MFAA goes into bat for brokers

Posted by LC Team, Friday, July 31, 2009

By Jill Fraser for Lending Central

MFAA Chief Executive Officer Phil Naylor told Lending Central that he has instigated negotiation with aggregators and lenders regarding the contentious issue of volume-based accreditation.

“We think a far better measure of determining quality is not through volume as a surrogate,” he said.

“We think a better measure is some sort of a definition of professionalism as a criteria, which is what we’re currently working out with lenders.”

Naylor agrees that the accreditation criteria of some lenders, which limits supply, has the potential to “chop a lot of brokers out of the market” because it will impact on their ability to deliver a wide choice of products.

Over the past couple of weeks the MFAA has been in discussion with aggregators and lenders to try to come up with some sort of criteria that will satisfy lenders’ concerns about not getting good quality loans.

“What we’re saying is if that’s the concern don’t use volume as the criteria. Let’s see if we can determine some sort of industry agreed definition of professionalism that would focus on quality as the criteria,” said Naylor.

According to Naylor the lenders are receptive to the idea and the MFAA in collaboration with the aggregators is working on reaching an agreement on the wording.

“Lenders are saying if brokers are not writing a product regularly the danger is that quality will slip. But we’re suggesting that if quality is the required outcome some sort of professional criteria, not volume, is surely the better measure,” said Naylor admitting he is confident that the process will find an answer that suits all concerned.

“We’ve got all the major aggregators involved in the process and once we’ve agreed on criteria we’ll then sit down with lenders and see if we can reach agreement.

“We’ve already had discussion with the lenders and in principle, they’re comfortable with the idea subject to agreed criteria,” he said.

Tags: Aggregator, Lenders, MFAA, Phil Naylor

Filed Under: Broker News, Featured, Lender News, MFAA

144 Comments

RS July 31, 2009

About time…

English Bob July 31, 2009

Sorry Phil…..too little too late.

Wouldn’t you be better off spending your resources on organising a nice golf day somewhere?

Michael July 31, 2009

I agrre. This was always the most obvious argument and it beggars belief that CBA and Westpac had the gall to suggest that volume is the criteria by which brokers should be judged.

For me it suggests that those banks either don’t get it or thay have another agenda.

In any case I believe that rather than “chopping a lot of brokers out of the market”, it would actually mean a drop in the number of those banks’ loans being written. The banks woul lose not brokers.

MMA July 31, 2009

Of course both the MFAA and some of the aggregators will be keen on this, as it is the MFAA and some of the aggregators who offer the online courses that, no doubt, the MFAA hope to make mandatory. Can anyone else hear the sound of cash registers a-ringing?

Don’t get me wrong - I’m all in favour of the MFAA and the aggregators concentrating their efforts on lenders who seem intent on introducing “individual volume hurdles”. Individuals aggregate in order to avoid volume hurdles - that is the main point of the exercise. Individual brokers should not be held to ransom over the volume of business that they, as individuals, place with a specific lender - I think we can all see the problems that this would cause with regard to “impartiality”.

However, if the lenders are genuinely concerned about “quality of submission”, and think that “broker education / product knowledge” is the way to improve this - it would be a simple and inexpensive answer to simply require brokers to complete a six-monthly online “refresher” in order to maintain accreditation.

Insist on more business, regardless of whether their products are suitable for our clients? Cancel our accreditations if we don’t give them more business? Oh please……. spend some of the money they’ve saved in recent months by laying off BDM’s, and add an online refresher. Problem solved.

Damien July 31, 2009

Great work Phil & the rest of the MFAA cronies, I guess if we expect nothing to come out of this we won’t be too disappointed !

Matt July 31, 2009

To quote Elvis

A little less conversation, a little more action please
All this aggravation ain’t satisfactioning me
A little more bite and a little less bark

Grant July 31, 2009

While the MFAA board contains members of CBA & NAB amongst others, they will always be compromised. Phil Naylor can make all the noises he wants, we all know he will do nothing because they do not represent us.

