Aggregators caught between a rock and a hard place says Connective’s Mark Haron
By Jill Fraser for Lending Central
In the second interview in our series on aggregators Lending Central spoke to Connective Principal, Mark Haron and learned that it’s not only brokers who are experiencing frustration.
Haron says he is acutely aware of the issues facing brokers and agrees that much of the anger and concern is justified.
“The problem is that at the moment banks are not overly keen to lend a lot of money and when they do their lending policies are very restrictive,” he says.
“Their knee jerk reaction has been to minimise both lending and broker relationships, at the same time maintaining an element of business through areas they think are most profitable.”
Haron says it’s this response that has led to brokers no longer being treated as true business partners and to the introduction of accreditation schemes that limit dealings to brokers who do a high level of volume at higher conversions and are well versed in the respective banks’ systems and processes.
What the banks are doing is tantamount to manipulation, he asserts.
His gripe however is that “brokers are not doing enough to help themselves”, which in turn, he says, renders aggregators powerless.
“How can an aggregator go to a bank and say, we’re really unhappy with your lack of service to brokers, you need to do something about it when banks are coming back to us saying, everyone keeps sending us business so why should we do anything?
“If brokers are having issues dealing with a particular lender they should attempt to fix it either by developing a stronger relationship or going elsewhere,” he says.
Haron admits that in some cases it’s too late for the former because a number of lenders are saying that they don’t want a relationship with a particular broker regardless of what he or she does to try to salvage the situation.
He explains that Connective communicates broker problems to lenders on a one to one basis. Systemic problems take much longer to resolve, which causes “a great deal of frustration and creates a lot of additional work”.
Systemic issues include turnaround times and the measurement of certain conversion ratios and the accuracy of that conversion.
“One of the biggest issues is that there hasn’t been enough time for these things to wash through and for brokers to adjust to the banks’ new way of thinking,” he says.
“The market won’t stay like this forever. At some point the tide will come back in and most brokers will still be around doing business. Whereas a lot of the decision-makers in banks who made these rules will have moved onto other roles.
“Banks are making some very short-term decisions to maintain their profitability.”
Haron doesn’t oppose all aspects of accreditation schemes but he strongly objects to brokers being penalised for arrears on loans that were established prior to the current clauses being written.
“A loan that was written five years ago and goes into arrears today potentially results in the broker who processed the loan being prohibited from submitting new business even though that loan was written before this new structure was in place,” he says.
“Some circumstances that lead to arrears are totally unavoidable no matter what a broker or bank does in terms of the application.
“If a broker has been penalised because of one or two arrears they should be taking it up with their aggregator.”
Asked if aggregators really have any sway when it comes to bank policy Haron says. “to some extent we can alter the thinking around individual situations”.
“However when it comes to overall policy the Golden Rule applies: He who has the gold makes the rule.. and banks have all the gold.”
Amused at the suggestion that aggregators signed off on the accreditation schemes he chuckles and says: “The banks presented them to us and asked what we thought.
“We told them and they went ahead and implemented them regardless.”
His advice to brokers is to “be a lot more open and use a more diverse range of lenders”.
“A lot of brokers consistently use just one or two lenders. It’s easier and in many cases more efficient. But these days they need to be across a lot more lenders, particularly non-banks, be a lot more adversarial for their clients and understand more what other lenders are doing.”
Asked if he thought that brokers could realistically spread their business across a range of lenders and retain the volume requirements with lenders who have imposed them Haron laughs.
“If a broker can’t settle12 loans a quarter spread around a reasonable number of banks, while maintaining the required volume for lenders who have this stipulation, he (or she) has a problem and I suggest they look at whether they belong in this industry.”
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Tony Harris June 17, 2009
I think what Mark Haron has said makes a lot of sense.
Its good to see some common sense and straight forward advice coming
through.