Jacquie June 25, 2009

So….in some cases our commissions will be cut (and product restrictions imposed) for not sending enough through to individual lenders, and we’ll get charged to get re-accredited if we don’t send enough through to others…

Did we not join aggregators so we could capitalize on “safety in numbers” theory and to avoid the minimum number of submissions hurdle before we could get paid, or to get paid a higher rate?

I wonder what commission the individual Broker receives for having a “direct” relationship with the lender? Is it equivalent to the amount we get left over, once shafted by the aggregator when they take their share? Might be worth exploring, considering we’ve now got the things we were trying to avoid, being imposed on us….

leon June 25, 2009

where are the owners of these aggregation companies, plan, choice, mortgage choice etc etc , it seems to me these guys have invested hundereds of millions of dollars in a business which they have no control. I would be filthy if that was me, so the challengers of the world get of your arses and start protecting your investment. my friends your business value is diminishing by the day as is ours.
Do something, it is the only business i know where you wake up in the morning thinking you have made x and by the time you get paid you have made y. Great business model isnt it, When was the last time Ralph Norris walked into seven eleven and offered 2 dollars for a mars bar worth 2.50c. Never. So why should he be allowed to haggle us on a daily, weekly basis. the aggregators should lock in contracts for 5 or so years at x amount and guarantee there income. Just like tehy do with our commissions.

Greg June 25, 2009

I have already fired NAB, CBA, St George, Westpac, ING and Suncorp.

Does Brendan have the ticker to do the same?

Steven June 25, 2009

dito Jacquie, couldn’t agree more. Brokers should unite form their own finance group with their own loan products and fight back, think of it this way. we have our own banking division EG Broker loan society use the Australia Post network undercut the Banks on rate and suddenly we are writing 40% of all loans under our own united Broker brand.
we get paid what we should, all of us happy bar the Banks and the bank puppets like Aussie.
people have had a gut full of them not only brokers.

Oz Boy June 25, 2009

Mr O’Donnell agree with everything you have said, however brokers as individuals don’t have the same clout for instance that Choice/Challenger or our representative body the MFAA. I would say that if your not getting any traction against these type of lender policy’s and the best you can offer is for brokers to change their mind set we as an industry could be in serious trouble. What happened with these lenders when you pushed back against the changes? I noticed Mr Naylor from the MFAA has come out saying it was disappointing but so is the weather in Melbourne most days!! We need some leadership not people telling us what to do, get up, stand up and do something for all our sakes.

Phil June 25, 2009

I canceled my accreditation with CBA last Friday. I urge all other brokers to do the same. And “Stevens” idea sounds great in theory, but remember most of the non banks at the moment were setup by brokers. They pay great commissions with no 20% going towards diddly squat! The biggest problem at the moment with these is mortgage insurance. We really need a third player.
Good luck to every one we sure as hell need it. But with good communication and support, brokers will prevail in some form. It maybe fee based yet!!

Troy McErvale June 25, 2009

My hearty applause Brendan.

So, I urge and encourage you to now take some action now that you have started with such positive words.

There are two options that we can take as a group (which is best initiated at aggregotor level) and I know would be supported by that aggregator’s brokers:

1. Aggregators band together, and set minimum service standards, turnaround times, constant decisioning - a quality metrics tool if you will - to determine which lenders are good enough to be on the panel of all aggreegators. If they do not measure up, they are withdrawn as a member, and no broker will be permitted access to products.

This may require some short term pain for some brokers, however the long term benefit will be worth it. And let’s face it, experienced and succesful brokers will support it - it will be the fringe brokers who will oppose it.

2. The MFAA / FBAA implement a code of conduct that lender members need to adopt to. This includes committing to the promotion of the industry (which will eliminate banks copntinuing to push the “churn” line), and any statements in the public domain (such as increased costs of funds responsible for lower commissions, etc) need to be evidenced. If they are not evidenced and it is seen to be a profiteering exercise, then they are expelled from the MFAA / FBAA, and member brokers of these bodies cannot deal with this lender moving forward.

