Mortgage Professional Australia issue 18.06 by Key Media

MPAMAGAZINE.COM.AU ISSUE 18.06

WEâ&#x20AC;&#x2122;VE GOT YOUR BACK Debating the hot issues that could alter the future of broking

TOP 10 BROKERAGES Becoming stronger in the face of change

FEDERAL BUDGET GUIDE Everything you need to know

FINANCE AND COFFEE A community with thousands of broker followers

JUNE 2018

CONNECT WITH US Got a story or suggestion, or just want to ﬁnd out some more information?

CONTENTS 34 4

TOP 10 BROKERAGES 2018

SPECIAL REPORT

2018 AGGREGATORS ROUNDTABLE

THE BIG INTERVIEW As the moderator of Finance and Coffee, an online community of thousands of brokers, Dien Le has found himself in a powerful position: he has to promote conversation and police it

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UPFRONT 04 Statistics CoreLogic’s quarterly review shows signs of a cooling housing market

06 Opinion Connective’s head of compliance explains what changes could come from the royal commission

SPECIAL REPORT

08 News analysis

TOP 10 BROKERAGES

What a tightening credit cycle means for brokers and their customers

In the face of change, these brokerages are only becoming stronger through their commitment to superior service, client education and staff retention

FEATURES

4 30

Seven major aggregators debate fee-for-service, how the banking royal commission and the Productivity Commission will affect brokers, and what they’re doing to promote brokers’ interests

PEOPLE

twitter.com/MPA_Australia

50 Business strategy Staying in love while in business – and married

52 Advantedge’s digital edge Make lodgement and settlement quicker and easier with these digital tools

PEOPLE 56 Other life

FEATURES

This broker goes above and beyond as a volunteer emergency ﬁrst responder

FEDERAL BUDGET GUIDE ING’s treasurer takes brokers’ questions on how the budget will affect business

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UPFRONT

EDITOR’S LETTER www.mpamagazine.com.au

Buoyed by optimism

onferences can often be staid and awkward affairs where you have to force yourself out of your comfort zone to approach and talk to strangers. Brokers and journalists really should be experts at this, but for most of us it still doesn’t feel entirely easy or natural. So it’s a rare and novel experience when the connections are immediately genuine and the small talk turns into something more meaningful. That was my experience after two days in Adelaide’s Barossa Valley at the Loan Market Leading Ladies summit. Without gushing too much, the women at this conference are prime examples of the brokers this industry needs to be promoting and championing to combat the recent negative industry scrutiny. I was struck by how ambitious, passionate and committed they are to their clients, and how they go above and beyond for them because they love to. So it also made sense when some of them expressed how gutted and depressed they felt at the constant barrage of royal commission headlines. At MPA, we are trying to strike a balance by keeping you informed of the news

We celebrate 2018’s Top 10 Brokerages, which are … strengthening their value proposition by providing personalised service and education to clients and changes happening in the industry, while also celebrating brokers who are going the extra distance to achieve good customer outcomes. This issue is a good example of that. We celebrate 2018’s Top 10 Brokerages, which are dealing with changing lending policies and increased compliance requirements by investing in back-office staff and consistent training, and strengthening their value proposition by providing personalised service and education to clients. We also have full coverage of the MPA Aggregators Roundtable, which featured seven aggregator leaders debating the future of commissions, how the royal commission could change brokers’ obligations, and whether vertical integration should have a place. One of the highlights of the event came from a broker who asked the aggregators what they were doing to defend the industry. I returned from the Barossa Valley feeling energised and optimistic about brokers and the value they provide. To keep this sense of optimism going, MPA would like to know how you are improving customer service, compliance, productivity and professionalism. Email me your stories at otiena.ellwand @keymedia.com. Otiena Ellwand, editor, MPA

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JUNE 2018 EDITORIAL Editor Otiena Ellwand Journalists Abel Riototar, Nicola Middlemiss Contributors Alison Hill, Daniel Oh Production Editor Roslyn Meredith

ART & PRODUCTION

SALES & MARKETING National Sales Manager Claire Tan Account Manager Simon Kerslake Marketing and Communications Manager APAC Michelle Lam Marketing Executives Alethea Dean, Danica Mendoza

CORPORATE

Designer Cess Rodriguez

Chief Executive Ofﬁcer Mike Shipley

Trafﬁc Coordinator Freya Demegilio

Chief Operating Ofﬁcer George Walmsley Managing Director Justin Kennedy Chief Information Ofﬁcer Colin Chan Human Resources Manager Julia Bookallil

EDITORIAL ENQUIRIES tel: +61 2 8437 4792 otiena.ellwand@keymedia.com

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Key Media Regional head ofﬁce Level 10, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 • fax: +61 2 9439 4599 www.keymedia.com Ofﬁces in Sydney, Auckland, Denver, London, Toronto, Manila, Singapore, Bengaluru

Mortgage Professional Australia is part of an international family of B2B publications and websites for the mortgage industry CANADIAN MORTGAGE PROFESSIONAL neil.sharma@kmimedia.ca T +1 416 644 8740

Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as the magazine can accept no responsibility for loss.

UPFRONT

STATISTICS

Signs of a cooling market CoreLogic’s latest quarterly review is a tool that brokers can use to make confident decisions in the face of industry changes THE HOUSING market could take a hit from the royal commission’s ongoing probe into misconduct in the financial services sector. Constrained credit and a slump in customer confidence are looming challenges. In CoreLogic’s quarterly review on the residential property market, it said national growth in dwelling values had essentially stopped in its tracks. In March 2018, values increased by an annualised 1.2% – much lower

KEEPING TABS ON HOUSING SUPPLY Comparing the December 2017 quarter to the previous quarter, completed dwellings fell by 1.2% across Australia. There were 0.1% fewer new houses under construction and 1.3% fewer new units. Approved dwellings that had not yet commenced construction were 22% higher. In total, 51,484 dwellings were completed in the December 2017 quarter.

than the 9.1% a year earlier and the slowest annual rate of growth since December 2012. “With a royal commission underway into banking it is reasonable to expect that getting a new mortgage is set to become even more difficult. Given this, it is reasonable to anticipate that values are likely to continue to decline over the coming quarters, particularly in Sydney and Melbourne where mortgage demand is strongest,” the report said.

35,000

Houses

20,000 15,000 10,000 5,000 0

7 c-8 De

1.2%

$1.7trn

-0.5%

51,484

Increase in national dwelling values over year to March 2018

Outstanding mortgage debt

Fall in national dwelling values in Q1 of 2018

Completed dwellings over December 2017 quarter

Units

30,000 25,000

2 c-9 De

7 c-9 De

2 c-0 De

Quarterly dwelling completions

Source: CoreLogic Quarterly Review: The Australian Residential Property Market and Economy, released April 2018

Total housing returns over the year to March 2018 stood at 4.8%, the lowest annual returns since October 2012. While all capital cities experienced a record low over the past year, Hobart was able to generate double-digit housing returns.

Total returns over the 12 months to March 2018 0.9%

Sydney

8.4%

Melbourne

5.2%

Brisbane

6.1%

Adelaide

1.5%

7.5% 4.1% 7.9% 4.8%

$25

$20

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$15

Hobart Darwin Canberra Combined capitals

Monthly value of housing finance commitments, national

Owner-occupiers Investors

$10

Combined regions National

Source: CoreLogic Quarterly Review: The Australian Residential Property Market and Economy, released April 2018

Changes in lending policies have led to a slowdown in mortgage activity; however, stamp duty concessions for first home buyers in NSW and Victoria and low interest rates are driving demand in the owner-occupier segment. In February 2018, housing finance commitments reached $33.5bn.

Perth

18.7% -2.3%

MORTGAGE LENDING ON THE UPSWING

Billions

HOUSING RETURNS LOWEST SINCE 2012

-88 Feb

-93 Feb

-98 Feb

-03 Feb

-08 Feb

-13 Feb

-18 Feb

Source: CoreLogic Quarterly Review: The Australian Residential Property Market and Economy, released April 2018

Houses

40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0

Units

Quarterly number of dwellings approved for construction but not commenced

-05 Dec

-11 Dec

-08 Dec

-17 Dec

-14 Dec

Quarterly number of dwellings under construction

7 c-0 De

2 c-1 De

180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0

7 c-1 De

-87 Dec

Houses

Units

-92 Dec

-97 Dec

-02 Dec

-07 Dec

-17 Dec

-12 Dec

Source: CoreLogic Quarterly Review: The Australian Residential Property Market and Economy, released April 2018

INVESTOR HOUSING CREDIT SLOWS

LONGER DAYS ON MARKET

The total value of outstanding mortgage credit reached $1.7trn in February 2018. Over the 12 months to February, housing credit advanced by 6.2%, while owner-occupier housing credit increased by 8.1%. Investor credit experienced its slowest annual growth rate since October 2016.

Combined capital city homes take an average of 50 days to sell compared to 46 days during the same period last year. Homes in Sydney, Brisbane and Canberra take 14 days, 11 days, and 18 days respectively to get off the market.