Nothing will happen. Mark it down.

Greg July 31, 2009

About time Phil, otherwise your numbers will be crunched big time. We must protect the quality brokers supplying quality loans whilst maintaining their ability to offer choice and thus be able to sit in front of the client looking at their needs (the clients) and not at volume hurdles in recommendation process.

It suits the Bank’s to play the “quality” card as they try and control the growth of Third Party and get back the power that they have been handed by the Fed. Government in this current environment.

Clients have spoken, they want brokers involved in their transaction. Get this sorted out (Volume Hurdles), then next job is to bring in more choice…ramped it up Phil!!

Mike July 31, 2009

So, can anyone tell me the reason we (generally) align ourselves with aggregators if not to get around the issue of minimum volume requirements? Surely this is the point which should have been raised much earlier by both MFAA & aggregators!

KeyChange July 31, 2009

Hang on guys let’s not jump on Phil for doing what we have been calling for him to do. I have been one of the biggest critics of MFAA and that’s why independentbroker.com.au got started. If the MFAA get some material outcomes then good - more power to them. If however they are just being a puppet driven by the lenders ie: looking to be doing something - rather than actually doing it, then yes Phil deserves all the derision we can muster.

Phil - we don’t need more formal training. I agree with Cert IV and minimum 2 years experience - that’s ok. What we need is better, consistent and accurate online information from lenders. We need product information that gives us the facts and not the sales spiel. We need broker support that answers questions promptly and accurately. We need policy that doesn’t change on the fly with no notice. Get the lenders to provide us with this and we will be able to provide them with quality loan applications…….. with one more proviso. We give them business because they deserve it - not because they expect it.

Xerxes July 31, 2009

I’ll reserve my judgement. If MFAA are simply going to make us jump through a thousand hoops (and $$$ to complete additional MFAA overpriced useless courses - which do nothing to impact our level of professionalism) to get some MFAA rating then this would be a dreadful outcome. We are going to have ASIC making us jump through red tape/ bureaucracy. We already have MFAA overpriced courses & their rotten useless CDP points. I’d hate to have the MFAA driving an agenda to make themselves relevant which results in us brokers having to jump through extra hoops. That’s what it sounds like to me.

Personally I think CBA’s position has nothing to do with wanting better quality applications. Rather their position is a direct attempt to divide and conquer brokers. CBA’s actions are the actions of a hostile player. Every word that comes out of Kathy Cummings mouth about brokers drips with contempt for our industry. She shows a total inability to hide her hostility towards us. Just listen to the words that come out of her mouth. CBA hate brokers and are horrified that they need to deal with us. This is what is driving their agenda not application quality. If it was application quality they would simply deregister any repeat offender poor quality broker (very simple).

PC July 31, 2009

How about addressing the professional standards of the banks while you are at it.
What’s the point of having aggregators? They should be the ones fighting tooth and nail to put a stop to this nonsense or they may well become a thing of the past.

CW July 31, 2009

Loans shouldnt be submitted to lenders that dont fit policy or dont service, unfortunately this is all too common hence the low conversion rate and subsequent parameters being introduced. I have a very high submission to settlement ratio and it annoys me when i hear some of the horror stories about brokers submitting deals that dont service, have no serviceability calculator and no notes. Professionalism is the way forward, brokers consistently clogging up the system with these deals affects my income and service to my clients. Lenders need to focus on these loan writers with poor submission quality and conversion and drop their accreditation and then ask them to resit an accreditation session for a fee. Maybe then the standard will lift and it will be better for all. Obviously we all have an issue from time to time with a val coming in low but unless your conversion ratio is above 80% you are part of the problem and it affects the rest of us.
Volume hurdles are damaging to the role of an impartial broker, but i have no problems with quality measures - i am sure the rest of the quality brokers out there would agree.