Brendan - do what you can. I will give you all the support I can. And I bet I am not alone.

Jacquie June 25, 2009

one way we’ll stop using them is if you (the aggregator) take them off the panel…either temporarily, or permanently.
If a client sees a comparison (which we need to keep on file to show what options we provided) and asks how (for example) CBA compares, then if we can’t deal with them due to not being on our lending panel then we can’t show them, or provide info for them.
We’re not allowed to give “advice”…so we can’t sway clients to 2nd tiers if we don’t provide the cheaper options too. Yes, we can sell up the pro’s of a second Tier, but if the cheaper option is available, then some clients will always go for it.
Suggesting we should take clients to 2nd tier lenders because it’s in “our” best interests contravene’s so many of the legislative acts we’ve all just been studying to get our Licences (and you people over east will need to do this shortly too)

I assume you have strict guidelines when chossing which lenders to put on your panel. They have to have great products and be fair and equitable for both clients and brokers. If you expect us to swallow the “we now more than ever need to diversify where we place business and demonstrate that we can have an impact and influence on market share” you need to do the same and show some leadership for us, before we can consider this. We can lose our licences for not providing all options on our panel…so take them off the panel, and we won’t have to worry about that, and the lenders in question will feel the heat a lot quicker than a few brokers working their arses off trying to “sway” clients to 2nd tiers.

Derek Miles June 25, 2009

Hello all you brokers who do not attend your aggregators PD days. I have at every PD session heard our aggregator say to the members, stop writing all your business with the majors. So what do these brokers do? They put all their business with the majors. So what do they expect? If you keep doing the same thing, you will keep getting the same result. If you want competition, spread your business. Do the right thing by your clients and give them the facts. Stop selling on rate or stop operating in your comfort zone. Look at alternatives and give your clients real choices. You can’t expect the aggregator to do anything about the volume going to majors if you the broker keeps writing business for them. The buck stops at your own business.

Pete June 25, 2009

Jacquie, if you cancel your accreditaion or have it canceled by CBA then you do not have to show them as an option as you can not offer their product.
If your client asks about CBA you just have to say you do not deal with them, simple, and you will not be breaking any laws or rules because that is the truth.

Jacquie June 25, 2009

Derek, do you understand the consequences of promoting the illegal practice of third line enforcing?
If aggregators don’t have the balls to take a lender off the panel, why should we (as individuals) risk our businesses by being seen as playing dirty tricks - which boycotting can quite easily be construed as. No matter how good one is at selling alternatives, there will always be the option of the cheap recognizable brand alternative.
If we don’t have the option to sell it, then we aren’t at risk…..why does the onus have to fall on us, when we’ve joined aggregators for their so called “power”.

Jacquie June 25, 2009

worth considering Pete…or perhaps going direct to lender and maybe getting paid more or less the same, without paying for the aggregator to take their share for dictating other aspects…

DJT June 25, 2009

Greg, agree with the others but ING. They still provide good service(ok nothings perfect but sorting the mess is what they pay us the big bucks for haha) and they don’t have channel conflict - no thieving branches.
As for Brendan’s comments, yes he right and proves that the so called leaders of the industry know what is wrong, don’t agree with but only have one solution.
That solution ALWAYS comes back to “brokers must sort it out” and that is right and we all know it. However aggregators and industry leaders have to realise that if we brokers are going to sort it out, part of that sorting out must include an immediate revision of the “fees” paid to aggregators, banning of exclusivity of agreements(why can’t we work with several aggregators if we want to, or none for that matter),banning of restrictive trade practises, ownership of the trail book and also whether continuing membership of the Many Funny Awards Association is in Brokers best interests.
Like all Brokers I can run a good business providing excellent service to customers but only if the vandals stop trashing my office and the middlemen keep their sticky paws out of my wallet.

Mmmmm June 25, 2009

Umm, third line enforcing, you mean like we MUST be a member of the MFAA to write business……….

re DJT June 25, 2009

DJT you can work with different aggregators, infact there is an aggregator out there who actually posts it on their web site….