35%

Owner-occupiers 30%

Combined capital cities days on market

80 70

Investors

25%

20%

40 15% 30 10%

10 0

0% -88 Feb

-93 Feb

-98 Feb

-03 Feb

-08 Feb

-13 Feb

-18 Feb

Source: CoreLogic Quarterly Review: The Australian Residential Property Market and Economy, released April 2018

-06 Feb

-08 Feb

-10 Feb

-12 Feb

-14 Feb

-16 Feb

-18 Feb

Source: CoreLogic Quarterly Review: The Australian Residential Property Market and Economy, released April 2018

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UPFRONT

GOT AN OPINION THAT COUNTS? Email otiena.ellwand@keymedia.com

OPINION

Headwinds of change Brokers have been portrayed as preying on helpless consumers while being richly remunerated. But that couldn’t be further from the truth, writes Daniel Oh IN THIS article I look at how the royal commission might change the standards imposed on mortgage brokers and what this will mean for the future of the industry. The National Consumer Credit Protection Act 2009 sets out the responsible lending obligations of brokers. It says a broker must conduct an assessment that a product or loan is “not unsuitable” for their client. In response to concerns in the ASIC review around conflicted remuneration, the Combined Industry Forum came up with this definition of “good consumer outcome”, which is considered to achieve a higher standard than the existing “not unsuitable” obligation: “The customer has obtained a loan which is appropriate (in terms of size and structure), is affordable, applied for in a compliant manner and meets the customer’s set of objectives at the time of seeking the loan.” What has changed? What is concerning is the change in narrative in 2018 regarding these standards. The Productivity Commission has recommended a ‘best interests’ duty be applied to brokers of aggregators owned by banks. And the royal commission has questioned who a broker acts for – the lender, the customer, or both? In May, the new ASIC chairman commented on the “reluctance and often resistance” to addressing conflicts in the financial services industry, especially those embedded in remuneration. He said that at times it had been recognised that the best way to deal with some conflicts was to remove them altogether.

Where are we heading? Unfortunately for brokers, the parameters are

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changing. As the industry begins to roll out CIF’s proposed reforms and looks at how to apply the deﬁnition of good consumer outcome, recent headwinds indicate an even higher standard will be imposed. After its review, the royal commission will inevitably recommend changes, and a likely outcome is that mortgage brokers could become subject to a best interests duty.

What does ‘best interests’ mean? If such a concept were introduced, the best guidance would be the Future of Financial Advice legislation governing ﬁnancial advisers, which became mandatory in July 2013. ASIC’s stance is that leaving the client in a

arguable that ﬁnancial advisers should be subject to a higher duty as their work involves dealing with the customer’s money. Finally, what does ‘best interests’ actually mean? Who determines the deﬁnition of ‘best’ and in what circumstances is it measured? What does a broker need to do to meet that standard? What does the royal commission mean when it references the meeting of community standards and expectations? In meeting such a standard, would a broker need to factor in the customer’s motivations in obtaining the relevant loan? Does it matter if that customer can easily service the loan? Would a moral evaluation of the use of the loan proceeds be required?

Connective’s view Connective does not support the imposition of a best interests duty. The current standard coupled with the ‘good consumer outcome’ concept is sufficient and appropriate. How would moving to a best interests duty practically achieve a better consumer outcome, especially if it unintentionally adds subjectivity and uncertainty to how brokers operate? The royal commission’s ﬁndings regarding ﬁnancial advisers, who have been subject to a best interests duty since 2013, make it clear that such standards have not improved customer

The royal commission will inevitably recommend changes … and mortgage brokers could become subject to a best interests duty “better” position according to the standard of a “reasonable advice provider” is key to determining whether the best interests duty has been complied with. If there is a conflict between the interests of the adviser and the client, priority must be given to the client. It is important to appreciate the differences between financial advisers and mortgage brokers and how this influences what is the appropriate standard to apply. A mortgage broker assists a customer in obtaining a loan from a third party lender. A financial adviser makes decisions regarding the deployment of a customer’s hard-earned savings. Although bad decisions could mean the customer suffers financial hardship in either situation, it is

outcomes or eliminated cases of misconduct. As a general observation, we are not concerned about the greater majority of our brokers’ ability to meet whatever standards are prescribed by regulators or legislators. We see professionals who tirelessly work for their customers, are contactable at all hours, and relentlessly pursue outcomes that support their customers’ ﬁnancial hopes and dreams. Daniel Oh is group legal counsel at Connective. With almost 20 years’ experience, Daniel has worked for multinational law firms and investment banks across Australia, Europe and Asia.

UPFRONT

NEWS ANALYSIS

A tightening cycle With the banks responding to criticism from the royal commission, brokers are bearing the brunt of slower turnaround times and lower valuations as the market enters a credit-tightening cycle

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WITH THE banks’ bad behaviour in the spotlight, they’ve been quick to respond to prove they’re making measurable changes to their lending practices and standards, forcing brokers to quickly adapt. According to UBS, the royal commission will likely result in the banks’ increasing their due diligence and reining in customers’ borrowing capacity. They have already started rolling this out in the way they calculate living expenses. In April, Westpac increased the number of living expense categories from six to 13, and it has begun requesting potential borrowers’ online banking details to check income and expenditure habits. Sam Ghoreyshi, a Smartline broker based in the Sydney CBD, says he’s observed the banks becoming slower in responding to loan applications because they’re applying a more careful approach to checking documents, transactions and living expenses, and crossing the t’s and dotting the i’s for both new and existing loans. “In terms of verification of expenses, they have gone over the top,” he says. Ghoreyshi was recently applying for a mortgage on behalf of a client making $700,000 a year, and the assessor was “hell bent” on a $100 deduction coming off her monthly pay cheque for taxi credit. This is something that never would have happened in the recent past, he says. Another example of the “fine-tooth comb” assessors are using to verify expenses had to do with one of Ghoreyshi’s clients who’d made two repayments to their mother for some grocery shopping she’d done for them. The assessor wanted to know if this was an ongoing commitment. For the last few years, Smartline brokers have been emailing clients a list of living expense categories that they have to fill out so the broker can have a more informed conversation with them and begin the verification process. Apart from the increased scrutiny around household expenses, one of the biggest changes Ghoreyshi has noticed in the last two months – perhaps as a result of the royal commission – has to do with property valuations coming in short on

reﬁnances, top-up loans and even some new purchases. “The banks are either mandating a more conservative approach to the valuers, or the valuers are obviously a lot more careful to make sure they’re not overvaluing anything right now,” he says. He’s seen clients’ valuations come in short by anywhere between $20,000 and $200,000 of the price they bought the property for or estimated it was worth. That can have a huge impact on a client’s LVR calculation. “It might mean that the bank will lend them less money or it might push a client into LMI territory, which costs the customer more. On a couple of occasions it’s made it difficult for customers to make the purchase, because now they don’t have the money to make up the difference,” Ghoreyshi says.

Once brokers explain that the lending market is changing, most clients grasp the dynamics at play, but not everyone responds with understanding towards their broker.

loans that they do put through should be of better quality.” While most clients are not calling brokers outright demanding to know about the royal

“If you have your heart set on buying a property that you might not be able to afford now, it almost comes back as the broker’s fault, whereas it’s not” Sam Ghoreyshi, broker “If you have your heart set on buying a particular property that you might not be able to afford now, it almost comes back as the broker’s fault, whereas it’s not. It’s literally that the calculators that the banks use are tougher to get through. … The positive side for the banks is that the

commission, brokers should still be proactive about communicating any relevant changes to them, Ghoreyshi suggests. But an element of calm reason is also needed: “With all these things they come in cycles; we’re just in a tightening cycle at the moment”.

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PEOPLE

BIG INTERVIEW

DIEN LE: BUILDING A COMMUNITY As the moderator of Finance and Coffee, an online community made up of thousands of members of the broking industry, this former banker has found himself in a powerful position: he has to promote conversation and police it

LIKE ANY good Melbournian, Dien Le drinks a lot of coffee – soy lattes, to be exact. That’s worth knowing, because at some point you’ll probably encounter him at a coffee meeting. He usually schedules about three per day. Le is the founder of Finance and Coffee, an online Facebook community that he began in February 2016 as a way of staying in touch with his broker and banking contacts in Victoria while he made the transition from lender to broker. The group quickly expanded beyond Le’s contacts to become a forum for all brokers across Australia. It was initially intended as a conduit to faceto-face coffee meetings, where sole operators could meet in person, talk about the industry, and workshop deals and discuss challenges, but it’s since established an even larger presence online. Today it has more than 5,500 members, the majority of whom are brokers. “A lot of them are one-man bands. The online community allows the person in their home office to reach out to a bigger family,” Le says. “When you have some sort of knowledge or familiarity with someone whose name you see

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pop up on the forum that you look at every day, it’s a nice thing to catch up with them in person.” Managing, moderating and expanding Finance and Coffee has since become Le’s

“I selected [the moderators] to ensure the page was agnostic and had a fair view of the industry so you don’t get one person touting one industry body or one aggregator over another,” he said.

“We need to be everybody’s friend, because at the end of the day we’re in one industry. Brokers can easily be divided … but there’s no place where brokers can talk to each other” full-time job. Membership is free for brokers. When they register, they are given the option to subscribe for more content and to access group discounts for the price of a coffee ($5) per month. One thing he quickly realised was that all communities, even online ones, need rules of engagement. He asked for 12 volunteer moderators, spread across every state and representing different aggregators and associations, to help him keep the page on track so it wouldn’t become another venue for ranting and bank bashing.