Daniel Thorpe July 31, 2009

As a trenchant critic of the MFAA and Phil Naylor as its point man its too easy to say too little too late. ITS NOT. Something is being done so lets get behind it but Phil, talk to some brokers, not just the Aggregators if you want a real solution. The Lenders imposed these stupid rules, the Aggregators grabbed ankle and submitted meekly, the MFAA didn’t see or understand the problem. That’s the history, what’s the solution. Here goes.
1. Define the issue. Quality of submissions, not quantity, is the issue.
2. The Lenders that have imposed these quantity rules immediately withdraw them.
3. Lenders instead impose a no tolerance policy on bad submissions. Decline them,send them straight back.
4. Define bad submissions through (a) the Lenders check list (most lenders have them) if required documents are missing, loan declined. (b) outside lenders policy - loan declined
5. Add a section to the checklist making an explanatory diary memo compulsory. This memo can also cover instances of reasons for missing/alternate documents or where policy may need an exception ruling so that points 3 and 4 have an oversight element. Will also train assessors to look at the deal properly before proceeding (current HUGE problem for Lenders that they need to address).
6. 1, 2 3 or whatever delined deals because of points 3 and 4 mean loss of accreditation.Depends how tough each lender wants to be, don’t need an overall rule.
Now some of these points won’t appeal to lenders because they want to write business and certainly won’t appeal to many aggregators who play the numbers game by signing up every Tom Dick and Mary who can pay a franchise fee or pay for a training course. Tough.
It will appeal to all the professional Brokers who make every effort to do it right with quality submissions within policy first time every time with every Lender.
Let we Brokers ourselves, by our actions, decide who deserves to stay in this great industry. Remember, measure what happens and you will get the right quality result, impose quantity rules and you destroy good brokers without getting rid of the bad ones.
Use a sniper rifle policy to weed out the incompetent, not a machine gun that guns down the good with the bad.
It is that simple.

Mike July 31, 2009

Of course I agree with CW that brokers who don’t reach high enough standards should be weeded out, but I am more concerned that, as a broker of over 10 years standing and with a high submission to settlement ratio, that I should have volume requirements forced on me.
The real issue here is not the professionalism of brokers, but the fact that banks like CBA want brokers out!
Two recent examples show me this.
1. Existing client needing owner builder loan. I was told I can no longer submit such loans and that the client would have to go to a branch.
2. Customer needing 95% loan. Again a branch deal only.

Result I lose 2 clients and I haven’t done anything wrong and my quality remains as high as ever.
As far as I’m concerned they can shove their accreditation up their **se and I will continue to deal with banks that operate professionally.

Derek Miles July 31, 2009

This whole debate regarding measure of professionalism has been hijacked by some lenders prior to going into a regime of licensing with ASIC. Some lenders have used the process of licensing to force more volumes to their way by giving the impression either through the media or through the ASIC process that brokers who do not write appropriate volumes through them therefore implies that they are not professional or even qualified.

Take my business model for instance. I am a lower volume writing broker, but a significant proportion of my loans are over $500k and are high net income and net asset investor clients. I am a highly qualified Accountant with 30+ years experience and a fully qualified broker with 15+ years experience. I provide my clients with an all emcompassing service, that is tax planning and finance planning, and I arrange the loans. This has been my model for many years and I will not engage in the volume/low value loan market. It is simply a business model choice that suits my style and my client base.

I resent the attitude adopted by a couple of lenders and especially pushed by another that I am therefore an inferior broker just because I don’t write with that lender or indeed not write enough with those lenders.

The industry has become too product and sales driven. It has gone away from being solution/service driven. The whole agenda being pushed by some lenders, not really quality and service but purely volume and market share.

So when CBA talk about their 5000 brokers in the substandard category, they falsly interpret those brokers as being small part time brokers or brokers with lower quality. Let me put this proposition. Would CBA rather they get 100 tight and difficult max lvr deals, or would they rather my one $1mil deal at 70% LVR high income and net worth client to clog up their system. Have they really analysed those 5,000 brokers and come to understand that maybe a proportion of them don’t write CBA because their service or product proposition doesn’t fit their client profile?

