance your customer service proposition, as we seek to continue to elevate our own for brokers. Mark Vilo, head of bank intermediaries, Suncorp Group
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SPECIAL REPORT
CONSUMERS ON BROKERS
WHO USES A BROKER? Looking at the type of consumers who use a broker – as opposed to those who don’t – shows brokers still need to raise awareness of their role
AS WITH any survey, to understand Consumers on Brokers you need to understand who was surveyed. Moreover, you need to be assured that the consumers in Consumers on Brokers represent Australians in general, and your local area in particular, before drawing conclusions on what this survey means for your business. Good news: in terms of age and income, the consumers we surveyed are typical of
OUR TYPICAL RESPONDENT
Is aged between
36 and 55 Earns between
$80,000–$130,000 pa Used a broker when buying an
investment property
88% had used a broker before (we excluded the remaining 12% from the majority of questions)
20% in our survey, as opposed to 13.4% in Australia as of January 2017. Those looking to refinance accounted for 21% of our surveyed consumers, with 8% switching properties and the remaining 5% giving a number of other explanations. It does appear that Consumers on Brokers is slightly biased towards New South Wales. Of the surveyed respondents, 48% lived in Australia’s first state, whereas figures from the
The fact that 23% of non-broker respondents were ignorant of brokers and a further 18% thought they’d have to pay their broker should alarm broking organisations Australians. Our survey is fairly representative in terms of the type of borrowers we surveyed – almost half were investors (45%), although first home buyers were a tad over-represented:
Australian Bureau of Statistics show finance commitments in NSW accounted for just 28% of the total. Correspondingly, borrowers from Victoria were slightly under-represented.
WHEN LOOKING TO GET A MORTGAGE, WHERE DID YOU LOOK FOR INFORMATION? Broker listing site (ie HashChing)
87% Directly to mortgage broker Note: respondents could pick several answers, hence the percentage figures not adding up to 100%
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24% Directly to bank
Comparison site (ie iSelect)
23%
5% 4% Mobile lender
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We marketed this survey across Australia so it’s difficult to explain where this discrepancy could have come from. One explanation is that almost all of our respondents had used a broker (88%) and brokers happen to be particularly strong in NSW. At the core of the survey is the fact that all our respondents to the core questions have actually used brokers, unlike other surveys in the marketplace. At the beginning of the survey, we asked consumers whether they had used a broker: if they answered yes, they got to answer the rest of the survey; if they said no, they were only asked why they didn’t use a broker and the final prize question. The fact that 48% of those who didn’t use a broker thought they could get a better deal from a bank should be of huge concern to brokers. ASIC’s review into mortgage broker remuneration found no difference in the interest rates paid by broker and directchannel customers, and critics of mortgage brokers have already jumped on this finding. Our finding that 23% of non-broker respondents were ignorant of brokers and that a further 18% thought they’d have to pay their broker should also alarm broking organisations. Evidently, more can be done to raise consumers’ awareness of broking. Concern about commissions weren’t a major factor for those who didn’t use brokers, accounting for 17%, but bear in mind this survey was completed before ASIC released their remuneration report and the subsequent media coverage of broker commissions. It’s therefore possible that many consumers who used this survey were unaware of the exact role commissions play, or the influence of soft-dollar incentives and volume-related bonuses, both of which have been criticised by ASIC.
HOW REPRESENTATIVE IS CONSUMERS ON BROKERS? Consumers on Brokers 2017
Australian Bureau of Statistics, January 2017
A first-time buyer
20%
13.4%
Buying an investment property
45%
50.3%
Based in NSW
48%
28%
Based in Vic
18%
25%
Based in Qld
15%
14%
Based in WA
7%
8%
Answer
Source: Australian Bureau of Statistics, Housing Finance Australia, January 2017
WHY DON’T CONSUMERS USE BROKERS?
48% I thought I’d get a better deal going directly to the bank
23% I wasn’t aware of what brokers do
18% I didn’t want to pay for a broker
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SPECIAL REPORT
CONSUMERS ON BROKERS
WHY USE A BROKER? As different borrower groups give different reasons for using a broker, it’s time to segment your customers and target your marketing accordingly
EXACTLY WHY consumers use brokers has been fought over for years, including by brokers themselves. We’ve talked to countless brokers who insist it’s about their warm, personal service and expertise, while their advertising banners promise borrowers a low interest rate (and, of course, it’s possible to do both). We wanted to ask the decision-makers themselves, the consumers. What our survey shows is ‘Help with the application’ (29%) followed by ‘Access to specialist lenders’ (23%) are the biggest reasons consumers use brokers. Interest rates come third, at 19%, followed by ‘Complicated deal’ at 18%. Survey respondents were only allowed to nominate one main reason, as we
were looking to drill down to the essentials. Before you go rebranding your brokerage, however, consider who your prospective customers are. When we segmented responses by the type of borrowers, the big reasons for using brokers were very different, as our graph demonstrates. You may not be surprised, first home buyers prioritise help with the
application, for instance – but these results are still highly important to your marketing. We also segmented responses by income levels, but found no significant differences in what consumers wanted from their brokers. Given the overall low level of lending through non-banks, the fact that 23% of respondents went to a broker for ‘Access to
You may not be surprised, first home buyers prioritise help with the application, for instance – but these results are still highly important to your marketing
WHY DIFFERENT BORROWER GROUPS USE A BROKER 60 Lowest interest rate 54%
50
Help with the application Access to specialist lenders
40
Complicated deal
30 27%
20
23%
29% 21%
15%
28%
25% 18%
18%
29%
29% 20%
14%
10
11% 5%
0
A first-time buyer
Buying an investment property
Refinancing
Switching properties Note: remainder of responses are other
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specialist lenders’ is a significant finding. It’s no coincidence that ‘Access to specialist lenders’ is also the biggest reason for investors to use a broker. Anecdotally, brokers have told MPA that APRA’s restrictions on bank lending to investors have forced investors, and particularly portfolio investors, to look elsewhere. Consequently, the number of loans by non-bank lenders experienced the strongest back-to-back gain in 32 months in January. We also asked consumers whether they noticed brokers’ branding, aggregator and association memberships. This question has been given new emphasis by ASIC’s remuneration review, which proposed that aggregators should play a major role in encouraging good consumer outcomes and be more transparent about vertical integration.