DJT June 25, 2009

Yes, some do but many do not. Time for some across the board standards which actually favour Brokers rather than the handcuffs approach WHICH IS STILL PREVALENT in the industry.

Anthony June 25, 2009

“FOOD FOR THOUGHT”
Greg has started firing the lenders that don’t truly support him, but where does it stop. The lenders know that we cannot “broker” if we fire all of them. They are also aware that for us to do the right thing by our clients, we must offer our clients a varied and wide selection of lenders to choose from, regardless, whether we utilise those lenders or not. If we end up with a handful (or less) of accreditations are we still brokers or do we become marketing arms (agents) to those lenders.

Individually we have no clout, never had and possibly never will! So who will stand up for our rights….. Our aggregators?

Aggregators are acting for the collective, not for the individual. When CBA started dropping brokers by the hundreds they advised them (the brokers) via email with 2 weeks to act. Interestingly enough though, the aggregators were advised weeks prior to the brokers receiving their notices. They then went to bat for the brokers rights, or so we were told.

As brokers we must be kidding ourselves if we think for one moment that our aggregators will bite the hand of the bank that feeds them. They receive volume overriders and achievement level bonuses, retention bonuses, quality k.p.i’s etc. far greater than the rewards they reap from the business generated by our small brokerage firms. They still provide the lenders with a steady stream of business from brokers that retained their accreditations.

I know brokers are disappointed with the attitude of the banks and more alarmed by the non-action of their aggregators. We have discussed amongst ourselves the idea of joining together to create bigger brokerage firms but those firms will only be as strong as the individual brokers belonging to them. Remember that most lenders are still assessing brokers on individual performance basis. It is the aggregators that set our commission splits based on our total brokerage business volume, regardless of where we place that business.

As brokers, we can take matters into our own hands but how can we rally and unite all brokers to follow the same course of action. This has always been the problem. It is like trying to create an international language but not everyone wants to speak Australian! What incentive can we offer a broker that has retained his/her accreditation to stand up for another broker that has lost theirs. What we are actually asking is, “will you jeopardise your income stream and accreditation in the off chance that I might get mine back”. Again the banks aren’t stupid and they know they have us over a barrel.

The only thing encouraging other lenders to adopt this accrediatation and performance tactic is our inaction. Lenders that have not followed suit as yet and are wanting our support will, in turn, gain back market share. But we must have commission levels and volume level restraints abolished by them in writing for a reasonable period into the future(5 years plus). Otherwise if we bring them too much business they too will think they can call the shots again. Then who do we turn to?

What entity is going to stand up for brokers as a collective if those brokers don’t stand behind and support it and the decisions and action paths they deem necessary to take. The MFAA and the FBAA are our representation but they receive sponsorship from the lenders that we want them to rally against, on our behalf. So how much rallying will be proactively done if they lose the sponsorship from these lenders.

There is no easy solution. Inevitably it is in our hands, so let’s stop bitching and come up with a strategy moving forward to combat our predicament. Or we will simply have no choice but to accept it!

Broker in the 'burbs June 25, 2009

Financial Planners have ‘access’ to thousands of managed financial products, that are further filtered down to a manageable ‘recommended list’ determined largely by external research houses & internal research staff who put these lists together.

Now, many of these financial planning firms (not the boutiques) have been bought by the banks for some time now & amazingly, just about every recommended list of each of these financial planning firms have their ‘masters’ products on these lists and often, their competitors products don’t appear. Who would have guessed eh?

And to further own the margin, why not own the administrative platforms (master trusts and wrap accounts) as well. Oh they’ve done that too(the banks that is) and amazingly, more often than not, only their ‘own’ admin / investment platforms appear on the recommended list as the only appropriate administrative product to use too, whether it’s the most cost effective or flexible product available is irrelevant.

So, what’s in store for the Finance Broking business going forward.

Same old, same old I’m afraid.

Own the product. Own the aggregator. Own the distribution channel and then force your own product sales through accreditation / volume requirements and other punitive measures.

Are we just frogs slowly simmering away in the pot?

Looks that way!