“As a moderator, you’ve got quite a powerful voice. You can delete, you can remove comments as well as people, so the guys I selected did a fantastic job.” Despite Finance and Coffee being a strongly rooted online community, Le is very hands-on. One of the challenges is juggling the many personalities that chime in. But if they don’t follow the rules, the moderators have no hesitation in expelling them. The administration team has kicked 1,000 people out of the group so far. Not everyone agrees with this modus operandi, and some

PROFILE Name: Dien Le Title: Founder Company: Finance and Coffee Years in the industry: 12 Career highlight: “Creating the Finance and Coffee community. It is not often that you manage to create something that a large percentage of the industry is using and, most importantly, is talking about. At the start of 2016, had I told you that you could qualify for CPD points from a social media group, you would probably have laughed at the notion. ... Both the FBAA and MFAA now allow us to issue five CPD points if we can prove member activity on the group. “With a hive mind of over 5,500 members in every state, someone, somewhere, can answer your question quicker than calling a lender BDM or going through multiple lender policy booklets/PDFs. While answers provided by another member need to be doublechecked, it is a great way to start your search for potential lenders.” Career lowlight: “The GFC. Multiple restructures, and the possibility of the lender I was employed with at the time closing business altogether, took a massive toll on me. While it all worked out in the end, what I learnt was that, as an employee, I did not have control of whether I had a job the next day or not. The seed to go out and start a business was planted, but it took many years and two more roles at two different lenders for me to actually have the courage to take the plunge into self-employment. I could not have done so without the blessing of a supportive wife.”

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PEOPLE

BIG INTERVIEW

FINANCE AND COFFEE AT A GLANCE

2016

5,570

30,000–36,000

Year the group was founded

Number of members

Number of Facebook interactions per month

Number of moderators/administrators

have parted ways to start their own groups elsewhere. But Le has come to accept that this is part of building the community he has envisioned: one in which learning and sharing is the mutual goal. He’s made the rules more rigorous as a result. Prospective members now have to register on the Finance and Coffee website where they’re required to answer a series of questions and provide their credit rep numbers. This also ensures the group is closed to the public, and open only to those who play in the third party space. This, in theory, should provide brokers with peace of mind when workshopping challenging deals, as well as allowing other allied businesses, such as loan processors, private funders and other lenders, to engage with brokers. “I’ve seen communities being built overnight, and they can also die overnight

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because those communities didn’t have rules, so anyone can post anything. It wasn’t well moderated, and when you do that you quickly lose the audience,” he says. “We’ve got an audience that is very highly engaged in the conversations that we have, and without strict rules we would potentially lose that.” Facebook data shows that there are more than 30,000 interactions on the Finance and Coffee page every month, which Le says proves the rules in place work. With lenders changing their credit policies so rapidly these days, many brokers have come to see the page as a resource enabling them to talk through scenarios, especially if their BDMs are busy. The broker can start sourcing some suggestions and tips from the group while they wait, and members have shown they’re eager to help in any way they

can, Le says. Some BDMs are also active on the group and respond to questions too. But there are some conversations the group doesn’t permit, such as talk that pits aggregators and industry bodies against each other. More recent topics, such as the royal commission, have also been quashed. “The brokers have their aggregators, and their respective associations, for that purpose and it’s their job to lobby for your existence as a broker. All associations and aggregators do massive work behind the scenes as well as publicly. Those are the ones that their questions and concerns should be directed to, not Finance and Coffee. Finance and Coffee is a platform for learning and sharing, not scaremongering.” In an industry that’s been forced to contend with heightened scrutiny and polarisation, Finance and Coffee is trying to strike a balance between keeping the group active and engaged, and also controlling the conversations so people don’t feel alienated. “We need to be everybody’s friend, because at the end of the day we’re in one industry. Brokers can easily be divided between aggregators or industry bodies, but there’s no place where brokers from across these groups can talk to each other. For some reason, I’ve managed to do that. We’re a friend to everyone.”

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SPECIAL REPORT

AGGREGATORS AGGREGATORS ROUNDTABLE ROUNDTABLE 2017 2018

2018

AGGREGATORS ROUNDTABLE Seven major aggregators debate fee-for-service, how the banking royal commission and the Productivity Commission will affect brokers, and what they’re doing to promote brokers’ interests through the Combined Industry Forum and beyond

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AGGREGATORS ARE in a tough position between brokers and banks. They have to juggle the interests of their members while also making sure they don’t alienate their lender partners. The banking royal commission and the Productivity Commission have raised a number of issues that could drastically alter the structure of the industry, affecting how both brokers and aggregators conduct their business. While neither inquiry has released a ﬁnal report, nor are the recommendations expected any time soon, the themes that have emerged were the main topics of conversation at this year’s MPA Aggregator Roundtable. Many brokers submitted questions about all the uncertainty resulting from the royal commission. The seven aggregators involved – Choice, Connective, FAST, Outsource Financial, PLAN Australia, Specialist Finance Group and Vow Financial – participated in a lively debate on whether fee-for-service would come

into play, how brokers should be dealing with heightened compliance and regulatory demands, and what the ‘best interests duty’ would really mean for brokers. One of the highlights of the live-streamed event on 11 May was a debate on the merits of bank ownership of aggregators. While there was some obvious division among the group, both sides presented strong arguments for and against. You can read all about that on the following pages. Another memorable moment was when the aggregators were stunned into silence by a prickly audience question: “You guys have been hiding through this process in my view. Why are aggregators not out in force defending our industry and your brokers?” Mark Haron, director of Connective and deputy chairman of the Combined Industry Forum, took that in stride. He defended the work aggregators had been doing behind the scenes in collaborating and consulting with various parties to establish industry reforms

that would safeguard the industry. He acknowledged that perhaps they hadn’t been proactive enough about publicising their progress, but that they also couldn’t challenge every naysayer. He also said brokers had a responsibility to stay informed too, and he encouraged them to read, watch and listen to the information out there. What it all comes down to is that in this climate neither brokers nor aggregators can afford to be bystanders. As Vow general manager Clive Kirkpatrick said, “It’s not about defending [the industry]; it’s about promoting the great service that we provide to the community”. We hope this discussion gives you a better idea of where your aggregator stands, what they’re doing to support you, and how you can advocate on behalf of the profession you love. If you want to watch the roundtable in full or read our latest coverage, visit mpamagazine.com.au.

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SPECIAL REPORT

AGGREGATORS ROUNDTABLE 2018 THE PANELLISTS

Anja Pannek, CEO, PLAN Australia

Brendan Wright, CEO, FAST

Stephen Moore, CEO, Choice Aggregation Services

What is the future of upfront commissions and how likely is fee-for-service to be applied? The fee-for-service debate has been thrust into the limelight recently as the Productivity Commission delves into whether or not this is a suitable method for paying brokers. The Productivity Commission is examining whether the fee-for-service model would remove potential conﬂicts of interest that arise from the current payment of broker commissions. The commission has acknowledged, however, that it is considering whether this could decrease consumer demand for brokers and harm competition. In an interview with MPA in March, Productivity

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Clive Kirkpatrick, general manager, Vow Financial

Tanya Sale, CEO, Outsource Financial

Commission chairman Peter Harris said that while the commission could recommend a fee-for-service model in its ﬁnal report, it was well aware of the downsides. “We’re not stupid; we wouldn’t necessarily go to a different arrangement just because it’s different,” Harris said. “It would have to be different and effective. … Can we do anything that’s better? “We are considering doing something in the commission area; we didn’t say we are going to,” he said. Tanya Sale, CEO of Outsource Financial, was keen to tackle this debate head-on at the roundtable. “Everybody in the industry is getting tired of this,” she said. “I personally don’t believe

Mark Haron, director, Connective

William Lockett, managing director, Specialist Finance Group

fee-for-service will ever come into play in our industry. I think it’s a disaster we’re even talking about it.” Sale referred to the problems faced by the industry post-GFC, when the majority of mortgages were being written through the major banks. With the royal commission ﬂagging the banks’ bad behaviour, she questioned why the government would recommend a ﬂat-fee model when it would squash competition and simply guarantee that all the mortgage business would return to the banks. “That’s not what the government wants, that’s not what ASIC wants, and it’s certainly not what we want in our industry, so I don’t believe that will happen,” she said.

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SPECIAL REPORT

AGGREGATORS ROUNDTABLE 2018

William Lockett, managing director of Specialist Finance Group, said he understood why brokers were worried, but fundamentally the commission model worked well. He also pointed to the fact that consumers were increasingly using brokers, which suggested they had no problem with how brokers were paid. “If they’re remunerated that way and the consumer votes to use their services … why are we talking about it?” he said. “At every stage during that process, the consumer has complete choice to not use them, and part of that process is full disclosure as to how they’re remunerated.” Lockett said he was surprised that fee-forservice was on the table when the common understanding was that consumers wouldn’t, nor could they, pay for brokers up front. “A fee-for-service model only supports the big major banks,” he said. Sale said what was more likely to happen with commissions were “ﬁne tweaks” as proposed by the CIF. Anja Pannek, CEO of PLAN Australia,

royal commission’s public inquiries had revealed that some planners’ behaviours still hadn’t changed.

“I personally don’t believe fee-for-service will ever come into play in our industry” Tanya Sale, Outsource Financial said the CIF’s proposed amendments, such as paying commission based on the facility utilised, net of offset, had addressed ASIC’s concerns around the risks of poor consumer outcomes. She said it was clear that a ﬂat fee disadvantaged competition and consumers who were making some of the most important decisions of their lives. “All of us believe that the changes we’ll make [as the CIF] are very sensible, but we need to continue to look at how we can evolve the industry; it’s very important,” Pannek said. Clive Kirkpatrick, general manager of Vow Financial, noted that while ﬁnancial planners were paid upfront fees, the banking

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“You would have to debate whether the remuneration actually drives behaviours or not. I think, as demonstrated in the ﬁnancial planning industry, there are still poor behaviours notwithstanding changes to the way they’re remunerated.”