GETTING YOUR NAME OUT THERE When you used a broker, were you aware of?
Given that just 23% of those who already used a broker know which aggregator they were with, it seems awareness of aggregators has a long way to go. More encouragingly for
why might they use a bank? Thirty per cent said they’d never consider going directly to a bank, which also means that 70% would consider going directly, for a variety of reasons.
APRA’s restrictions on bank lending to investors have forced investors, particularly portfolio investors, to look elsewhere industry associations, 42% of consumers were aware of their brokers’ association. This represents an improvement of sorts: back in 2015, we asked consumers about industry associations and two-thirds said they didn’t care. To get a different perspective on brokers, we asked consumers the opposite question:
The fact that 32% picked low interest rates should push all brokers who don’t currently conduct regular reviews of previous clients to start doing so, lest they be undercut by a branch. As ASIC is not looking to fundamentally change commissions, the 14% who said they wouldn’t use a broker if they had to pay for one will be less of a concern.
GOING DIRECTLY TO THE BANK Being able to do the entire process on their website
Lower interest rate 32%
Your broker’s brand
3% 84%
9% What would make you consider going directly to a bank for your next loan?
Your broker’s aggregator 23%
30% Your broker’s industry association 42%
More support in branch
14% I would never consider going directly to a bank
12% I’m already a customer of that bank Having to pay to use a broker
(Respondents could select more than one option, hence percentage figures do not add up to 100%)
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SPECIAL REPORT
CONSUMERS ON BROKERS
THE THREAT FROM ONLINE Some types of borrowers are far more comfortable getting a loan online than others, but face-to-face contact is still preferred across the board AS THE fully online mortgage application gets closer to reality, many have predicted that it will give lenders an advantage over the broker channel, by making it easier and more convenient to apply for a mortgage yourself. We wanted to test whether this was really the case: if fully online mortgages were available, would consumers actually want them? Thirty-eight per cent of respondents said they would be prepared to do a mortgage application online without any face-to-face contact; 34% answered maybe. Our finding that 38% would go online is very significant,
especially if you’re a broker specialising in high net worth clients, as these clients are even more likely to get their mortgage entirely online. Clients who are switching properties are also considerably more comfortable with going online: 60% answered yes to this question. Banks don’t have a monopoly on great websites, and some brokers are already operating largely online, so brokers won’t necessarily lose 38% of their customers, but they will need to adapt. Many brokers and banks have defended their decision not to go
online by arguing that mortgages are too complex a product to be sold online, and similarly 31% of our respondents said their needs were too complicated to fit into an online form. Rather than a reason to give up on online channels, ambitious brokers and developers may see this finding as an indication that we need to improve the quality of online application forms. The limited utility of online forms was consumers’ biggest concern about getting a mortgage online, followed by those who felt more comfortable dealing with people
WOULD YOU BE PREPARED TO DO YOUR ENTIRE APPLICATION ONLINE? Yes
44% Yes
31%
Yes
No
33%
Yes
25%
Up to $40,000 pa*
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Yes
No
24%
$40,001–$80,000 pa
33%
38% No
No
26%
No
28%
21%
$80,001–$130,000 pa
$130,001+ pa
Average
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face-to-face. Contrary to expectations, the number concerned about privacy was relatively low (9%); perhaps for our respondents their faith in brokers was already well established. It’s notable that the number of our respondents who used comparison sites and broker-listing sites for research were relatively low: 23% and 4%
Clients who are switching properties are considerably more comfortable with going online respectively, although we only surveyed those who had already used a broker, and many broker-listing sites have only recently been established. As brokers look to improve margins, make more of their limited time and cater to supposedly online-savvy millennial customers, many are cutting back on the face-to-face meetings and using other modes of communication. However, our survey suggests that consumers hugely value meeting their broker face-to-face at least once; there is limited interest in videoconferencing or just relying on email. However 28% were comfortable only using the phone, so there is clearly an opportunity for a minority of brokers to establish callcentre based operations. First home buyers, however, were slightly more likely to want several face-to-face meetings, although there were no other significant differences between income and borrower groups.
CONCERNS ABOUT GOING ONLINE
My needs are too complicated to fit into an online form
Privacy concerns 9% Not confident filling in the form without assistance
14%
31% What is your main concern with online mortgage applications?
23% 23%
I feel more comfortable face-to-face
I have no concerns
WHEN USING A BROKER, HOW WOULD YOU LIKE TO DEAL WITH THEM?
51%
At least some in-person meetings
28%
At least some phone calls
13%
Several in-person meetings
5%
Email only
3%
At least some video conversations (ie Skype/ FaceTime)
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SPECIAL REPORT
CONSUMERS ON BROKERS
WHAT CONSUMERS SAID ABOUT YOU Consumers have a wide range of needs and thus different demands from brokers, often trying several before finding one that fits
STAR COMMENT Our final question was the most simple, but potentially the most revealing: “Thinking back to the last time you used a broker, would you change anything?” One respondent now has a $300 Bunnings voucher with which to improve her new house, thanks to her answer:
“Yes, the last time I used a broker I felt like the person was never up-to-date on my details. In spite of many emails, I was constantly asked the same questions over and over. Emails and online forms are good for records, but phone and face-to-face conversations are also needed to obtain direct and efficient answers. Emails leave too much time and uncertainty as to whether or not the person has processed the information.”