Anthony June 25, 2009

Troy made a great point. Why do we as brokers break our backs to try and please the lender to retain or obtain accreditations with them. Why are we now on individual performance checks… WHY, because we let them.

Our aggregators do have clout but choose not to use it. We should not try and fight the banks on policy but encourage our aggregators to stand up and make the banks justify being retained on our aggregator panel. If they are then everyone in the group can submit applications otherwise if the lender is removed from the panel, brokers, should they write enough business can deal directly with the lender.

Lenders won’t want the hassle of dealing with many firms compared to dealing with the far more organised aggregation firms. If a lender loses the support of an aggregation group, they lose access and marketing opportunities to thousands of households instantly.

Let’s turn the tables and make the lenders strive for accreditation and acceptance with us. Everyone has lost the “working together mentality” now it is back to them and us. This is not good for our businesses, our income or our industry! Remember Brokers… We can influence our aggregators more readily than we can influence the major lenders. So let’s do it!

To the LC Team Re All of the above June 25, 2009

Guys,
Why don’t you start a petition and have a link where all brokers can put their name to it, expressing our dissappointment at the Banks actions.

Steven June 25, 2009

DJT, handcuffs approach, would that be aussie

Anthony June 25, 2009

Hey NO NAME, Great idea.. let’s give the banks a list of targets. Would it not be more prudent to chose a bank and a week or fortnight that we all agree not to submit any business to that respective performance based lender. Then we could gauge how much support brokers give each other in the test endeavour! Then do the same for another performance lender the next fortnight and so on and so on. One positive outcome would be that these lenders could play catch up on the deals in the sysytem and may even stand up and take notice. Like you, I am sure, If I lose money out of my back pocket I quickly look araound to see where I lost it!

Mike Pitt June 25, 2009

Like the 2nd verse of “Advance Australia Fair” - we know the tune but the words aren’t right. Old Lancaster saying(I think)”Ya want ougt for nought, do it ya sen” - translated “If you want something done for nothing, do it yourself”. Brizbroker has it right, along with a number of other brokers repeating & beating the same tune. Whinging that we are hard done by - well folks either accept it & do nothing or reject it by doing something about it! For god sake, we know MFAA, FBAA wont get involved; our aggregators wont get involved, so what’s is left? Oh, US. I say US as nothing will change unless it is driven by US as a united & independant (read brokers) front. The following is a link whereby all brokers can have a say on matters affecting us: - http://www.independentbroker.com.au
How far are you willing to let yourself fall?
So again I say, lets build momentum to force change. Viva la Mortgage Revolution. If you want to contact me - 0411 189 305..

Get rid of 'em June 25, 2009

This Bloke is fair dinkum , doe he want the top Job at PLAN??

We really need to back up what he is saying and support any one but the big 4 especially the CBA & Westpac, perhaps keep supporting the ANZ to some extent, but take away the market share of CBA & Westpac , we have the numbers to DO IT.

FELLOW BROKERS THINK outside the square PLEASE. JUST DO IT>

A June 25, 2009

count me in!!!

Derek Miles June 25, 2009

SENSE OF REALITY

Ok, if you think you can set up a co-op aggregator for $200 per broker, then I think you need to visit a shrink. Where is the money going to come from to:-

a. Develope the software
b. Pay someone to negotiate contracts with lenders (if indeed they would even bother to negotiate with a new aggregator.
c. Pay for the staff to admisister the collection and payment of commissions not to mention the software cost of doing this.
d. Run the Professional developement to make sure all brokers remain compliant
e. Manage the compliance and audit of all brokers to make sure they are all compliant.
f. All the support staff to manage a team of brokers.
g. Then the co-op would need a head office and state offices to help the brokers so we have rent, phone and salaries

Have you got the picture guys? We are talking about millions of dollars. Ok you say, but you can run a meaner and leaner operation than the current aggregators. Well, I would like to see if you can and certainly I wouldn’t trust my trail with any organisation that has unrealistic expectations of running an aggregator operation.