How do you think the revelations by the royal commission will impact the broking industry going forward? And any thoughts on how it will inﬂuence lending, investors and servicing requirements? The royal commission has raised some serious concerns about irresponsible lending, banks putting proﬁts before customers, the

poor verification of income and expenses, and conflicts of interest. “What has come out of the royal commission, I don’t think anyone would have envisioned the level of misconduct that we’ve seen,” Lockett said. As part of its investigation, he said, the royal commission had also looked at the third party channel, which the industry should welcome. “Any changes or improvements that we get out of it, we fully endorse, but let’s not sugarcoat this. The royal commission was 98% or 99% damning [about] the banks and the banks’ conduct,” Lockett said. “I don’t know of any brokering firm that had 55,000 breaches in anti-money laundering.” As for the direct ramifications for the industry, Haron said brokers were already seeing these in the form of banks constantly reviewing and amending their policies and adhering more strictly to them. He said those changes would continue as the banks moved to overhaul how the Housing Expenditure Measure was calculated, which the royal commission had shown was not up to scratch.

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AGGREGATORS ROUNDTABLE 2018

“Most consumers, I’m sure, would be happy to stand by their broker and support them” Mark Haron, Connective “We, as an industry, unfortunately become the meat in the sandwich, or almost to a certain extent a little bit of salad that gets tossed aside. … But we will be bearing the brunt of a number of those changes,” Haron said. The Connective boss anticipates the royal commission will blow out its time frames until next year, with a ﬁnal report unlikely to be ﬁnalised prior to the next election. That means brokers will be in limbo even longer. It also means the next government will be the one actually dealing with and enacting the recommendations in the report. “As an industry, we have a lot of work to do to continue to talk about this with ASIC, with Treasury, with the government,”

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Haron said. “I think there will be a lot of opportunities, and I think the industry bodies will engage brokers signiﬁcantly to ensure that we all start talking to our customers and making sure our customers know the impacts of [such things as] no commission, fee-for-service. “Most consumers, I’m sure, would be happy to stand by their broker and support them and make sure that their local minister is aware of that as well.” Brendan Wright, CEO of FAST, took a pragmatic approach to the royal commission and the impending changes. “The regulatory times that we’re facing are just the reality of the business that we’re in. But there are clear learnings that have

come out of FOFA and ﬁnancial planning,” he said. It’s all about being on the “front foot” as an industry around the insights coming from the ongoing inquiries, Wright said. “For the brokers that are tuning in who are running businesses and are worried about the complexities of what’s going to happen next, I’d encourage you to talk to your aggregators, who are working with industry bodies; lenders, small, medium and large; and consumer advocacy groups through the CIF to take a leadership position.” Wright added that the CIF’s aim was to deliver changes that would ensure brokers’ businesses and the industry remained viable and sustainable in the long term. Pannek reiterated Haron’s point that brokers should steel themselves for the long haul. “I think for everyone it’s to realise that the royal commission and the Productivity Commission, this conversation, is going to continue for quite some time.” That doesn’t need to be viewed as a negative thing. “As an industry it will give us an opportunity to pause and think about how we want to continue to develop standards,” Pannek said. “[Brokers] want to do the right thing, and they honestly want to see our industry continue to grow and improve in terms of professionalism.”

Are accreditation policies robust enough, and what are you doing to support brokers to ensure they are sufficiently trained and educated for the job? Most of the aggregators agreed that ensuring brokers were good at their jobs had to do with ongoing education and better mentorship. “I think accreditation is one point, but ongoing education is far more important,” Kirkpatrick said. “Once people achieve their accreditation, they must maintain a higher level of education, and I don’t think the current system of PD points is the best way.”

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AGGREGATORS ROUNDTABLE 2018

To ensure brokers were providing bestquality service, Choice Aggregation Services CEO Stephen Moore said the aggregator had developed educational content that suited all learning styles, so brokers could learn in a classroom, online in their own time, or in small groups or tailored individual sessions. The aggregator has

with a number of novel initiatives around education, including taking a group of PLAN members to Stanford University in California to learn world-leading business strategies. PLAN also hosted one of the largest business development training forums in aggregation earlier this year, with more than 600 members in attendance.

“[Brokers] want to do the right thing, and they honestly want to see our industry continue to grow and improve” Anja Pannek, PLAN Australia also launched peer-to-peer sessions in which brokers share and learn best practices from one another, and these have been a resounding success, he said. “It’s not just about formal education either, and I think that’s the key.” Pannek’s organisation has also come up

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A successful broker is one who constantly thinks about the ﬁve C’s, Pannek said: customer ﬁrst, customer focused, compliance obsessed, commercially focused, and committed to the industry. As for accreditation, there was some debate around whether there should be a

limit to the number of lenders brokers could be accredited with, and what should happen when they hadn’t written a loan with a speciﬁc lender in 12 months. Sale questioned how conﬁdent these brokers would be in talking to a client and writing a loan for that product after so much time had passed, and whether they should even be allowed to sell it if they were unfamiliar with it. “There’s a lot of pushback from the industry saying ‘why shouldn’t I be accredited with everyone?’ Well, I, for one, am not a fan of that,” Sale said. Lockett agreed that if a broker hadn’t used a bank in a year, there needed to be some re-education and training to get them up to speed. “But that shouldn’t automatically give accreditation back for it only to happen again,” he said. Haron said that aggregators had let the industry down when it came to maintaining a higher accreditation standard. If the banks could rely on the aggregators’ standards,

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AGGREGATORS ROUNDTABLE 2018

broker quality and training, then a straightforward online product and policy test could be sufficient to prepare that broker to write with that lender again.

The Productivity Commission has recommended that a clear legal duty should be applied to brokers who work under bank-owned aggregators to act in the consumer’s best interests. What do you think of this and how will it affect how brokers operate? “One of the most significant yet simple achievements that came out of the CIF was the definition of a good customer outcome,” Wright said. But the CIF’s ‘good customer outcome’ was not the same as the legal definition

with the CIF’s good customer outcome definition and customer-first principles. “The best interests standard that was developed through FOFA, that didn’t work, so we need to look at that and say: what can we learn?” Haron said. “We’ll have what will be an industry best interests duty done through a customer-first focus.”

Vertical integration has been ﬂagged by the Productivity Commission as an area of concern. How important is independence to your business? The Productivity Commission’s draft report into competition in the ﬁnancial system cited the concerns of consumer advocacy groups that vertical integration could limit

“A good customer outcome is a really practical, tangible and relevant way to describe what we’re trying to achieve” Brendan Wright, FAST of the ‘best interests duty’. “It’s up to us to continue this leadership position around helping the Productivity Commission and the royal commission understand that a good customer outcome is a really practical, tangible and relevant way to describe what we’re trying to achieve,” he said. However, Wright said that if the best interests duty did get applied, it should be adopted by the whole industry and not just a select group. “We as an industry continue to lead towards a good customer outcome, and putting the customer ﬁrst, as … the appropriate way to answer all the critics and questions coming from royal commission and Productivity Commission.” Haron said that while the best interests duty would be a recurring theme for the two commissions, the industry might be able to satisfy this duty by moving forward

an adviser’s objectiveness and the options and information available to consumers. “The reality is that most consumers are only shown a limited amount of the market, and the broker often receives incentives to act as a sales channel in a way that increases

the significant levels of concentration in the mortgage market,” consumer advocacy group CHOICE said in its submission to the commission. At MPA’s roundtable, there were some polar opposite views on whether bank ownership had a place in aggregation and whether it should be tolerated. Moore said NAB’s ownership of Choice Aggregation Services had made it a better business. “The level of investment that we’ve been able to make to directly benefit brokers and the people we’ve been able to put on would not have been possible without NAB’s support.” He argued that both brokers within the Choice network and those outside of it had benefited from NAB being a vocal supporter of the channel. “I think ownership – you know, ‘skin in the game’, in other words – has been a key reason behind that, and unfortunately we can’t say that for all lenders at the moment.” Moore ran the stream at the CIF on disclosure of ownership, for which the group has since proposed clearer guidelines. He said the most important thing was for brokers to be transparent about ownership so customers were well informed and able make their own decisions. However, Lockett, of Specialist Finance Group, didn’t agree. “My firm view is that lenders should play

CIF REFORMS OF OWNERSHIP DISCLOSURE • Disclosure of ownership structures will be required if there is “signiﬁcant inﬂuence” (for example, 20% ownership or greater). • Disclosure of ownership structures should extend beyond mortgage brokers and apply to all players in the home loan distribution chain, including lenders and aggregators. • Disclosure of ownership structures should be included in marketing material, digital formats, as well as at all distribution points (for example on websites and at physical premises). The reforms should be implemented by the end of 2018.

Source: Combined Industry Forum response to ASIC Report 516

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AGGREGATORS ROUNDTABLE 2018

A NEW PUBLIC REPORTING REGIME The CIF has proposed providing the following information to ASIC to increase customer outcomes and competition in the home loan market. Aggregators to publish and provide to ASIC: • List of all lenders available on panel and percentage share of business written with each over the previous ﬁnancial year • Spread of number of lenders being used by brokers in the group/ aggregator (in the last 12 months) – % of brokers using <3 lenders – % of brokers using 4–7 lenders – % of brokers using 8-plus lenders • Weighted average commission rate percentage earned in the previous ﬁnancial year for mortgages

no part in ownership of an aggregator,” he said, something that has been reinforced by the revelations coming out of the royal commission, which have highlighted the conflicts that arise from vertical set-ups in financial advice. “Banks can still firmly support the third party channel as a prime business partner. There are many ways that you can give

Kirkpatrick, of Vow, provided a balanced perspective. “Aggregators need capital to provide services to minimise the costs back to the broker. [Having] a part shareholder that’s a ﬁnancial institution providing that capital so you’re providing better services is great for the broker and therefore the customer.” The broker’s job is to put the customer

“[If ] you put the customer first, I’m not really sure if it matters who the aggregator is owned by” Clive Kirkpatrick, Vow support; you don’t have to have ownership. And it is a clear conflict of interest and a perceived conflict of interest that I don’t think should be in our industry.” Moore countered that the best way to manage conflicts was through disclosure and clarity, but he agreed to disagree with Lockett.