KEEPING IT SIMPLE “Having everything in writing, maybe a standard template, that includes all circumstances, such as parental leave, would make the whole application process smoother and quicker. Also having a simpler way to identify ourselves to the banks would help hugely, as popping in to the post office with both applicants to the loan present, between 9am and 5pm Monday to Friday, is difficult.” “In a complicated situation, there is a lot of information to be gathered. To do this as a one-off helps keep control and would create a perception of better organisation – ie, that the mortgage broker is totally on top of it. This is reassuring to the lender.” “I would ask more questions. It was our first time and there were some things that weren’t clear, but because it was a lot to take in, we didn’t always ask for as in-depth an explanation as we probably needed. I think a leaflet with FAQ information would be good, and I would do research on what questions we should ask that they probably don’t want us to.”
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GETTING FEEDBACK has become a science in broking, like all areas of business. Yet getting honest (occasionally brutally honest) feedback from your own customers can be difficult, and too often feedback’s restricted to: “How satisfied are you on a scale of 1 to 5?” Our survey included such statistical questions, but we wanted to go beyond that and get a customers’ view of the mortgage process. As our three Consumers on Brokers surveys have shown, customers do not necessarily go away happy just because they got the best rate: they have a range of demands depending on their circumstances. Furthermore, as our comments show, it’s possible to get the best rate yet find the overall experience of working with a mortgage broker unsatisfying. Many commentators said they’d tried several brokers until they found one that suited them. Here we’ve brought together some of the most articulate and useful comments to brokers. We’ve excluded comments related to one-off individual situations that wouldn’t apply to most brokers, but haven’t excluded comments for being particularly positive or negative. These comments come from our final question: “Thinking back to the last time you used a broker, would you change anything?” A prize was awarded to the star comments. It’s notable that, despite the prize, a huge number of answers simply stated nothing needed to be changed; they’d had a great experience using a broker, and often had used one again.
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MEETING CLIENTS “Maybe just the times they were available to meet with us. It’s hard to organise meeting times as I work full time and don’t usually get out until at least 5.30pm.” “I used a broker to purchase my first home. I understand commissions are paid by the bank, which is fine. However, I never heard from him again. No value adds about market information. I did contact him to discuss using my equity in my property to purchase an investment property. He met me for a quick coffee. He didn’t spend time with me to bring me through the process nor did I receive any follow-up.”
PICKING BROKERS “I would definitely like the broker to provide his profile or be more transparent. I would also like to understand his subject of expertise. I am investing a huge amount of money on a house, therefore I would like someone who is reliable, transparent and honest.” “I would use a different broker. One thing I would want in a broker would be: someone who has personal experience with property investment. Also, I would want to be able to personally contact those who have used their service and hear their testimonies.” “The broker I use is an investor themselves and looks to not just this loan but what’s next and how will this affect that one. Not all brokers are investors and don’t understand potential pitfalls (cross-collaterisation, etc).” “I would make sure the broker divulges their monetary association with all the lenders they recommend. [Provide] reasons why they recommend each of the loan options. Understand the investment strategy I am working with and the feature I require in loan situations.”
BROKERS AT THEIR BEST “A broker took the worry out of my settlement. I’m a busy single parent and working full time. It was one less thing to worry about. I had several face-to-face meetings and the broker was very helpful in explaining my options and various avenues to refinance. After our first meeting, I was able to obtain all the information required, and that was about the most difficult thing to do, all the rest he took care of. I was constantly kept updated of the progress. I would strongly recommend this broker to anyone, especially if your finance is complicated.”
“I wouldn’t change anything. We have a long-standing relationship with our broker (10 years plus). She has saved us thousands in interest, clawed back hundreds in overcharges from banks, acted as mediator between banks and given us helpful perspectives and alternatives to consider.” “Not really, my broker is not only a mortgage broker but almost acts as an accountant. It’s a service that would be tough to beat!” “I love my broker. She makes everything so easy. Hence why I use her and not go directly to a bank. We have used her for four property purchases and each time it is completed with easy and within time frames required. I only see her once or twice to go over docs.” “He was full of information and was far more experienced than the bank person we spoke to. He gave us advice far beyond just what loan to go with and we had several meetings along the way just to pick his brain. Ultimately, our bank gave us a better rate directly, but he was able to match it, and it was a rate we’re very happy with.”