So why not work with what you have rather than try to re-invent the wheel? Certainly, find an aggregator that is broker friendly. Then work with the aggregator and support that aggregator to achieve suitable outcomes for our industry. If you have the time to waste trying to set up an alternative aggregator, then you can’t be writing much business because you have all this time on your hands.

Over and out.

Greg June 25, 2009

The $200 is only for feasibility and advice. Shareholding I suspect would be more in the vicinity of $10,000 each for say 200 brokers.

Melbourne broker June 25, 2009

If a bank wants to measure my performance on an individual basis, why then can’t I have direct accreditation with them? Clearly they have the systems in place to monitor individual brokers, and so must have the ability to pay individual commissions.
I admit that I worked at a bank in the ’90s that was very much involved in the birth of aggregators, as the systems weren’t available to manage accreditations and commission payments to (then) hundreds of individual brokers. (I wonder if Kevin Matthews remembers the meeting where a bank gave him the idea on a platter?)
There was supposed to be support and added benefits to the brokers to join these groups. We haven’t seen much of that so, apart from providing us with the information we’re already emailed direct from the lenders, I can’t see what the aggregators are actually adding to the industry.
How about we all approach those lenders that we know use quality metrics (with or without volume requirements) and demand individual accreditations? That might get some of the less effective aggregators off their collectives arses. (I’m going to give it a whiz anyway!)

DJT June 25, 2009

Yes Derek but would you trust your trail to an aggregator whose agreement(and actions)states you can’t go anywhere else unles you leave your trail behind.’
Lets face it there are lots of different broker models and businesses out there and some of them are sharks who do very little of any of the things that you say are done, gauge huge commissions splits and use industry handcuffs. Want to walk if you have to leave nehind a trail book of $100 Mill plus. Yeah right.
So lets do a bit of wheel reinventing and get the industry straightened out - not all the sharp operators in the industry are brokers.

KeyChange June 25, 2009

Hi I have the forum up and running

http://independentbroker.com.au/

Jacquie June 25, 2009

Melbourne Broker reiterates my thoughts above….
we’ve been herded like cattle for the wrong reasons, thinking the farmer can take care of us easier if we stick together, when it actually really means that we can get branded up the butt easier!

Steve Z June 26, 2009

Derek, spot on! Everyone needs to keep in perspective that aggregators and brokers are on the receiving end at the moment but the tide will turn.

Broker June 26, 2009

Well said Derek Miles, at last some balance.

Mike Pitt June 26, 2009

Valid Points Derek; but I think it is a strategic policy or mindset change that’s required. No aggregator in their right mind would really challange the banks - not one, no matter how closely we work with them. Still, if we could convince one aggregator to side with us, we would only be splintered as a group (aggregator would only support their individual brokers). Nonetheless excellent point of discussion.

Lets all collectively share thoughts & work towards real change.

If brokers are serious about wanting change, lets stop sooking & get some unity no matter which aggregation service you use.

AND PLEASE DON’T LEAVE IT TO TOO FEW. UNITED WE STAND (No I’m not Socialist, but beleive in the common good).

Visit http://independentbroker.com.au/index.php?action=profile

& send address around to all broker contacts.

cheers

Mike Pitt

Savvy Investor June 26, 2009

Hi Derek,

The software is nothing really to worry about. We have our own commercial software development business run in a different company we own which has actually been looking at building some better broker systems (for our own business) for some time, but running the broker business has been our first priority so progress has been slow. There are also plenty of CRMs and commercial loan product selection sites available out there that are not tied to an aggregator or lender. Most of the time we have to go back to the lender site anyway, to confirm policy, so that would hardly be an impediment. As for the other overheads, there seems to be more than one aggregator out there so these other issues are hardly insurmountable. A problem shared by a community can be done with little effort on the part of individuals.

Once traction is obtained the lenders would have to make a commercial decision to support the new one or not based on membership and volume.

I still favour working with existing channels like yourself for the hassle factor though.

Savvy Investor June 26, 2009

Unfortunately it seems every aggregator is overlooking the simple fact that we only need aggregators to stop volume and accreditation being on an individual basis. If this becomes a standard for all the banks/lenders then what is the function of aggregators other than the software and training (which are available elsewhere).