Lenders to provide to ASIC: • Weighted average pricing of home loans in the previous financial year across their different distribution channels (Further work to define the terms is ongoing) Brokers to publish to customers: • List of lenders available to the customer via the broker’s aggregator • Number of lenders used in the previous financial year • Top six lenders and % of business written in the previous financial year

ﬁrst and match them with the most suitable product for their needs, regardless of who owns their aggregator, he said. “[If ] you put the customer ﬁrst, I’m not really sure if it matters who the aggregator is owned by. The broker, even though they’re not allowed to be called independent, actually have independence of thought; Source: Combined Industry Forum response to ASIC Report 516

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AGGREGATORS ROUNDTABLE 2018

BROKER QUESTION Why are aggregators not out in force defending our industry and their brokers?

they provide an independent view and independent advice on what is best for the customer at that point in time.” Sale, from Outsource Financial, said the most important thing that her independent aggregator had championed for years was full transparency. “I think that’s where this best interests duty comes into play, because banks are owning aggregators, whether it’s 100% or partially. All I’ve ever wanted for the industry and the consumer is that full transparency. And that’s what we’ve fought for as independent aggregators for a number of years,” she said. Sale said that she wanted to see ownership clearly stated on all compliance documents and websites to remove the “grey cloud”. “We’ve got to remove those muddy waters and make it fully transparent so that the consumer can make an educated decision.”

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“I think we well and truly are,” said Connective director Mark Haron. “I understand brokers are very frustrated with the negative publicity that to a certain extent they have been getting [from the royal commission and Productivity Commission].” But he said aggregators were working with other industry bodies through the CIF to consult on the reforms to ensure they were fair and representative of brokers. “Perhaps we haven’t been as active at getting out there and communicating this as effectively to brokers as we could. But there is a lot of information out there, and I think what a lot of brokers haven’t done is gone and listened to that information. Listen to the podcasts, watch the live streaming, go on to the MFAA’s website. They haven’t even read their own aggregator’s submission to the Productivity Commission. Please go and have a look at these things before you start challenging and saying aggregators aren’t doing anything,” Haron said. “This is a long game; it’s not a short game. It’s not about just shoving down one journalist who might say something stupid ... All aggregators will be looking, along with the industry bodies, to engage brokers and their customers to ensure that a balanced view is given around the great service that mortgage brokers provide, so watch this space.” Stephen Moore, of Choice, said that while he knew it could feel disempowering being surrounded by so much change brokers thought they couldn’t control, it didn’t mean they were helpless. “You can get actively involved at a local minister level, for example, which is key. But ﬁrst and foremost, we should never forget that more Australians are choosing to use a broker than any other channel, and there’s a reason for that. That’s because brokers provide great experiences to customers, so the noisier the environment becomes, the more uncertainty there is for consumers – and that’s when customers need brokers even more. “So the message for brokers is: stay focused on delivering great customer experiences.”

FEATURES

2018 FEDERAL BUDGET

Brokers’ budget guide ING’s treasurer, Michael Witts, answers brokers’ questions on how the latest federal budget will affect ﬁrst home buyers, interest rates and household indebtedness THIS YEAR’S federal budget didn’t prove to be front-page headline fodder for long, especially not compared to last year when the major bank levy was announced. Instead, Treasurer Scott Morrison presented a balanced and subdued budget on 8 May that promised tax relief, support for older Australians, as well as a big boost in infrastructure spending. So what does all this mean for brokers? Here, ING treasurer Michael Witts answers brokers’ questions on how the budget will affect their businesses, the RBA cash rate and housing prices, among other issues.

Redom Syed, Confidence Finance: Do you believe the income tax cuts in the budget will have an influence on consumption figures, inflation and/or the timing of RBA cash rate changes? Michael Witts, ING: The tax cuts announced in the recent budget are the first instalment of broader income tax reforms due to be introduced over a number of years. Initially they focus on lower income levels, which could be expected to translate to additional spending – ie lower-income earners will have

NEW TARGETED TAX OFFSET, 2018/19 $90,001–$125,333

Taxable income

1.5m taxpayers

$48,000–$90,000

Benefit of new tax offset gradually reduces from $530 to $1 Full benefit of $530

4.4m taxpayers Tax relief between $200 and $530

$37,001–$47,999 1.8m taxpayers

Tax relief up to $200

up to $37,000

Source: Federal budget 2018

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Redom Syed, Confidence Finance: Unlike last year, this year’s budget had little to say on housing affordability and, specifically, first home buyers. Do you think this government should be doing more to tackle housing affordability, or should this be a matter for individual state governments? MW: We have seen first home buyers returning to the market as investor activity is reduced, employment markets

2.4m taxpayers

more to spend. However, given the high level of household indebtedness in Australia, lowerincome earners might use the extra cash to reduce their debt. Against this background it is highly unlikely the RBA will be inﬂuenced by the tax cut in its policy considerations.

Sponsored by

WHILE SPEAKING to each of the winners on this year’s Top 10 Brokerages list, several similar themes emerged: consistency, service, communication and education. The brokers excelling amid all the lender policy changes are the ones whose robust back-end systems and knowledgeable, often long-standing staff support these four principles. What’s emerged is that the division between brokers and support staff is blurring. Many of the brokerage owners on this list told us about the importance of training staff from the ground up so they have a clear understanding of how the entire business works. One brokerage has instituted its own broker trainee program; another has support staff who are cross-trained as qualified brokers even though they don’t intend to ever sit in front of customers. Many are also seeing direct results from bulking up their back-end teams. In order to be a productive and successful operation, collaboration and constant communication internally among staff and externally with clients is imperative. One brokerage has started hosting weekly lender policy update sessions to stay on the front foot. Another broker boss makes dozens of calls to new and existing clients every day, even though he’s also the face of the business. It helps that many of these brokerages have been able to retain their staff for years – even a decade or more in some cases. One of the notable benefits of that is being able to foster a sense of familiarity and neighbourliness in the office that encourages clients to return to their local broker when the time comes. One broker talked about writing loans for several generations of the same family. While these brokers are industry success stories, they haven’t been immune to the challenges. With sometimes fewer clients walking through the door, there’s more pressure on brokers to utilise their referral networks, optimise word-of-mouth and Google reviews, and deliver approvals for those who do turn to them. They’ve also experienced lags in loan processing times, shortfalls in valuations, and the headaches that come with lender appetites changing from week to week. Despite all the inquiries burdening the industry at the moment, these brokers do their work with optimism and pride. They believe that those brokers who continually improve their commitment to customer service, good consumer outcomes and education will come out stronger and more relevant than ever. The 10 brokerages profiled in this report showcase the valuable and meaningful work brokers are doing on behalf of their clients.

HOW WERE THE WINNERS SELECTED? This year we asked all of the major aggregators and franchise groups to submit up to three of their most successful brokerages. We ranked them on a combination of four metrics: total loan book size; settlements over a 12-month period; settlements over that 12-month period divided by loan writer; and conversion rate. We rank brokerages on each metric then combine the rankings to produce the ﬁnal tally. While things in the industry are changing, there’s no easy way to rank on “good consumer outcomes” other than through numbers like these. In the future, we hope to include a larger range of customer service indicators.

A MESSAGE FROM OUR SPONSOR At NAB, we believe brokers play an essential role in providing strong outcomes for consumers and enhancing competition in the home loan market and the Australian financial landscape at large. That’s why we are incredibly proud to sponsor and support MPA’s Top 10 Brokerages – a fantastic initiative that recognises and celebrates the very best in the business. Building a leading brokerage is not an easy thing to do. It truly requires an unwavering commitment to delivering the best for customers. Indeed, the most successful brokerages are those that fully grasp the importance of the lending journey for their customers; those that know and appreciate that broking is about developing strong, long-term relationships, and the value of going above and beyond to help customers achieve their financial dreams. It’s clear that customers still value having a trusted adviser they can talk to – someone who can help them navigate the market, and who takes the time to gain an in-depth understanding of their specific needs and goals. These Top 10 Brokerages should be particularly applauded for staying on top of industry changes and trends. Forward-thinking brokerages are streamlining processes and embracing technology to add further value and efficiency to the evolving needs of customers. As more and more Australians choose brokers to assist with some of their most important financial decisions, NAB is committed to the broker channel and to supporting brokers in building quality customer-focused businesses. On behalf of NAB, I would like to congratulate all of the brokerages who have been recognised in MPA’s Top 10.

Steve Kane

General manager, NAB Broker Distribution

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TOP 10 BROKERAGES

LOAN MARKET NEW FARM Dealing with change means constant communication with clients and the team

Total loan book

$242,917,643 Total settlements 1 March 2017–28 February 2018

$127,167,840 Number of loan writers

4 Avg annual volume/broker

$31,791,960 Conversion rate

97%

LIKE MOST other brokers on this list, Loan Market New Farm’s Paul Hixon says it takes about 30% more time to put together a loan these days. The brokerage has therefore expanded its team over the last 12 months, adding more credit staff to handle the new changes and restrictions that the industry is currently facing. To maintain exceptional service throughout these challenges, the emphasis is always on communication. “Whenever you touch a ﬁle, you communicate with your customer. So when you lodge a ﬁle you tell them;

when you send something extra to the bank you tell them. We communicate so much that they don’t need to question or worry about anything,” Hixon says. With over 50 years’ combined credit experience, each team member brings a wide breadth of knowledge and skill to the company. Hixon’s background in real estate has allowed him to develop strong referral relationships with agents. And his colleague, Adam Wallace-Harrison, has a keen eye for analysis and process, thanks to his previous experience as a rugby player and coach.