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SPECIAL REPORT
BROKERS ON BANKS
2017
BANKS ON
BROKERS Following MPA’s Brokers on Banks survey, the five banks ranked highest by brokers respond to their concerns, from turnaround times to ASIC’s review IT’S NOT easy to run a bank. Every year our Brokers on Banks survey calls out banks on where they’ve slipped up, whether through sloppy turnaround times, unhelpful BDMs or bad products. That criticism is important, but only if the banks take brokers’ feedback and make meaningful changes and explain what went wrong. That’s why we began our Banks on Brokers report: to find out exactly how the banks are responding to your concerns. We’re looking for industry best practice, which is why we only speak to the five banks you rated highest. Evidently these banks are doing something right when dealing with the common challenges of turnaround times. They may also be ahead of their competitors in finding better ways to work with brokers or introducing new technology into the marketplace. Therefore we’ve tailored questions for these banks based on their individual areas of success and weakness. This year’s Brokers on Banks survey also raised a
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number of issues relevant to all banks. Banks were consulted as part of ASIC’s Remuneration Review and 60% of brokers didn’t think they had done enough to defend brokers. Conversely, two thirds of brokers came out in support of branch networks – good news for the majors but less encouraging for those non-majors with less of a physical presence. We’ve asked all banks in the top five about these topics to get their views. 2017’s top five includes three of Australia’s biggest banks – Westpac, ANZ and CBA – but also two nonmajors: Suncorp and Bankwest. In recent years the Brokers on Banks top five have been dominated by the majors plus Macquarie, and so this year’s result brings a much-needed diversity to the banks’ responses and strategies for the year ahead. Moreover, it’s reflective of a more competitive lending landscape: pre-GFC, nonmajors consistently outperformed the major banks, and we’re beginning to see non-majors return to prominence.
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HIGHLIGHTS FROM BROKERS ON BANKS 2017
Product of the Year: Westpac Flexi First Option Home Loan
60% of brokers said banks didn’t ‘effectively defend the role of brokers’ during ASIC’s remuneration review
37% of brokers said extensive branch networks were a hindrance to their business
More brokers said turnaround times had worsened than improved this year
OVERALL RANKINGS
Bank
2016
2017
Westpac
1
1
ANZ
3
CBA
Bank
2016
2017
NAB
6
6
2
St. George Group (Bank of Melbourne, BankSA and St. George)
9
7
2
3
Macquarie
5
8
Suncorp
4
4
AMP
11
9
Bankwest
8
5
ING DIRECT
10
10
Channel conflict remains a problem for 82% of brokers
WANT TO HEAR MORE FROM THE BANKS? Go to MPA’s website to watch the footage from our Major Banks and Non-Major Banks roundtables for free, unedited and with your questions included. Topics include ASIC’s Remuneration Review, investor lending, foreign borrowers, turnaround times and more. www.mpamagazine.com. au/tv/
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SPECIAL REPORT
BANKS ON BROKERS
WESTPAC WESTPAC’S TOP RESULTS
Flexi First Option Home Loan
1st BDM support Commission structure Communications, training & development Online platform & services Product range Turnaround times
2nd Product diversification opportunities
3rd Credit policy
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Westpac is celebrating 200 years in business and a third consecutive year topping Brokers on Banks, an achievement that general manager of third party distribution Tony MacRae puts down to a consistent focus on customers
MPA: This is a third straight win for Westpac, a huge achievement. How have you maintained consistently good service over these years despite all the changes in the market? Tony MacRae: Firstly it’s great recognition, and we’re really humbled to have brokers vote us the number one lender for the third year running. I think what hasn’t changed over that period is our fundamental purpose, and our fundamental purpose is to help more Australians into their homes whilst ensuring they have a full life and security in retirement. We have a really strong focus on ensuring we keep things simple: we have simple processes, a simple approach to how people engage, but at the core of everything we do with brokers are relationships. Ensuring we have good lines of communication, really strong relationships, BDMs that through the good and the bad times are out there in the market talking and communicating with brokers – that’s absolutely critical to us. We’ve done technical things as well: keeping marketleading technology in this space; we’ve introduced more real-time online tracking of the home loans; we’ve played around with iPad applications to ensure brokers can have better information at their fingertips anywhere, any time. MPA: Turnaround times have been a difficult area for many banks this year, but Westpac has continued to be rated number one. How do you maintain excellent turnaround times? TM: The first thing we do is around those processes and simplifying and removing red tape: simple things like trying to remove the amount of back-and-forth touchpoints, or encouraging our operations people to pick up the phone and make a phone call, rather than send a
message or email, which means you can get to the heart of the issue quicker, and we get much quicker turnaround and simpler processes for all. The second is around ownership and accountability and ensuring all people in the value chain are prepared to take ownership and be held accountable, so applications don’t slip through the cracks. The third thing is that every conversation, every project that we implement, has a real, relentless focus on the customer. That’s something we’re really proud of and is at the centre of our value proposition. MPA: Westpac was rated ninth for interest rates. As a bank, shouldn’t a competitive offering include competitive interest rates? TM: Interest rates are one component of the value proposition for any lender … We review our interest rates regularly, and we look at them taking into account economic impact and market conditions, but our decisions around interest rates also need to bear in mind the needs of our borrowers, the needs of our shareholders, as well as the competitive market we operate in. Ensuring we balance all of those things is absolutely critical to us. Funding plays an interesting role and we’re starting to see funding costs differ for different types of loans. We’re moving into an environment where we will have differential pricing for different types of loans, and we will be able to offer, for instance, the Flexi First product at a different rate for different parts of the market, and a premium product with all the bells and whistles at a slightly higher price … We do want to support investors, but we want people to pay off their loans quicker, so we’re offering lower interest rates for those that are willing to do principal and interest and get to home ownership and paying off their loan.