I have 30 plus lenders I could use but if I have to write 1 deal a quarter for each of them then I have to write 120 deals every year just to keep them available to me! You let just one get away with that and what stops the rest from demanding equal time (and would it be fair to deny them)? I really don’t want the aggregators to disappear but if individual volumes are allowed to be the market driver then ‘aggregation’ becomes irrelevant does it not?

Broker 1 June 26, 2009

I agree with Savvy Investor. To put it another way if you have 15 lenders with whom you are accredited then CBA represent 6.66% of your lenders. If you write 4 deals a month they are demanding 16.66% of your business.

Savvy Investor June 26, 2009

Hi Broker 1,

It potentially worse than that. If you have less and less choice as you lose accreditations due to eventually failing to meet volume requirements, so if you take that to the extreme and you lose all but (say) the CBA, then you are not working for the aggregator at all - as the CBA has effectively become your only option i.e. you won’t need an aggregator/panel! You are their employee but not treated or paid as well as one!

To get an accreditation back you have to pay the lender for the course when you have a potential loan to sell them - and if you are only going to lose it again later, it effectively becomes a tax or another expense of writing a loan to that lender. This makes you less competitive than their own channel. Again you are being driven to put all your business with one or only two lenders and effectively become a contractor/salesperson for them to avoid the tax/expense. This is an attack on the aggregators but they are not seeing it yet. Best way to kill a tree is not to knock off a leaf at a time (brokers) - just hit the trunk (aggregator). Kill that and the rest dies with it.

Mick June 26, 2009

Lets all drop WBC and CBA.

Broker 1 June 26, 2009

Agree Savvy.
NEWS FLASH, not only do you have to pay $500 for re accreditation if you can’t persuade clients to go with CBA, but just in HOT OFF THE PRESS CBA now want $100 if you transfer to another aggregator and have your accreditation transferred with you. How good is that, what next……

Gordo June 26, 2009

Hey fellow brokers pull the corners of your mouth apart tightly and say BANKERS. The sound you will hear is an accurate description.

Mick is right and I believe this is why. We lose CBA, so what do we do, we jump in bed with WBC! We are all guilty of this. When we look back we said to each other that we would not support a bank that cut our commissions by up to 40%. Well we have and we still do.

The people at WBC factored in up to a 50% loss in broker volumes when they played with our livelihood because their cost of funding and rising interest rates which they absorbed, made them (in their eyes) no longer a competitive player. Yet as rates have tumbled down and they have not reversed their commission cut and what have we done. We have rewarded them by giving them more business than ever before. The person that instigated the broker commission cut must now have a corner office with views and 6 figure plus salary. They are fantastic sales people (manipulators). Screwing us in such a way that we look forward to and embrace the experience! After all this, what do we have to show?

Spread your business out amongst the lenders that have not imposed business targets and remind their BDM’s this is why they are now getting your business. So this way hopefully they will not follow the mistakes of CBA & WBC.

Darren B June 30, 2009

People, what we know is that there are in fact a large group of broking firms and individual brokers out there in the market place who are unhappy to say the least with all that has transpired within our industry, the fact that lenders really are pushing the controls, the industry bodies and associated aggregates are not using the collective clout that they have / suppose to have to work with the brokers that form part of this industry. This along with the reduction in commissions, a change in the economics and the sheer cost of looking after the best interests of the consumer, our clients who are the reason we exist. I know that there has been talk of a possible co-op which would see the coming together of like minded brokers, in an attempt to secure some clout. Some reference has been made to costs associated with this, and really trying to get lenders (who already are finding magical ways to limit the groups / brokers they deal with) to sign new Aggregator / co-op agreements, to me sounds rather unlikely. I agree with the possible concept of a co-op, but more to the point, i agree t hat brokers need to band together with a common mind set. This will allow us a real voice, the ability to collectively terminate dealings with the “POWER PUSHING” lenders that set volume expectations, charge us fees for wanting to ensure the consumers best interests are at heart and offer us service levels that do not deserve the term “SERVICE” linked to it. I have been working for some time on a model / concept which i believe has legs, but will need the support of a collective group which would work towards determining the viable outcomes which we as independents / smaller broker groups require. I do not propose top set up a new aggregation, however, if together a group of broking firms band together under a collective sub-aggregation agreement (albeit that a current aggregation will remain in place), then what we hold is critical mass. Critical mass by way of a voice, direction / dictation as to the accepted lending panel, where we hope that combined volumes will hold some power, and if we choose to “stop” sending business in one particular direction, it will be noticed. This combined with a collective marketing plan, shared adminstrative resources and reduction in operating costs i believe will hold benefit - in short a consolidation of smaller brokers in to a larger collective structure. If there are any reputable brokers who would be interested in discussing this further, please contact me and i would happily provide further information to the thought process behind this.