Some lenders are in critical danger of destroying product or service innovation. They are doing this whether deliberatly or unintentionally by restricting the market to high volume basic feature products and service. They don’t want the alternative because this means they don’t have to worry about innovation or value of service. They just want the model T Ford. I can understand the rationale - lower cost. However, the reason the broker industry started in the first place is that so many customers want more than this - the want solutions that assist them to save/make money or create wealth and the want service they can’t get at the branches. When will these lenders get it ????????????????????? !!!!!!!!!!!!

So I applaud Phil Naylor in his defence of his constituents and I am sure he can see where this is all heading. As members of MFAA, we need to get behind the organisation and look to the future with vision and create this industry - not back stab the MFAA and the aggregators and drive this industry so that a few lenders cannot highjack how this industry grows.

Ritchie July 31, 2009

Next weeks Financial Review front page:

MFAA CONVINCES BANKS THEY ARE WRONG…………….I’d love to see that, may even leave the industry as it could never get better than that!!!!
Think I’ll be here for a bit longer.

Rich July 31, 2009

The MFAA is a nonsense! - designed to extract money from brokers.

They are just feathering their nest again - jumping on something topical a little too late.

And as for the Aggregators - they are simply agents of the lenders (by contract with them).

Brokers need a representative someone who is independent and that can stand up and speak without fear and trepidation on their behalf.

Someone like Maria Rigoni from AIPB (Australian Institute of Professional Brokers). Now here is a real ‘Joan of Arc’.

As brokers we need to support her. We are going through a massive paradigm change and we need to speak as one voice.

jack July 31, 2009

Is it just me or is Phil more worried about the potential of declining member numbers and the impact it will have on revenue rather than looking after our interests. We have been hearing about these volume requirements for several weeks now and it has taken Phil this long to say he will do anything. But when the banks are on the board how much can he do?
Makes one question again what the point is in being with the MFAA at all as well as an aggregator.

Xerxes July 31, 2009

Response to CW,

I would like to see comparisons between branch introduced application to settlement ratios and broker ratios. I’m not willing to blindly accept that broker ratio’s are much different to branch ratio’s. Many brokers are in fact ex bankers with lots of lending experience. When I worked inside one of these big corporates I saw all sorts of unprofessional behaviour & incompetence and very poor conversion ratios.

Also as a loan writer, not every deal is black and white. Pass or fail. There is grey in lending. You must fight for the grey deals & use your experience to get them through. Occassionally they will get knocked on the head. Even after you have done the due diligence.

Brokers should always look to keep their quality high. But declines are part and parcel of the game.

If a broker sends a lender an application that is rubbish the lender should simply bounce it back to the broker & send a letter with it saying if you continue to supply business of this quality we will withdraw your accreditation. Don’t impose volume requirements on us all because of the actions of a few.

To insist that all brokers hold an extremely high application to conversion ratio with each lender is not necessarily a good thing. As you mentioned, there are always the deals that fall over through no fault of your own (low vals, unknown CRAA, bad service from lender meaning customer loses the property & no longer wants to deal with that lender, customer gets sold a slick sales pitch from another operator after your submission, you are given a bum steer from the broker help line, etc etc etc). There are also the occassional grey deal that you are just unable to get across the line.

It is very easy to imagine that you could have a 90% application to settlement across all applications with all lenders and you have a statistical anomoly with one specific lender who you use occassionally (say 2 or 3 deals fall over in a row). All of a sudden your conversion ratio with that specific lender falls to 70% or 60%. Despite the fact you might be a highly professional operator you will have your accreditation withdrawn.

CBA’s call for quality & volume is a smoke screen. Yes we should keep our quality high (that’s just smart broking) but there is another agenda at play here.