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MPA: Thirty-seven per cent of brokers said extensive branch networks were a ‘hindrance’ to their business. How are you getting Westpac branches to work with local brokers? TM: We’ve spent a lot of time and resources on developing the broker-branch relationship, and to us it’s about choice: it’s about providing customers with choice of channel and choice of service. It’s not about putting one channel above the other … we very much want our branches to see brokers as an extension of their salesforce and brokers to see our branches as an extension of their operation … to the extent we’ll invite brokers into our branches to hold meetings, to have functions; we have our BDMs spend a lot of time in our branches educating the branch staff on how to interact with brokers and what’s important with brokers … in our key branches, where we have larger populations of brokers, we do have key people within the branch, personal bankers who specialise in dealing with broker customers. We respect the relationships brokers have with their customers and we’re there to complement it, not get in the way of it. MPA: Are there any changes brokers can expect from Westpac in the year ahead? TM: We’re excited to partner with MPA for your High
“We keep things simple: we have simple processes, a simple approach to how people engage, but at the core of everything we do with brokers are relationships” Performance Business Summit later this year, which will be a great partnership, with us as a key event partner. That’s part of our long history of supporting industry events, and we see this as a great opportunity to work with some of the best brokers in the industry through this investment. This month we kicked off a new sales and leadership program for our BDMs. This is largely focused on assisting our BDMs to move from a transactional, functional activity to much deeper relationships that focus on how they help the broker grow their business, not just deliver the transaction. That launched in NSW this month, and we’ll be rolling it out throughout the country and helping our BDMs to be in a much better position to help brokers.
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SPECIAL REPORT
BANKS ON BROKERS
2
ANZ Moving into second place is music to the ears of Simone Tilley, but ANZ’s head of retail broker distribution is determined to find out how the bank can be better
ANZ’S TOP RESULTS
1st Credit policy
2nd BDM support
3rd Communications, training & development Online platform & services Product diversification opportunities Product range
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MPA: ANZ has moved into second place overall this year, driven by strong performance across several categories. How do you intend to reach the top spot? Simone Tilley: Second place is a sound result in what has been a challenging year. We know there’s a lot we need to do to be the bank of choice for brokers, and we’re constantly looking at new ways to do this. Some initiatives we’re focusing on include investing in education, trying to simplify banking, and ultimately delivering a superior service to brokers and customers. We are always listening to our brokers and regularly seek feedback through one-on-one interactions with our BDMs, whether it’s on the phone, email, at professional development days or training sessions. Our brokers and customers want simplicity, trust and convenience, so we will continue to work harder and smarter. MPA: Brokers rated ANZ number one for credit policy again this year. What do you think brokers like about your approach to credit policy, and is there room for improvement? ST: The marketplace is constantly evolving, which ultimately drives credit policy. This outcome is a testament to collaboration across many ANZ teams (product, credit and distribution) which come together to implement changes so that we can deliver the best possible decisions for customers. In every conversation we ask ourselves what is right for the Australian marketplace; we consider external trends so that we can make balanced, considered decisions. Our objective is to deliver strong, responsible lending policies while also driving significant benefit to customers. We try to keep banking simple and time changes in a considered way, as we appreciate the complexity that brokers face.
When we need to communicate changes, what many do not see is the determination of our teams to ensure these changes are clear and well communicated. Our BDMs, or ‘feet on the street’, play an integral role in this. We strive to ensure they are well briefed on policy
“We try to keep banking simple and time changes in a considered way, as we appreciate the complexity that brokers face” changes because this will help our brokers, and ultimately customers, navigate their way through the deal. There’s always room for improvement and we constantly ask ourselves, in a very genuine way, how can we be better? MPA: Turnaround time has been an area ANZ has put a lot of emphasis upon. Yet this year ANZ’s ranking for turnaround time slipped from second to fourth. What are you doing to improve turnaround times? ST: We have been strong on this historically; the market has high expectations, and rightly so. Whilst I am a little surprised by the result, it’s also important that we take this feedback on board and act swiftly with sustainability in mind. We have been working in tandem with our operations colleagues on ways to reach a market-leading position, and hopefully our brokers and customers have already started to see improvement in this area.
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We understand that brokers value consistency, and it is our aim to deliver what you and your customers have come to expect from us. MPA: Thirty-seven per cent of brokers said extensive branch networks were a ‘hindrance’ to their business. How are you getting ANZ branches to work with local brokers? ST: From our own research, we know the majority of brokers are satisfied with our branch-broker interactions. There is still always room for improvement. It’s all about giving the best possible experience for our customers regardless of the channel of introduction. To develop a consistent standard of service we are channel agnostic across policy, products and pricing. The key words that summarise the answer to this question are: how we are going to build mutual respect across our entire network. We have aligned all our BDMs to districts nationally. I think there is much stronger alignment than there has been before, and we are working extremely hard to drive that alignment even closer. If we all focus on onboarding customers in an exceptional way, then this will drive symbiotic benefits for all: our branches, brokers and of course our customers. What we are
aiming to do is create a clear path. It’s important that communication lines are kept open, and when all parties appreciate the value and benefits of each other’s services, then interactions ultimately become seamless. If we bring these elements together, we can instil confidence in our brokers and our mutual customers so we are working together to enrich customer experience. This is another important element around how we convey simplicity: ANZ is easy to do business with. MPA: Sixty per cent of brokers didn’t think banks ‘effectively defended the role of brokers’ during ASIC’s remuneration review. What has ANZ done to highlight the role of brokers? ST: At ANZ, we recognise the importance of doing the right thing by our customers and by the market we are serving, and we have strong, sustainable, well-managed businesses. As one of Australia’s largest financial institutions, it’s our obligation to get this balance right. Brokers play an important role, and it’s in our collective interest to drive the best outcomes for customers. Whatever the outcome of the review, we’ll continue to work in partnership with our aggregators, brokers and regulators.
