NAB answers its critics - a Lending Central exclusive
By Jill Fraser for Lending Central
NAB has come under considerable attack lately for its lengthy processing times, poor service and discriminatory practices.
Last week broker Maria Rigoni took the matter to another level when she lodged a letter of complaint to MFAA CEO Phil Naylor, in which she accused NAB of being “in breach of the MFAA Code of Conduct” and “failure to reach reasonable standards of efficiency and competence in the conduct of business in the Mortgage & Finance Industry”.
Rigoni’s complaint was prompted by a 20-day processing delay followed by a rejection of the loan application due to her inadequate ‘star rating’, which she maintains “held her client to ransom”.
NAB’s Head of Broker Sales, John Flavell spoke exclusively to Lending Central about broker frustration and Rigoni’s complaints.
LC: How does the processing time for brokers compare with the processing time for your direct channel - your retail bankers?
JF: Our system is designed to provide an unconditionally approved loan in six business days for both brokers and retail bankers.
Over the last six months a disproportionate number of first homebuyers have entered the system. Their savings history, employment history etc is not as robust as people who would be making applications without the grant so this has caused delays.
As well credit has tightened up and there’s been a large number of lenders leave the market.
All these things have created a bubble of business that’s more complex and a diminished number of lenders to meet those requirements.
Plus lenders such as ANZ, CBA and Westpac have reduced their maximum LVR from 95% to 90%.
That’s meant that there’s been a disproportionately large amount of business that’s come our way, which is greater than our system is designed to handle.
I couldn’t comment on what the experience is for our retail channel is at the moment but..
LC: Would you be able to find that out?
JF: It’s not a significant difference.
LC: So you’re saying that they’re experiencing similar delays?
JF: Their challenges are the same as the brokers.
LC: Are you doing anything to address this issue such as taking on more staff?
JF: To put it in context; just about every lender has gone through this challenge and is experiencing the same sorts of pressures.
LC: But that doesn’t make it right or easy on brokers.
JF: No. It doesn’t make it right and we wish we could provide a better solution.
We’ve assessed whether the environment we’re experiencing currently is going to prevail long-term or if it’s just a moment in time. There are elements of both so we’ve done things such as making available additional resources in the short term. But that means getting them on board, skilling them up etc.
LC: So I can confidently say that your direct channel is experiencing the same delay as the broker channel?
JF: You talk about a delay. What’s a delay?
What we need to do is let brokers and their customers know what our time to provide service is so that they can make a decision at the outset.
LC: Okay. So we won’t call it a delay but can I state that the processing time for your direct channel is the same as the broker channel?
JF: There’ll be slight variations between the two but overall they’re the same.
The most important thing for us to do is let brokers know how long it’s going to take for us to process an application.
LC: Moving onto Maria Rigoni’s case. She was told by NAB Broker that an application had been declined due to her Star rating. At the time of lodging the application she was a One Star broker and therefore wasn’t permitted to submit a new client. However Maria told Lending Central that she lodged a copy of her Certificate Four in Financial Service along with the application, which would have immediately elevated her to a Two Star rating.
JF: There are three elements to the Star Rating. One is your conversion rate over the preceding measurement period, another is your portfolio performance of your loan book, and the other is an education criterion, which is Certificate Four in mortgage lending and/or an equivalent.
A discussion about the Star Rating system was held with all aggregators of all broking groups and the broking market over 12 months ago.
LC: My understanding was that aggregators came into effect because that would prevent brokers from needing to acquire volume with lenders.
JF: Our Star Rating system is not volume based.
We communicated the criteria to the aggregators and broker market prior to delivering on it and then on each enhancement.
LC: Have you been listening to brokers many of whom are very angry?
JF: All I can tell you is that there are a lot of brokers who tell us that it’s fantastic and is just what they want.
LC: Have you lost a lot of brokers as a result of the Star system?
JF: The most important thing is that each broker has the ability to determine his or her own Star rating based on his or her dealings with us and choice of education levels.
We think it’s good for the industry.
LC: How is it good for the industry?
JF: How is it not?
LC: How is this good for brokers and in turn consumers?
JF: Consumers see that there’s a lender out here that wants brokers to do education and training and will reward them for doing so. Don’t you think that’s positive?
LC: I think the education aspect is but brokers are being penalised if their clients go into arrears and I don’t see that as positive.
JF: There is an arrears component, there’s an education component and there’s a conversion component.
From the arrears perspective there are brokers who have no arrears in their panel, others have moderate levels of arrears in their panel and others have a very high percentage of arrears.
LC: So am I correct in understanding that if a client goes into arrears a broker will be penalised?
JF: Not necessarily.
LC: Can you elaborate on that?
JF: The vast majority of brokers have very few arrears. The significant concentration of arrears is with a very small number of brokers.
LC: But why should the broker who does the job properly upfront, be held accountable if a client goes into arrears?
JF: If that were the scenario he wouldn’t be penalised in the system as it exists now. If only one client who goes into arrears he’s not penalised. It’s 1% of the broker’s portfolio balance and three or more loans.
If it goes beyond that there’s a pattern. That’s when we say work with us to get this sorted out for the customer’s benefit, for our benefit and for your benefit.
LC: What you’re saying sounds quite reasonable so why are there so many angry brokers out there?
JF: The numbers of brokers who would lose a Star based on arrears is very, very small.
To get their Three Stars brokers simply need their Certificate Four in Mortgage Lending, no arrears issue, if they haven’t been with us before they won’t need a conversion history. To get the fourth Star we need to prove that brokers can convert business at a higher rate.
We’re not forcing brokers to do business with us. But these are the things that are important to us and they’re good for the industry and good for the consumers.
LC: When the additional changes occur with the Star system on 1 July will this mean that Level Two Stars won’t be able to lodge applications for new customers?
JF: Yes. They can do a variation or an additional loan for an existing customer.
We’ve chosen not to drop our maximum LVR to 90%. But we need brokers who know our systems, our processes and our policies and have a history of dealing with us effectively. So from 1 May only Four-Star brokers have been able to lodge applications for more than 90% LVR.
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Jenny June 3, 2009
I had the same problem. And they left the file sitting there with no response??? Come on NAB stop defending yourself and wake up. ANZ are way faster compared to your lousy system of star rating and delays (cant even call it a delay anymore). Shame on you! what impression does this give to clients about NAB? (let me tell you- that you are slow and can not accommodate any changes to teh economy)