LOAN MARKET, ONE NETWORK BROKING

Regular and consistent training is the key to brokers’ relevancy

Total loan book

$444,671,995 Total settlements 1 March 2017–28 February 2018

$168,428,608 Number of loan writers

6 Ave annual volume/broker

$28,071,435 Conversion rate

95% 36

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WITH BANKS and lenders virtually changing their requirements overnight, brokers are being forced to adapt quickly and with minimal guidance. “While these changes are new, we are deﬁnitely spending a lot more time on every ﬁle and really questioning ourselves and asking, ‘What does the bank want to see?’ Additionally, it is taking at least a week longer to get an application approved,” One Network Broking co-owner Nick Gurry tells MPA. He runs the business with Matt Simms. While Gurry and Simms applaud the stricter measures, they say communication from lenders to the

third party channel has not always been sufficient. To stay relevant and up to date with industry changes and expectations, the team has increased its training program. “Everything we do is now about ensuring we are meeting the obligations of the banks and customers,” Gurry says. The brokerage puts great emphasis on support and training to encourage professional development and staff retention. Its successful trainee program works with new entrants from the ground up for six to nine months, allowing them to shadow the top brokers.

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TOP 10 BROKERAGES

AUSSIE BELMONT NSW Planning for the future with a new co-franchise owner on board

Total loan book

$383,600,000 Total settlements 1 March 2017–28 February 2018

$177,900,000 Number of loan writers

3 Avg annual volume/broker

$59,300,000 Conversion rate

85%

AUSSIE BELMONT NSW is serious about providing genuine customer care. “We talk about it every day,” says franchise owner Phil Gallagher. His team practises daily 10-minute ‘stand up’ sessions to make sure everybody is in the loop. The habit allows them to identify issues that need greater attention so they can better service customers. Gallagher believes in mulling over what one could have done differently to make the deal better. “We can’t just behave in a way that we did a week ago, because the world is changing fast,” he says.

“Nothing feels better than helping a client buy their ﬁrst home, an investment property, or whatever it is they think wasn’t possible to achieve,” Gallagher says. “Then, down the track, I get to talk to them about how it changed their lives.” Gallagher sees an even brighter future ahead with the addition of existing client Nicolas Jones as co-franchise owner. “It’s really about taking us to the next step. … Our objective is to create succession in the business, to bring in new blood with new ideas and focus.”

AUSSIE PARRAMATTA

Aussie Parramatta strives for deeper relationships to better meet customer needs

Total loan book

$745,200,000 Total settlements 1 March 2017–28 February 2018

$178,500,000 Number of loan writers

6 Avg annual volume/broker

$29,750,000 Conversion rate

85% 38

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RECENT CHANGES to LVRs, interest rate margins and interest-only lending have created challenges for Aussie Parramatta and other brokerages, but they have also presented opportunities for brokers to strengthen their value proposition and service offering. “Compliance requirements and administration had to be built into our processes to ensure efficiency and consistency across our team while meeting obligations,” Aussie Parramatta co-franchisee Ross Le Quesne tells MPA. Aussie Parramatta has actually reduced the number of brokers on staff to focus on processing quality loan

applications and deepening its relationships with existing business referrals. Le Quesne says clients want not only a competitive rate and a speedy response and solution from their brokers but also to gain an education and receive personal service. “We’re moving away from emails and non-personal communications to regular phone calls,” Le Quesne says about the team’s effort to increase customer retention and referrals. He advises brokers to stay updated on policies and products, and gain a thorough understanding of external business inﬂuences.

ICHOICE

Celebrating gender diversity in this growing business

Total loan book

$456,166,000 Total settlements 1 March 2017–28 February 2018

$263,000,000 ICHOICE HAS two women to thank for its success. Operations manager Victoria Moussa, a former fruit shop employee, runs the entire iChoice business; she is up for nomination for Connective’s loan administrator award and often works Saturdays, even when not asked. iChoice sales manager Alexia Pettenon, a famous property auctioneer on weekends, joined the business after being a client of iChoice managing partner Jason Khoury’s for a while. After hitting the gym, she opens the office at 7.30 a.m. every day.

“Both Victoria and Alexia are lovely, compassionate people. Our clients love them,” he says. To keep customer satisfaction high, iChoice also employs a compliance manager to input data and uses a CRM to keep in touch with customers during lodgement and after settlement. A move to a new office space in a refurbished 1963 CBA building in Strathﬁeld is another source of pride for the team as they continue to provide the knowledge and trust many clients have come to rely on.

Number of loan writers

2 Avg annual volume/broker

$131,500,000 Conversion rate

75%

MORTGAGE CHOICE MELBOURNE Staying on the front foot with policy changes brings new leads

5 Total loan book

$747,832,689 Total settlements 1 March 2017–28 February 2018

“THE LENDING challenges have been massive this year,” says Cameron Price, but that hasn’t slowed business for the Mortgage Choice franchise he and Stephen Zamykal run in the Melbourne CBD. “We’ve felt the changes to lending in the inner city … and for overseas borrowers, shortfalls in valuations, constricting of lending policies, greater deposits required, self-employed assessments getting harder, lenders now taking into account debts in company names for an individual” – and the list goes on, he says. To combat this, the brokerage introduced regular Tuesday morning lender catch-ups. A different lender

or supplier will visit the brokerage every week to talk to brokers and support staff about overall industry trends, lender-speciﬁc changes, and to provide tips and tricks. As a result, “we’ve been able to get on the front foot and not get caught out with any changes”, Price says. For brokers like Price and his team, it just proves that, for those who are knowledgeable and keen enough, the tightening landscape actually presents some new opportunities. “Some ﬁnd it too difficult and are giving up, but we’re getting a lot of clients who’ve been to see someone and they’ve been turned away.”

$188,648,243 Number of loan writers

4 Avg annual volume/broker

$47,162,061 Conversion rate

91% www.mpamagazine.com.au

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TOP 10 BROKERAGES

MORTGAGE CHOICE GLENELG This regular Top 10 contender says longevity, consistency and customer care are the keys to success

Total loan book

$1,106,950,974

Total settlements 1 March 2017–28 February 2018

$177,187,619

KEITH CAINE’S team at Mortgage Choice Glenelg

Number of loan writers

Avg annual volume per broker

$59,062,540

Conversion rate

90% 40

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in Adelaide had the largest loan book among this year’s Top 10 contenders. Caine says it’s all about longevity. Over the last 20 years, the brokerage has built a standout reputation in the local community by offering a great service. “We are known for being a trusted and knowledgeable brokerage and have built our book by working extremely hard and delivering well over and above customer expectations for a very long time,” he says. But the business still encounters the ups and downs of the market, including all the extra time it now takes to prepare an application. Caine says while the number of enquiries received are down, the number of loans settled in the year to date are up. “We are working harder to close the customers that are coming in,” he says. The business has expanded its mortgage broking team to four customer-facing brokers, and has also bolstered its ﬁnancial planning arm. Caine is conﬁdent that no matter how difficult it will become for brokers, his business is not going anywhere. And that really comes down to customer service, which he is constantly improving by setting customer expectations early and communicating with

“No matter how difficult it will be made for brokers, we offer a fantastic service and we’re not going anywhere” them regularly. It also helps to show customers how well you know your stuff, Caine says. Clients are increasingly turning to brokers to gain a clearer understanding of their ﬁnancial position and ability to borrow money. “Too often they are misinformed by branch staff. We are experts in our ﬁeld and our customers know it,” he says. If Caine is someone you wish to emulate, it might also be a good idea to share his passion: “I love numbers and I love people! Mortgage broking allows me to experience both.” But he says new entrants should warn their families that they won’t be around for a while. “Prepare to dig your feet in and work very hard.”

AUSSIE CARNEGIE In a sea of change, this brokerage is all about providing a friendly and familiar service to its customers

Total loan book

$522,600,000

Total settlements 1 March 2017–28 February 2018

$173,200,000

GLENN ENGLISH’S favourite day to go to work is Saturday. That’s when he schedules five to eight appointments and gets to do what he loves best: spend time with clients. “It’s great. You don’t have to worry about the phone ringing because it’s fairly minimal on a Saturday. You don’t have to worry about dealing with the banks or dealing with the assessors or anything like that; it’s just face-to-face with clients,” he explains to MPA. Thanks to Aussie Carnegie’s set-up, with two brokers and five support staff, English is able to spend quality time in front of clients or on the phone with them, and the firm’s conversion rate is a lot higher as a result, he says. The support staff are integral to the work behind the scenes, which is more important than ever now that changing lending requirements have doubled the amount of paperwork. It also helps that three of them are accredited brokers, so they have a thorough understanding of the loan process and can readily respond to client questions. As for English, it’s not uncommon for him to make up to 40 follow-up phone calls per day to check in on new and existing clients. “I keep ringing, but it’s not overbearing. I keep ringing until I get the deal, or to check in on settled clients to make sure things are still

running smoothly for them,” he says. English believes that consistency is key. Brokers build trust by being approachable and becoming familiar faces who clients want to deal with again. The idea is to give clients that friendly community experience that maybe their grandparents once had with their local bank branch manager, he says. “They don’t get that if they ring a call centre.” English will celebrate 12 years at Aussie Carnegie in June. And he’s not the only one: another staff member has also reached that milestone. Many of the other employees have been around for at least ﬁve years, which means staff and clients get to know each other by name. “I think it’s really just the customer service and knowledge clients are looking for, and somebody who is going to treat them with respect and get the job done,” English says. That will become increasingly important as the lending environment becomes tougher for brokers to work in, but English isn’t worried. He believes it will just make those brokers who already deliver excellent service stronger. “When they make all these changes, a lot of brokers fall off, so the guys who are still remaining get busier.”