ANZ’S PLANS FOR THE YEAR AHEAD Simone Tilley says brokers can expect to see ANZ: working closely with two aggregators to ‘test and learn’ new ways of working with brokers continuing its Building Credit Knowledge webinars, which involved 3,500 brokers in 2016 and offer CPD points improving education within the bank and its third party teams to share the right information with brokers and help them grow their own businesses
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SPECIAL REPORT
BANKS ON BROKERS
3
COMMONWEALTH BANK Technology and referrals are emerging as key drivers of CBA’s success in the broker channel, according to general manager of broker sales Sam Boer
CBA’S TOP RESULTS
1st Product diversification opportunities
2nd Communications, training & development Credit policy Online platform & services Product range
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MPA: Coming third this year, CBA rated consistently well in a range of categories. How do you remain front of mind for brokers? Sam Boer: We are committed to consistently delivering the best outcomes for home buyers, and our mortgage broking partners are an important part of that strategy. We want to partner with our accredited brokers to help enhance their reputation as mortgage professionals, so we spend a lot time understanding their businesses and providing them with the support and education that’s essential to become successful in their local market. Our leading resources and insights via our Home Loan Pricing Tool, CommBroker, Property Reports, Simply Print, and ApplyOnline Dynamic Checklist enhance the ability of our accredited brokers to deliver fantastic customer outcomes.
this result, and how do you intend to improve turnaround times? SB: Improving our application turnaround times is one of our key priorities as we know how important it is to deliver a fast, consistent service for customers. Importantly, quality applications are critical to a fast, consistent credit decision, and we need to ensure basic application requirements are met at the time of submission. We’re still seeing a number of applications missing very basic information, so we need to work together with brokers to ensure they understand our requirements.
“Quality applications are critical to a fast, consistent credit decision, and we need to ensure basic application requirements are met at the time of submission”
MPA: Brokers rated CBA number one for product diversification opportunities. How do you help brokers diversify their business? SB: Our leading CONNECT program was designed for mortgage brokers to help build their business by providing a way to refer products to help meet the needs of their customers. By providing brokers with an opportunity to recommend their customers to financial, insurance and risk product specialists, mortgage brokers can help protect their customers’ assets and lifestyle.
We recently introduced ApplyOnline with Dynamic Checklist and Document Upload, which will help brokers to ensure that they’re providing us with all of the supporting documents we need up front.
MPA: CBA dropped from sixth to tenth for turnaround times this year. What has caused
MPA: According to brokers, CBA’s BDM support lags behind other major banks. Will we see any
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CBA CONNECT
changes to your BDM network this year? SB: We are committed to helping our broker partners meet the home buying needs of their customers. We offer a variety of support for brokers, including dedicated relationship managers with local expertise, strong credit knowledge and access to experts across the Commonwealth Bank. We also host personal development days twice a year for valued broker partners, which seek to help them build their brand and enhance their productivity, and we host tailored workshops for large brokerages that help educate brokers on recent product changes, credit policies and our processes. MPA: Thirty-seven per cent of brokers said extensive branch networks were a ‘hindrance’ to their business. How are you getting CBA branches to work with local brokers? SB: As Australia’s largest home loan provider, we want to ensure our customers can access high-quality home buying information and expertise whenever and wherever it suits them. This means we will continue to invest and enhance the home-buying experience across our branches, online, over the
phone and through our accredited mortgage broking channel. As part of our CONNECT program, the relationship between our mortgage broking partners and our branches ensures the best possible experience for a new customer. MPA: Sixty per cent of brokers didn’t think banks ‘effectively defended the role of brokers’ during ASIC’s remuneration review. What has CBA done to highlight the role of brokers? SB: We continue to review the report by ASIC and consider the recommendations. MPA: Are there any changes brokers can expect from CBA in the year ahead? SB: We will remain committed to enhancing the professionalism of the mortgage broking industry. We will continue to do this by providing valuable education opportunities and delivering high-quality, consistent service for our mortgage broking partners. By making things simpler, and investing in our technology and processes, we will continue to provide the best possible home buying experience for customers.
CBA’s CONNECT program is intended for brokers whose customers require services beyond the home loan. It pays commissions to brokers for the sale of non-mortgage products, including: loan protection and life insurance home and car insurance business transaction accounts term deposits personal loans All existing CBA-accredited brokers have been automatically enrolled into CONNECT. There is also a spot-and-refer Commercial CONNECT program which pays upfront commissions to brokers.