Mike Pitt July 1, 2009

STILL we continue to whinge & bitch. We have a chance to have a real say & a collective voice. There are currently 16 ‘members’ wanting change & willing to act as one - join us. Get on board at
http://independentbroker.com.au
You can remain anonymous if you wish but still have a real say about matters affecting all of us. No-one is going to help us; we MUST help ourselves. Get this thread post to all other brokers in your group.
Venting on posts such as this will only get it off your chest, joining with others to make change happen is the only way to get change.

Broker July 1, 2009

To Lending Central - why are you allowing this forum to have other forums advertise their business….are you mad????????

KeyChange July 1, 2009

Broker - Lending Central is a newsletter with a blog type input - it is not a forum, and the independent broker forum is NOT a business, it is not an association it in fact has no and seeks no members - so what’s your beef mate?

12 inch vinyl July 1, 2009

Here’s the problem we all agree on. Write all your business with the majors, put our business at risk. But we still do it. Here’s the solution we all agree on. Write less business with the majors, protect our business. But we don’t do it. Here are the excuses trotted out- its the MFAA’s role- RUBBISH. They dont write the loans. Its my aggregators fault- RUBBISH. They dont write the loans either and they’ve been telling us for months to pull our heads out of the sand and use multiple non bank lenders. Major banks have the best rates/deals - RUBBISH. You have to be kidding if that’s what you believe. DEF’s are too high at non banks - RUBBISH. Only matters if you churn your book. Most lenders have portability provisions. If the customer is planning a sale within 4 or 5 years, don’t use a non bank. I cant sell a non bank because no one knows who they are - RUBBISH. Customers call you to recommend loan solutions. Thats OUR job - educate and sell. That’s what we get paid for. No wonder commissions are being reduced by majors. Soon we’ll just be getting a fee for taking an order. If you want to earn the better commissions, do the work. Sell. Earn it. When all the whingeing is said and done- it really comes down to one thing- tonight when you sit down with Mr and Mrs Smith and discuss their options, will you take an order for an easy sale or will you go in to their home prepared to sell a great deal from Homeloans ltd or resimac or firstmac, for example? That’s the crux of it. Thats all that really matters. You only need to be successful in selling non banks 10-20% of the time to make all these problems go away tomorrow.

Brad July 1, 2009

12 inch Vinyl, well said -will they listen to you-no they will keep on doing the same thing. Their are other Lenders out there, as good or better then the Banks. One you did not mention is AFM,
I listened to one New Mortgage Broker whinging about having trouble with a major, and after some discussion I suggested she had the wrong lender for the client. ” I never though of them” she said, yet they were better option then the major she was bashing her head to get the loan approved with it. Their are so many ways to sell the other lender providers. I have never had a client complain about the “Fringe’ lenders, I cannot say that about the big boys. ANZ has always given me good service.

DJT July 1, 2009

Yes 12 inch vinyl what you say is true about brokers working harder to fit deals outside the big 4 except for your bit about aggregators. How do you go to a non bank lender that your aggregator doesn’t deal with, your agreement precludes you from going to them direct. You entirely miss the point that has happened with commissions and service levels is the thin edge of the wedge.
The whole broker distribution channel is an evolving business and the next iteration may well be partly the way you suggest but it won’t make “all these problems go away tomorrow”.
Brokers need to drive the change, not bitch and do nothing nor equally take one aspect of the many issues and claim problem solved after they imperfectly address that issue.