Number of loan writers

Avg annual volume per broker

$86,600,000

Conversion rate

97% www.mpamagazine.com.au

SPECIAL REPORT

TOP 10 BROKERAGES

LOAN MARKET BAYSIDE Borrowers are looking for more than just a good rate; they want brokers who can offer an education

Total loan book

$509,926,131

Total settlements 1 March 2017–28 February 2018

$226,326,279

ACCORDING TO Loan Market Bayside’s Josh

Number of loan writers

Avg annual volume per broker

$113,163,140

Conversion rate

92% 42

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Bartlett, clients are thirsty for knowledge. They aren’t turning to brokers just to talk about which lender has the best interest rate. They want to know what’s going to happen when they’re in that loan product and how it’s going to work for them, he says. If a client comes to him looking to refinance, it could be that they’re experiencing financial stress. It’s all about assessing the situation so brokers can provide them with what they’re really asking for: an education. With 11 years of experience as a personal trainer under his belt, Bartlett is an expert when it comes to analysing people and understanding their psychology. It’s important not to project one’s own thoughts or opinions on others as a broker, he says. “Figure out who they are and how they live their lives.” One way his brokerage does this is by having clients fill out their living expenses on their own first so they can have a more thorough conversation about it once they come in for an appointment. When Bartlett began broking seven years ago, the landscape was a lot less chaotic. Bank policies

and pre-approval criteria were consistent for extended periods of time. Today, clients often find themselves in limbo, where they may be preapproved by a lender one week and rejected a couple of weeks’ later, putting a huge amount of pressure on brokers to problem-solve on the fly and find quick solutions. To keep clients abreast of the constant changes, Bartlett’s team send regular updates to pre-approved clients via text messages. To make the loan journey smoother and easier on clients and staff, Bartlett’s team are constantly training. They do 20-minute training updates almost daily, in which they exchange what they learned today that they didn’t know before. “One person can’t know everything, but if one person notices something different, they can share that knowledge with the rest of us,” Bartlett says. They are also avid listeners of the Loan Market compliance podcast, of which there are now eight episodes. Bartlett believes that the more educated brokers are, the more they’ll embrace the changes and come out on top. “Our business is strengthened because we’re constantly learning,” he says.

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TOP 10 BROKERAGES

MORTGAGE CHOICE BRISBANE CITY Matt Cunliffe’s young, energetic team show commitment to both their customers and each other – making for a winning combination

Total loan book

$712,265,471

Total settlements 1 March 2017–28 February 2018

$262,034,000

Number of loan writers

Avg annual volume per broker

$52,406,800

Conversion rate

93% 44

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MATT CUNLIFFE cracked the number one spot this year after taking the silver medal in last year’s competition. While this brokerage is no stranger to Top 10 glory, it’s an impressive result that it surpassed the Sydney and Melbourne strongholds – and during a time of tightening credit and rapidly changing bank policies. There’s good reason for its success: Cunliffe’s firm is young, energetic and dedicated to customer service, education and nurturing its staff. Cunliffe believes his brokerage’s win this year comes down to the team’s commitment to their customers and each other. “We operate as a family so no one is left behind,” he says. “Everyone is working towards the same goal, and that same goal is a great client outcome. The better the client outcome, the more frequent we get to help.” But there are some unique aspects to the business, which is spread across two offices and covers four franchise areas in the Brisbane region. For one, the average age of its employees is around 28. They bring a diverse range of skills and experience to the job, with degrees in finance, business, marketing, and, most recently, construction management. “I don’t hire brokers into the business; we hire support staff and then train them to become brokers,” Cunliffe says. “As long as we get a good feel for them and they have the right drive and hunger to perform within our business, I’m confident in our ability to train and teach them.” They are taught from the ground up, starting with data entry, processing, submission quality and compliance and sales. They’re also cross-trained so

customers don’t feel one person’s absence when they get sick or go on holiday. To make sure they’re offering clients the best service, the team constantly seek client feedback. “We have a very open office where everyone discusses everything with everyone. We have team meetings every week. We put things on the table to discuss how we can improve,” he says. “We’re a big business in the numbers we do, but we’re also a small business, and that allows us to be nimble and adapt to the different needs of our customers.” While he may have a young team, Cunliffe’s brokerage has a broad client base and it has never tried to focus exclusively on millennials or the first home buyer market. “With the professionalism of the staff and the brokers, we can overcome any potential concerns that an older client might have in working with a younger broker,” Cunliffe explains. Regardless of age, clients are coming through the door for an education. “That’s where brokers really need to hang their hat, on the ability to educate.” As banks overhaul their policies, and turnaround times are blown out, brokers have to manage their clients’ expectations while still making their proposition attractive. Cunliffe is a big believer in “underpromising and overdelivering”. “Anyone can lodge an application – you can do it online yourself, you don’t need a broker for that – but if you want a good outcome and you want to learn and set yourself up for the future, I think that’s where we really shine.”

“We operate as a family so no one is left behind. Everyone is working towards the same goal”

NAB relationship manager Dominic Amor (left) with Mortgage Choice Brisbane City owner-manager Matt Cunliffe

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ALT-DOC LOANS

Embracing alt doc Once known for their complexity and questionable reputation, alt-doc loans have undergone an image overhaul of late, becoming the ideal product for many self-employed Australians, writes Nicola Middlemiss

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AS THE gig economy continues to flourish, many Australians are choosing to abandon traditional modes of employment in favour of more flexible working options that suit their individual needs. In fact, data from the ABS shows that the number of independent contractors surged from 986,000 in 2013 (8.5% of the workforce) to 1,310,000 in 2015 (11.2%) – the highest rate since ABS records began in 1978. However, independent contractors are just a portion of the much larger, self-employed workforce and, according to advocacy group Civil Society, around 2.4 million people across the country now identify as self-employed. Despite this growing demographic, many self-employed Australians are still unfairly disadvantaged when it comes to securing finance as the big banks continue to narrow their spectrum for lending and buckle down on income and expense verification. “The reality is that self-employed customers don’t always tick all the boxes of the banks, nor can they satisfy the standard income policies that haven’t been reviewed for some time,” says Aaron Milburn, director of sales and distribution at Pepper Money. The gravity of the situation was highlighted in a 2017 survey by Pepper, which found that 26% of rejected loan applications were filed on behalf of selfemployed individuals. The same study also uncovered a glaring lack of consumer awareness, with more than half of all unsuccessful applicants oblivious to alternative options in the market. “Brokers need to play a role in not only educating these customers but helping them achieve their goals,” Milburn told MPA, pointing to alt-doc loans as the ideal solution. Sometimes referred to as low doc or

lite doc, alt-doc loans are best suited to borrowers who can’t provide sufficient documentation to traditional lenders – such as those who have been self-employed for less than two years or whose tax returns aren’t up to date. Depending on the category of alt-doc loan, a variety of alternative documentation can be used to guarantee a borrower’s ability to repay a loan, including business bank statements, business activity statements and an accountant’s letter. “Often this type of documentation is more reflective of the current state of a

“The reality is that self-employed customers don’t always tick all the boxes of the banks” Aaron Milburn, Pepper business, and over time has proven to be more accurate than 18-month-old tax returns,” Milburn says. Despite the convenience and flexibility they afford borrowers, alt-doc loans aren’t exactly renowned for their squeaky-clean

reputation and have even been vilified in the mainstream press in the past. As a result, some brokers remain reluctant to offer this option to their clients. However, Daniel Carde, general manager of third party distribution at

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ALT-DOC LOANS

THE MAJOR PLAYERS

% of loans that are alt-doc

Compliance support

Specialty area

66.4% of settled loans (YOY 2017–18)

Over 30% of applications

15–20% of originated loans each month

Undisclosed

Partners with aggregators to provide regular workshops and training on the technical aspects of writing a non-bank loan, including common scenarios and typical requirements

State-based webinars, in-house credit training with credit assessors and one-on-one training

Allows borrowers to support their income declaration with a number of different documents and provides brokers with tips on what to look for in those documents

Credit policy set with responsible lending obligations front of mind. Requires a Borrower Repayment Declaration in all instances

Products speciﬁcally geared to support self-employed and credit-impaired borrowers

Residential and construction lending products, including prime, near prime and specialist

A wide variety of borrowing scenarios catering speciﬁcally for credit-impaired borrowers, for those with as little as six months’ trading history, and those requiring higher LVRs

Residential, commercial and rural property. Construction and development ﬁnance

Homeloans, says this is an outdated mode of thinking that could easily undermine a broker’s longevity and value proposition. “One of the biggest misconceptions

guides provide more than adequate guidance in terms of what documentation is acceptable to verify the income of self-employed borrowers,” he continues.