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SPECIAL REPORT
BANKS ON BROKERS
4
SUNCORP Suncorp has held its position in the top five, but new head of bank intermediaries Mark Vilo says the non-major can go one better
SUNCORP’S TOP RESULTS
2nd Interest rates
4th Credit policy
Top non-major bank in 2017
MPA: Suncorp has beaten a major bank and made the top four for a second year running. Is this the ‘new normal’? Mark Vilo: We’re really thrilled to maintain our position this year, and to come in ahead of one of the majors is testament to our team and the work they continually put in. We have always strived to be the leading non-major, and to have achieved that, as well as coming out in front of a major, is really exciting for us. Having said that, I believe there are certainly opportunities for us to go one better next year! MPA: Brokers again ranked Suncorp very highly for interest rates. Are we likely to see more competitive offers in 2017? MV: We continue to operate in a highly competitive market, and our rates are set based on a number of factors to balance the needs of borrowers, savers, shareholders and regulators. We’ve always been a strong supporter of competition, and naturally, we will continue to offer competitive deals. Having said that, we may not always be the sharpest, so we need to make sure we’re delivering in other ways. With leading brands across insurance, banking and superannuation, Suncorp is in a unique position to truly provide value by offering a variety of financial solutions to our partners and customers to meet all of their needs. MPA: Although Suncorp came fourth overall, in several categories of service brokers rated you below this level. What changes have you made to drive consistently good service across all areas of your business? MV: We know that service is absolutely key, and providing consistent turnaround times that brokers can
50
rely on remains a priority for us, and we’re absolutely focused on improving our back-office scalability to deliver consistency 100% of the time. This year we’re also going to be focusing on utilising technology in a way that helps to deliver a smarter way of doing business. This includes enhancing and expanding our upfront valuation process and utilising dynamic processes to validate information prior to assessment. We’re also going to work closer with our broker partners and ensure that we’re providing the best service proposition possible, to deepen relationships and really earn our position as the best non-major. MPA: Thirty-seven per cent of brokers said extensive branch networks were a ‘hindrance’ to their business. How are you getting Suncorp branches to work with local brokers? MV: Like most retail organisations, we locate our stores in areas where they are most relevant to customers. We do find that many customers rely more on brokers, mobile and online banking services rather than visiting a physical store, and as such we regularly review our services, channels and locations to make sure we are meeting customer and community demands. Suncorp’s store teams assist brokers by providing post-lending support for customers. MPA: Sixty per cent of brokers didn’t think banks ‘effectively defended the role of brokers’ during ASIC’s remuneration review. What has Suncorp done to highlight the role of brokers? MV: Brokers are an important part of our business as they help us to provide customers with greater access to our products and services. The mortgage broker model provides a unique service to Australians looking to buy a home or invest, and we support this choice. We do
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believe there is a role for commission and incentives to reward the performance of our intermediaries. In banking right now we face a range of challenges – remuneration is just one. For me, I think the best way forward is not only about understanding and articulating our challenges but working through how this translates for our broker and aggregator partners. I think we all recognise something is going to change, and it’s our job to help support our partners to get ready for it. MPA: Are there any changes brokers can expect from Suncorp in the year ahead? MV: Again, being relatively new to the role, I believe having some fresh eyes allows us the opportunity to look for ways we can deliver even better service for brokers. The long-term goal for us at Suncorp is to create a marketplace for us to work with intermediaries in the way that they choose. We know that by just offering products, like insurance, to brokers is unlikely to mean they will just use them, but we now have that option. There will never be a blanket approach that will work for everyone, so what we’d like to build is a marketplace that enables intermediaries to engage in other business lines or work with like-minded business people if they choose to refer. The only way we can do that is to find out more
about the needs of our brokers and their customers, and we’re in the process of doing that now. I think we will also start to see the results of having brought all of Suncorp’s intermediary businesses together. By moving away from a structure that was very
“With leading brands across insurance, banking and superannuation, Suncorp is in a unique position to truly provide value by offering a variety of financial solutions” business-line focused, we’re able to better concentrate on putting our customers and partners at the centre of what we do, and I believe our brokers will see the benefits of this change this year. We’re also looking at initiatives to bring together all of our broker partners in a marquee event that really will be focused on delivering strategic insight with practical value for all intermediaries, and across all spectrums of financial services.
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SPECIAL REPORT
BANKS ON BROKERS
5
BANKWEST This year’s shock result by a non-major was driven by a new approach to processing and keeping brokers in the loop, explains general manager of broker sales Stewart Saunders
BANKWEST’S TOP RESULTS
3rd BDM support Interest rates Turnaround times
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MPA: Reaching the top five is a great achievement for Bankwest. What changes have you made in the past year to stand out from the other non-major banks? Stewart Saunders: The last 12 months has been a really exciting period at Bankwest as we have focused on investing in strengthening our relationships with brokers and supporting them in delivering world-class experiences to customers. A key priority for us has been building a strong broker proposition which resonates with our broker partners. A key initiative was the introduction of the case ownership structure, which has led to us consistently achieving a sub-two-day approval process from the point of application to final decision. This change sees a single case owner being assigned from the point of application to the final decision. This has allowed our processing colleagues to take far greater ownership of the process at the same time as increasing accountability to deliver an improved and consistent experience. Secondly, with regard to technological innovation, we have conducted extensive research with brokers and customers to assess how we can improve the service throughout the application process. In November 2016 we rolled out the Bankwest Home Loan Tracker application, which gives brokers and customers key updates along the application process. An important step in the development of this application was the feedback we received from brokers, who were keen to ensure they were still able to provide the key communication of the home loan application being successful. With that in mind we introduced a 24-hour window into the process, during which time brokers can contact their customers directly to deliver the good news. It is exciting to see how Bankwest and brokers have
been able to work together to provide a great experience for customers while still complementing the service provided by brokers. MPA: BDM support was an area of strength for Bankwest. What makes your BDM team so effective? SS: Bankwest is very proud of its BDMs and broker support managers, who are constantly and diligently working towards ensuring they are strengthening relationships and adding value to their broker partnerships. We have a strong support structure for BDMs whereby our broker support managers are available to respond to emails and enquiries from brokers should the BDM be otherwise engaged. Our key focus is to be able to respond to enquiries in a timely and effective manner and give brokers a quick answer when dealing with Bankwest. We have continued to invest in growing our BDM support team, and drive continuous improvements throughout our processes. MPA: Bankwest ranked behind the majors and many non-majors for commission structure. Are we likely to see any change in your commission structure? SS: We will continue working with the industry to ensure Bankwest’s commission structure equitably balances a fair remuneration structure and excellent customer outcomes. MPA: Thirty-seven per cent of brokers said extensive branch networks were a ‘hindrance’ to their business. How are you getting Bankwest branches to work with local brokers? SS: Over the past year Bankwest has introduced an
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improved onboarding experience for customers who have come from brokers. This involves all customers being onboarded by our store consultants in order to deliver an outstanding customer experience right from the beginning of a customer’s relationship with Bankwest. By doing this we can ensure that customers have all their banking needs set up, and if they have any questions around Bankwest we can answer these proactively. MPA: Sixty per cent of brokers didn’t think banks ‘effectively defended the role of brokers’ during ASIC’s remuneration review. What has Bankwest
done to highlight the role of brokers? SS: Bankwest is a broker-focused bank, and building and maintaining strong relationships with brokers is very important to us. We have and will continue to work transparently with all levels of government to ensure a strong and stable banking system in the broader interests of the community and the economy ... mortgage brokers are a very important part of how we meet the home buying needs of customers. MPA: Are there any changes brokers can expect from Bankwest in the year ahead? SS: Brokers are strategically important to Bankwest,
“Our broker support managers are available to respond to emails and enquiries from brokers should the BDM be otherwise engaged” and strengthening our relationships with brokers is a key priority for us. In the year ahead Bankwest is refocusing its strategy and investing for future national growth by evolving and improving its store, digital and broker offering and strengthening its position in WA. Firstly, the launch of the Bankwest broker portal will give brokers the ability to have access to increased information on the portfolio of their loans and more information on the status of home loan applications. In addition, Bankwest will be launching a new broker website which will give brokers better access to information with which to service their clients. Most importantly, we will continue to listen to and work with the broker community so that together we can deliver world-class experiences for customers today, and for generations to come.