Bob July 31, 2009

The banks just need to understand that brokers can read and so long as all required information on each of their products is readily available, and brokers regularly check that information, there is no problem. There is absolutely no need to be charging $500.00 to attend a reaccreditation course. No one will convince me that attending a classroom training session for 2 hours listening to a BDM talk about his products will ever make a broker more professional.

Before writing any loan, I have listened to what my client is looking to achieve short, medium and long term, then find the most appropriate products to suit their needs. I will always read up on the products so that I know them back to front, irrespective of whether I have written that particular product in the past 6 months. It’s called due diligence and is something that I believe every professional broker would be doing. I also leave hard copies of full product information with clients for their records. I find that often times when I call a broker assist line with a question, the person who takes the call often does not know the answer and has to go and check it out with a team leader. Remember, these guys only have to know 1 product suite. I believe that as a broker I know more about a lot of lenders products then their staff know. I believe that other brokers would agree with me on this.

Xerxes July 31, 2009

Bob,

I agree with you 100%

CW July 31, 2009

Xerxes i agree with your comments - but for eg 55% conversion with ING from my aggregator (one of the big 2) isnt a low val or CRAA that pops up.
Grey areas yes there are, but i always vet those with my bdms before submitting.
I am an agent for Veda as well so dont have the CRAA issue.
Obviously there is always going to be the odd deal that doesnt go through for whatever reason but there are way too many brokers out there sending in incomplete deals, that are poorly put together that dont even service. This is what needs to be addressed.

I know this because my partner is a credit assessor and some of the deals that are sent to her are a joke. She only approves 60% of the deals that come to her.

Whilst i dont doubt there may be other agendas at work, whilst the low conversions are there and 55% is low, there is always going to be the squeeze on commissions and requirements etc etc. Of course we need industry bodies and aggregators to stand up and be counted but if everyone is submitting quality, I would think that has to help our cause.

CW July 31, 2009

Agreed Bob - obviously you and Xerxes are not the ones that would be affected by quality measures - neither would I.

Xerxes July 31, 2009

CW,

Why don’t these lenders simply cut off the repeat offenders?

If I send rubbish once, I deserve it to be thrown back at me (don’t waste more than a couple of minutes on rubbish files) with a warning to pick up my act or loose accreditation. If their issue is quality they could cut off the bad quality in no time by taking this action.

It’s not a quality issue. It’s an opposition to broker issue. We drive competition. They don’t like the competition we drive. Without brokers there is less competition and higher margins. Simple. Its not about quality or volumes. That is a smoke screen.

And as for grey area deals vetted by BDM’s - I’m sure you have had experience of a BDM giving the conditional green light (assuming you can actually get through to one) only to find credit knocking it on the head. If you haven’t then lucky you.

Phil July 31, 2009

ok how many people do you need to see to settle four cba deals in six months? Whats the ratio that CBA is best for the client?

Under the new regulation if we recommend a loan that is not suitable for the client ASIC can send the broker/someone working for a financial institution to jail or fine the licence holder $1.2 million.

MFAA has made submissions to ASIC regarding regulation. CBA makes comments that brokers will get a wake up call once regulation gets in !!

WESTPAC the bank also stipulating volume requirements after all this time actually reads the regulation draft, shock horror finds that sh*t their staff are regulated too. Their staff and them can be fined $1.2 million.
Oh its too heavy handed we need a rethink - regulation now 2011.

If we write deals with CBA and WESTPAC how do we prove its the best loan for the customer?? I bet if in fact regulation in fact only effected mortgage brokers our Aggregators and our Mortgage Industry body would not have a problem?? Because they certainly didnt alert the Government there is an issue it was Westpac. ( and only because it effects their staff)

MFAA too little too late ….. certainly YES !!!!

Savvy Investor July 31, 2009

All,

The course you did a week ago could be obsolete by the time you write the next loan, you still have to check online for policy and product updates (and your CRM) and double check through BDM or Broker support anyway (just to be sure), so what benefit to a static course with all the time wasted and how does that guarantee quality anyway?