12 inch vinyl July 2, 2009

DJT, with all due respect this is all about getting some of the balance back into the equation. In any relationship, there should be give and take. Both parties should have somewhere approaching reasonable equity in the relationship. It cant always be 50/50, but nor should it be 90/10. Right now, by driving so much business towards the majors, we have handed them a 90/10 balance of power. Worse, by doing so we also perpetuate the completely false view that only major banks have money to lend, only major banks can be trusted, and so on. These are all falsehoods but we aren’t telling our clients. Not enough of us are, anyway. This is the crux of it. Is CBA a terrible lender all of a sudden because they raised rates 10 basis points? Seems no matter what they do we reward them with more business. That’s our fault and ours alone. I’m simply suggesting that we have to change the momentum. Get some of the balance back. Let me ask you this; do you believe the banks would have done any of the following if we hadn’t handed them such dominance? Cut commissions? Cut trail? Impose volume minimums? Impose Re accreditation fees? Impose transfer of accreditation, fees? Publicly abuse us for daring to call their call centres after their service started to slip? Give us lip service at a lender forum but make no measurable improvements in the months since? Fail to invest in resources to cater for the increase in business via third party channel? Provide one set of of standards for bank staff and one for brokers? Make no mistake- the slow but steady winding down of the broker channel has begun, but banks are just being banks. They are n the business of profit, not love. Its like blaming a dog for eating a steak you leave within reach. Its just a dog being a dog, and you gave them the opportunity. No point complaining about it. Just don’t leave a steak within reach again. Anyway I don’t believe the majors would have dared do any of those things if they didn’t have an oligopoly. So no, I don’t think I’m off the mark at all by suggesting that we can change all of this quite quickly by moving 20% of our business away from them and towards non banks. It gives them a wake up. It ensures competition remains in the market. It helps diversify our books and improves our income, it improves our customers turn around times, but most importantly it restores some balance to the relationship. I don’t think I have missed the point at all. Change the momentum, change the game. If your aggregator doesnt have a single non bank lender or mortgage manager available- well lets say I find that hard to believe. Every aggregator has someone. Chellenger, ResiMac, FirstMac, AFM, Homeloans Ltd, Mortgage Ezy. There are plenty around. Otherwise find a referral partner. They pay 40% more and you arent giving a cut to your aggregator so surely you can do the maths and still make at least as much as youd make writing Westpac or CBA.

Savvy Investor July 2, 2009

DJT,

Many aggregators do not tie you into ‘panel only’ agreements or exclusive aggregation. We are able to write ‘off panel’ loans with all those mentioned by 12 Inch Vinyl and more like Victorian Mortgages, MPlus, One Lend, PFG, Merchant Mortgages, ING and about 10 others. Many are now on panel because we used them and found them great to deal with.

Mostly they are other channels for Challenger and Adelaide Bank and other bigger players but they do funnel funds away from the majors and create more competition. If they offer a better product then I have no problem using them at all.

Take a look around and you will find a wealth of product choice out there that compares favorably - but get to know them well and understand the differences, as this is where you can get a little stuck at times. It is more work but well worth it.

DJT July 2, 2009

12 inch vinyl
I agreed with what you said about shifting from the majors so no need to repeat it all. Savvy Investor picked up on my point about being prevented from doing this by restrictive aggregator agreements. So we all agree to spread our business away from the majors.
My point is broader that at the same time we Brokers have to take control of our businesses( and we are by and large independent small business people)and change the industry paradigm by naming and shaming aggregators who have these restrictive practises, get the MFAA to publish a list of them, including those that retain trails when brokers no longer contract them, get Banks/Lenders to facilitate switching of trails.
We can do our switching to non Bank lenders at the same time as getting these other issues front and centre.
We are all talking about Broker control - lets not stop at half-measures, lets get the whole job done.