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PEOPLE
CAREER PATH
WHEN PRIVATE BANKING MET BROKING Century 21 Home Loans’ new national manager Ben Braysich has brought together broking, private banking and real estate
2000
2002
EARLY BROKER
MOVES TO LONDON After two years in broking, Braysich fulfilled a long-held ambition and moved to London. Approaching the age cut-off for a working visa, he was in a rush: Braysich arrived with no job, and began cold-calling employers. He ended up in sales for the Financial Times – the UK’s equivalent of The Australian Financial Review – dealing with supplements, including mortgages. “I was living in Notting Hill … there was three of us above an off-licence in a place beside a fire station, so I think it had good reasons for being cheap!”
2006
PRIVATE BANKING Private banking is a broad label; in fact Braysich started by selling Macquarie Mortgages products, setting up a group of brokers to sell these products. He was also involved in setting up Virgin Home Loans. Being a broker within Macquarie led to some strange situations. When the bank pulled out of mortgages, Braysich and his colleagues continued to broker for clients, selling other banks’ home loans. “If the client wanted to buy property I’d go for a St George loan, or a CBA loan or an ANZ loan … at least we had the contact with the client.”
2017
A NEW VISION FOR CENTURY 21 Ellis and Braysich were reunited at Century 21 Home Loans, over a decade after Braysich left McGrath. Braysich has been tasked with growing the Century 21 brand, taking its first ever steps into Queensland and looking at Sydney’s under-served southern suburbs with a recruitment drive.
“It’s a symbiotic relationship and I believe that we’re going to see more acquisitions between real estate groups and finance companies” 54
Braysich’s first job was actually in broking, going from the family business to a job at Wisdom Home Loans. He was one of the first to do the Diploma of Mortgage Lending; broking and securitisation was a new phenomenon at the time.
2004
BACK TO BROKING Coming up to his 30th birthday, Braysich weighed up staying in London or moving back to Sydney, eventually settling on the latter. He was one of John McGrath-owned Oxygen Home Loans’ first three brokers, along with Peter Scott and current Top 100 broker Peter Ellis. It wouldn’t be the last time Ellis and Braysich worked together in broking.
“It was a definitive moment in my career: if I chose to stay there it would have to be for a long tenure” 2010
SPOTTING AN OPPORTUNITY By the end of the 2000s, as Braysich recalls, “things weren’t so rosy”, so he decided it would be best to go back into retail banking. Starting at CBA-owned lender Equigroup, Braysich moved on to a more traditional private banking role. He noticed that high net worth clients in Sydney’s elite suburbs overwhelmingly used brokers, and that the bank could work with those brokers to get close to their clients.
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PEOPLE
OTHER LIFE
THE BEAUTIFUL GAME
Choice Home Loans broker Phil Sampson has been working with Moorebank Sports Soccer Club for almost three decades as a coach, director and president
2 million Australians regularly play soccer
1969
The year Moorebank Sports club was founded
6th
Australia’s position in the FIFA world rankings for women (55th for men)
BROKING HAS been graced with a number of ex-professional athletes over the years. Yet Australian sport is nothing without its grass roots – those volunteers who keep local clubs running and train the stars of tomorrow. Phil Sampson is one of those volunteers, and when he’s not running Choice Home Loans in the Sydney suburb of Liverpool, he’s on the field or in the boardroom at Moorebank Sports Soccer Club. Sampson is not himself a soccer player: “I was actually a rugby league player, and the only reason I got involved in football is because my son started playing when he was seven years old; his mother didn’t want him to play rugby league.” Now a Moorebank life member, Sampson has been working with the club since the early 1990s, on the committee, as president from 2005-15, and now as
treasurer, as well as sponsoring the club. It’s a demanding job, with no shortage of paperwork. The club has several teams across soccer, baseball, cricket, rugby league, Aussie rules and netball. That’s not including the time Sampson spends watching the games themselves: “My weekends are, to a large degree, spent at the ground, which is only just across the road from my place, which is great!” On the field, Sampson’s success came last year, as he coached Moorebank’s ladies soccer team to their third grand final in a row, but he’s not resting on his laurels. “I’ve actually hung up the boots for football while I’m on a high,” he says. “I’m coaching volleyball now; I started coaching volleyball for the first time in my life. It’s a new challenge but at the same time it’s similar; it’s just a different skill set.”
Source: Football Federation Australia / FIFA
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