Answer is relatively simple. Put a ‘real’ type loan scenario on the Lenders website (which changes as policies are changed), then if you have not lodged for say 6 months, get broker to determine why the loan would not go through (demonstrating knowledge of policy). If they can’t then they can not submit the deal. Once they can, then they probably understand policy enough to proceed. Live quality control.

Or you bite the bullet and create an online Loan Submission system that checks the loan parameters and does not allow you to hit ’submit’ or ‘refer’ until it meets your Banks requirements. This should not be so hard given their skill sets…

Broker in the burbs July 31, 2009

MFAA 1 FBAA Nil

Phil, you apparently talk the talk……but mate, what size ‘negotiating stick’ do you possess?

I’d simply love to know what negotiating muscle you have when mixing it with the ’suits’ at the CBA & Westpac on the quota issue.

Or are you simply grandstanding for the benefit of disenchanted brokers?

Time will tell I suppose.

As we all know, volume quotas are simply a cynical mechanism for the CBA & Westpac to force brokers to write mortgage business for them, as defacto sales agents at the expense of 2nd tier banks (other than Bankwest & St George)& non banks.

Banks don’t hate brokers, they just hate competition.

And because brokers don’t do what is expected of them, then they just have to be coerced don’t they. But of course,it’s only about compliance and product education or other such rot.

Interestingly, what about one of the CBA’s FNQ mobile lenders and his understanding of CBA’s lending policies & product specifications recently.

I mean as an employee of the bank, surely his product & credit knowledge would be undoubted. Wouldn’t it?

The mobile lenders own admission post fact, was that he was simply inundated with business, so sales volume was not in question with his Area Manager or anyone else at the CBA.(What a good boy)

But what about compliance standards with the credit staff at the CBA? What were they doing? We’ve all seen the news reports on the outrageous income declarations supposedly made by these unsophisticated applicants and the levels of gearing involved, but clearly, there was scant regard taken to compliance.

What a ‘Storm’

But that’s OK, if the mobile banker was in the third party channel, they’d be lauded as business champs and their accreditation certificates would be framed in gold.

Yep, I agree with the CBA when they keep telling me that it’s all about sound product & policy knowledge, not sales quotas!

And the piggy squadron is No 1 on the runway too.

broker July 31, 2009

I would have thought that satifying clients’ needs would be a better way to judge professionalism and not meeting volume criteria

Broker in the burbs July 31, 2009

Oh, on the matter of crap brokers submitting crap deals and stuffing it up for the professionals….this is my take on it.

I joined a retail bank when I was 17 years old. After 3 years there I went to a Finance company and learnt all about PL’s, HP’s Factoring & Leasing.

I then joined a commercial lender (wholesale) and learnt all about floorplan finance. Then I moved to another position as a mobile lender (mortgages)and then moved into the funds management industry for 10 years or so in various business development roles. Finally a did a 4 years stint managing a Financial Planning firm. I’ve subsequently been broking (my own business) now for 5 years.

In other words, I know and was trained in the Financial Services industry.

So when some aggragators continue to recruit non industry people into the business on the back of some pretty useless theoretical training and then lenders accredit non industry people after 30 minutes of brochure reading, then what does the industry expect will result?

Too many players (including aggregators & lenders) who profit off the back of brokers sweat & toil have held had their collective hands out much too often, without putting the effort back into effective training.

Don’t blame the poor people who want to do well in this business, whether they are non industry or industry trained.

The service & product providers have to lift their game.

In the Financial Planning game, a new player must submit a number of their SOA’s to their compliance department before they go solo.

Too many brokers are being blamed for every ill in this business, that’s for sure.