“We encourage brokers to embrace borrowers in need of an alt-doc loan, as this rapidly evolving group represents a signiﬁcant opportunity” Royden D’Vaz, Bluestone around alt-doc loans is that they are in some way a contravention of brokers’ responsible lending obligations,” says Carde. “This is not the case. The regulatory

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“Ultimately, it is up to the broker to make reasonable enquiries of the borrower and then seek documentary evidence to support the information provided.”

Royden D’Vaz, national head of sales and marketing at Bluestone Mortgages, says another misconception lies in the belief that alt-doc loans are complex and convoluted. “Many brokers still believe that alt-doc loans are too difficult,” he says. “However, the borrower information required, whether for a prime or a non-bank loan, is standard across the industry.” While self-employed borrowers or those on varied incomes may be shunned by the banks, D’Vaz says it’s a demographic that savvy brokers simply can’t afford to ignore. “It’s imperative that brokers recognise the changing lending landscape and actively embrace a diverse cross-section of borrowers to remain viable in a highly competitive market,” he says.

This diverse landscape, he told MPA, also includes credit-impaired borrowers, those with defaults, mortgage arrears or court judgments, as well as borrowers with discharged bankruptcies. “We encourage brokers to embrace borrowers in need of an alt-doc loan, as this rapidly evolving group represents a signiﬁcant opportunity,” he says. “Providing superior service and the ability to say yes more often bolsters volumes, increases the bottom line and deepens relationships,” he explains. “When provided with a workable solution, alt-doc borrowers

often become some of a broker’s biggest advocates and tend to both stay loyal and readily refer potential clients.” Cory Bannister, chief lending officer at La Trobe Financial, agrees that brokers would be missing out on a huge opportunity if they failed to meet the demands of selfemployed consumers. “With one third of the private sector workforce being self-employed and growing as more and more people are beginning to operate online businesses outside their normal day jobs, the number of future opportunities in this area is likely to increase,” he says.

“The self-employed are also a good client type for cross-selling opportunities, particularly for leasing, insurance and equipment finance products, and often they are much ‘stickier’ clients with more regular ﬁnance needs as their business needs regularly change.” Regardless of how they may once have been perceived, it seems alt-doc loans are gradually shedding their controversial reputation as they increasingly meet the demands of a notoriously underserved market. Brokers who are unable to adjust their thinking may soon ﬁnd themselves left behind.

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RELATIONSHIPS

Staying in love while in business – and married A surprising number of brokers are in business with their spouses. Psychologist and motivation expert Alison Hill offers advice on how to build a successful business and still stay married BUILDING A fast-growing business is hard. Staying married, despite what it’s like in the honeymoon haze of the wedding day or on the latest reality TV show, requires a lot of effort. So combining the two might be a recipe for lunacy, or the greatest self-development course you could ever undertake. When I started my career as a psychologist I didn’t picture myself being a business owner, let alone the CEO of a fast-growing business with 15 staff. In 2017, the business, Pragmatic Thinking, was ranked No. 33 on the Australian Financial Review’s Fast 100 list. It wasn’t part of a big life plan; there was no vision board that captured even a glimmer of this path. When my husband Darren and I started the business over 10 years ago, it was a leap of faith. We knew that we were going to need to ﬁgure it out along the way. The more I talk to business owners, the more I realise that business is built on the ability to ﬁgure it out as you go. The quicker you can work out how to get out of the bind you’re currently in, the more business growth happens.

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In so many ways we were ﬁguring out not only how to build a business but also how we should work together. It’s been our commitment to ‘let’s ﬁgure it out along the way’ that’s been a big part of our ability to build a fast-growth business, still stay married and have two kids. Through all of this, we’ve learned five important lessons.

Lesson 1: Be each other’s biggest fans

Among the busyness of business we often take the people we love the most for granted. We give our energy to clients, staff members, work, and leave the little that’s left of us for the people we love the most. It’s been a conscious decision for both my husband and I to express how much we are fans of each other. We constantly talk about ‘us’; how are we investing in ‘us’. Of course there’s every chance you’ll be reading this and thinking, “Well, of course a psychologist and a behavioural scientist would do that”, but the honest truth is that we’ve got to be conscious of doing this. There are days when all I want

to do is complain about the wet towels that are left on the bathroom ﬂoor, but I’d never mention that publicly (OK, only once to make a point). On public platforms we make the choice to express how much we are fans of each other: in the way we talk about each other, how we celebrate each other on social media, how we each focus on what’s great about the other person, even if they’ve annoyed the crap out of us that day. Our friends are sick of seeing it on social media, but our marriage – and our business – has reaped the beneﬁts of this lesson.

Lesson 2: Invest in personal growth

Business will challenge you personally every day. As a business owner, if you’re not growing personally then the business soon becomes stagnant. It’s my fundamental belief that the same is true of our closest relationships. When both people are investing in being better people, it strengthens the connection. This lesson can be tricky to navigate when the pace and timing of your personal

Lesson 4: Learn to say no!

Lesson 5: Love is the bottom line

When success feels like it’s relying on you, it’s natural to put your hand up for everything – because really no one does it as well as you could anyway. But this does mean that you never ‘turn off ’ from the business world. If you don’t become the boss of busy, it will become the boss of you. This is a hard lesson to navigate during business growth, because if you don’t do it then no one will. Whenever I’ve made the time to investigate where my time goes, I’ve realised that there’s a better way to do things. It’s the ability to be protective of our time, to say no, to outsource as much as we can. That has made all the difference to both our business and our marriage.

Really early on in our business growth we talked about our fears of the business coming between us … Together we created this mantra that ‘love is the bottom line’ growth is not the same for both of you. For us it’s a reminder to give the other person support and space for whatever they are facing, respecting the timing. You don’t always have to do this together. The lesson we’ve learnt is how important it is for both of us to make the time to invest in our own personal growth, and to know that the other person is growing at a pace that is useful for them, and that’s OK. It’s a dance of knowing when to push and challenge each other and when to simply shut up and watch the latest Emma Stone movie together.

Lesson 3: Prioritise your own health

This lesson sounds counter-intuitive to a conversation about how to grow a successful business and commit to an amazing marriage. When the business is all-consuming and the travel is crazy, health not only takes a backseat but is put in a headlock and wrestled to the ground. The bottom line is you’re a better partner and a better business owner after a good night’s sleep and a healthy dose of probiotics.

Really early on in our business growth we talked about our fears of the business coming between us. Together we created this mantra that ‘love is the bottom line’. For us this means that, if there was ever a time that the business pressures impacted signiﬁcantly on our relationship, we would shut the business down. It’s not to say there aren’t moments of strain, but if a seismic crack appeared in our business, our marriage would take priority. This has been such a powerful mantra for us that it’s now become one of our company values. This value holds a different meaning for every person in our team, but the essence remains. The core of what we do is making a difference to the difference-makers, and we want both our team and the people we work with to love that.

Alison Hill is a psychologist, co-founder and CEO of AFR Fast 100 company Pragmatic Thinking, a behaviour and motivation strategy business that works with organisations to build cultures they rave about. Find out more at www.pragmaticthinking.com.

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VENDOR FOCUS

BRETT HALLIWELL: DIGITAL EDGE Advantedge has introduced digital tools that make mortgage lodgement and settlement quicker and easier on both brokers and customers. Now it’s just about getting brokers to realise the beneﬁts MPA: What digital enhancements has Advantedge introduced recently, and how are brokers responding? Brett Halliwell: IDyou and ZipID are two mobile phone apps that brokers can use to collect and verify their customers’ identification documents. The apps allow brokers to take pictures of their customers’ documents so they can submit the entire application to Advantedge in a single PDF. You literally can do a full ID and have it done and dusted within a couple of minutes and all automatically uploaded and veriﬁed straightaway. While it is really quick, easy and convenient for the broker and the customer, there has been some reluctance to take up the technology. We’ve found that brokers are worried about the security and storage of their clients’ documents on their phones. To be clear, the images of the documents don’t actually sit or remain on the phone at all; they’re uploaded into the provider’s web services and stored on secure IT infrastructure, so the risk is not one they should be worried about.

MPA: How will brokers beneﬁt from becoming more accustomed to these digital tools? BH: Like any type of new technology, it just

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BROKERS HIGHLY RATE ADVANTEDGE’S DIGITAL TOOLS 50% of brokers surveyed in February 2018 used digital signatures with clients. These brokers gave the following average ratings:

8.7

8.5

8.6

for making it easier for clients to execute loan documents

for reducing the number of errors in the client’s documentation

for making the settlement process faster

Brokers who used digital identity verification tools, IDyou or ZipID, gave the following average ratings:

8.6

8.5

the apps were easy to use

for making things more efficient for a broker

takes a little while to get comfortable with it, understand it and use it in a consistent manner. Brokers will beneﬁt from forming some new habits, and over time they’ll

realise it’s much easier and more convenient. Ultimately, I’m sure this is the way the industry will move, and every ID veriﬁcation will some day take place using these kinds of tools. It just takes a while for that to be the norm and the habit in the way brokers conduct their business.

MPA: How does this process compare with the manual process? BH: With the manual process, the broker needs to fill out a form, tick a number of boxes, and transpose the identification numbers. The broker then has to sign it, and the customer has to sign it. Despite that manual process being relatively easy, what we’re finding in our operations environment is that it’s not uncommon for brokers to get it wrong. We don’t think Advantedge is different from any other lender … and yet we’re seeing things that are being missed or overlooked. The documents that they’ve uploaded might not be clear or can’t be read, so putting all of that together, we really do encourage and would love to see uplift in brokers using these tools in every single instance. The benefit to the customer is that it’s quicker and easier; the benefit to the broker is getting it right and eliminating errors. On our side, we can effectively get the information instantly, and we find it