Daniel Thorpe July 31, 2009

Lots of talking around the issue but at the end of the day we all generally agree.
Please read my earlier blog (about 14 back) with suggestions for the solution and see who agrees. If we Brokers don’t suggest and support a sensible solution and do it in a united fashion we will jsu get the rough end of the pineapple again and again and again.
Who agrees with my 6 point approach.
Here goes.
1. Define the issue. Quality of submissions, not quantity, is the issue.
2. The Lenders that have imposed these quantity rules immediately withdraw them.
3. Lenders instead impose a no tolerance policy on bad submissions. Decline them,send them straight back.
4. Define bad submissions through (a) the Lenders check list (most lenders have them) if required documents are missing, loan declined. (b) outside lenders policy - loan declined
5. Add a section to the checklist making an explanatory diary memo compulsory. This memo can also cover instances of reasons for missing/alternate documents or where policy may need an exception ruling so that points 3 and 4 have an oversight element. Will also train assessors to look at the deal properly before proceeding (current HUGE problem for Lenders that they need to address).
6. 1, 2 3 or whatever delined deals because of points 3 and 4 mean loss of accreditation.Depends how tough each lender wants to be, don’t need an overall rule. (The rest is on earlier blog)

Comment July 31, 2009

Surely this is a better approach than Maria Rigoni’s machine gun spray and threats of legal action. Yes Phil, it is about time, but as one of your critics who always poses you questions at meetings, I commend what you are doing here. As long as you stay strong on the point. Don’t accept the rhetoric of lenders that they are doing it to give us better service. If lenders get away with the volume agenda, the next step is that they will want the brokers to become contractual agents of the bank rather than the client, and that would be terminal for the broker model. This is the type of debate we need, not rants & boycotts & threats.

Xerxes July 31, 2009

Daniel,

I like your pro active thoughts. But I think you are dealing with the smoke screen not the issue. The banks want QUANTITY & they want less competition.

If it was genuinely a quality issue they would simply apply your 3rd point. End of problem.

The fact that average broker quality submission is not great (but is it really any worse than branch quality submissions?) simply enables them to spin their agenda (put in place quality and quantity metrics - to reduce competition and add pressure on brokers to increase volumes to the majors).

I think brokers should always strive to submit highest quality applications. But really when its all said and done, is it that big a deal if occassionally a $40 / hour credit assessor spends 15 minutes looking at a poorly put together application with a 50/50 chance of approval (if it is, apply you 3rd point - decline due to poor submission - then remove repeat offender broker)?

I’m not encouraging bad quality applications (we should always be professional). But is this really the issue or is it a smoke screen?

Many other posters have suggested simple solutions lenders could employ to help with improving quality.

BBB July 31, 2009

This is the MFAA doing what they should always have been doing , The majority of their members are brokers , Less brokers less income for the MFAA .

That being said write to Phil Naylor at the MFAA lending your support . it will psooibly Jam up his e-mail BI+UT it will gib=ve him some strong argument.

woo hoo July 31, 2009

MFAA , why bother , you have done jack shi# other than rip us for useless annual fees from us for a zero return, I expect NOTHING to come of this, and I don’t expect that you will prove me wrong, MFAA is just a waste of space, nothing more, nothing less…..

John July 31, 2009

You are a joke Naylor, didnt you learn from your “Roundtable” failure.

Banks get the majority of their business from 70% of their brokers so to cull the balance makes sense.

You really cant be serious to think that they care about anything that you have to say as you have a proven track record of having no real power at all.

The Software provided by Aggregators gives the brokers all they and the clients need to know about the products on offer. Hence the retraining requirement just being another way to cut the ones not writing a lot.

I look forward to hearing you try and put a positive spin on the meeting and your attempt to make it sound like you actually achieved something.

It really is a shame that we cant pay you the way you expect us to get paid. No result = No payment from the client under your rules, well here I am being your client and you have achieved no results for me in commission cuts and volume levels so where is my refund??

Keith July 31, 2009

Hi Guys,

I am really beginning to think it is time for brokers to withdraw their memberships from the likes of the MFAA etc and start an independant association run by finance brokers for finance brokers.

The MFAA is not in a position to be able to wield any leverage against the industry heavyweights such as the banks because the banks are represented on the MFAA board. The MFAA can not possibly support brokers for that reason. The MFAA is kind of a hotch potch of ideas all rolled into 1. Representation from all sectors of the finance industry to provide communication to all members of the finance industry.

As for the relevance of the MFAA in 2009, I ask you what do they do for brokers. They provide education facilities mainly, all the while lobbying to aggregators that brokers should not be allowed to operate unless they are members of these associations.

An independant broker association could provide the same education facilities and the profits would be going to support brokers. They could liase with aggregators and the lenders and the policy makers ON BEHALF OF BROKERS.

Brokers need to regain some leverage, and they can’t do it through the likes of the MFAA.

Congratulations to Maria for taking this stand. She has my full support.

“Comment”, I don’t know where you are coming from, but at least Maria has formally STARTED the fight. It may not be perfect but it is a very good start, and I don’t see your name up there doing anything about it, just complaining that what Maria is doing is “not good”.

The lenders are simply making a business decision to reduce their costs by “getting rid of”, or “lessening the impact of brokers on their bottom line”.

They will tell you that they are not, but they are. And what better way than by creating a poor public image for brokers. They do this by implementing bigger hurdles for brokers to jump over like tightening credit policy, reducing staff numbers, etc, all the while telling brokers that they are loved and that this situation is just an outcome of the GFC. Rubbish….

Many of the big banks still want to deal with the broker channel, they really can’t afford not to.

Brokers need to get back their independance from which will come strength.

Independant finance brokers do a great job for their clients, and clients want our services.

How many times over the past 10 years have any of you seen national advertising promoting the strengths and benefits of using brokers. The MFAA did run 1 a few years ago and thanks to them for that. But we need to make our services a household name which is trusted and valued.

Let us set up an independant finance broker association which requires strong professional training and backgrounds to be a member, which will solely support brokers by brokers and then let us promote our services to the general public who will want to use our services. And when that happens, all the lenders will want to use the broker channels, and on our terms.

I hope to hear from you all

Keith

Patrick August 1, 2009

More of this type of sentiment please Mr Naylor.

As for this Maria Rigano, if this person is so against the MFAA, why do I hear she continues to be an MFAA member and also attended the last MFAA conference on the Gold Coast. Lot’s of integrity there for this solution less trouble maker..

Savvy Investor August 3, 2009

Hi Patrick and All,

Maria and everyone else leaving the MFAA would not prove integrity or otherwise. She, like most of us, want to make changes - the only way to do that is be involved. If you leave the organisations currently driving the changes then how can you stay in touch with what is relevant or attempt to influence the directions that changes are being made in?

Maria has done the one thing that we should all be striving to do, getting the word out about the issues and having them in the public arena. You are brokers, networkers and doers. Let people know the issues and you will see that Australia has a long and proven history of backing the underdog and giving people a ‘fair go’. History has a brilliant way of repeating itself… just do your bit and keep the pubic informed.

I find it amazing how many of my friends and family don’t even know the real issues here and what their response is once they realise. Banks don’t have the best reputation with the public at present, and whilst attacks against individual brokers are very highly visible, that is also because they are also extremely rare… can the same be stated for the Banks? Sadly, their service is already so commonly held up to public scrutiny it is no longer news when an incident occurs. Worse is the fact that their quality is not being rated reciprocally by us and that they have no interest in getting this feedback or acting upon it. At least Mr Naylor has admitted there is a problem and has heard the feedback and is trying to do something about it. I am amazed that having asked so often for action from the MFAA, the brokers here are not more supportive now that they are finally getting what they have asked for.

Lastly, whether he is ‘late’ or ’successful’ or whatever… is not the issue (for me), at least he is prepared to give it a go. If you don’t believe he will succeed then don’t just depend on him alone, keep up the effort that led to this point and the more that try to make changes the greater the chance of success as a whole.

MMA August 3, 2009

Savvy Investor : I don’t think anyone is complaining about the MFAA “getting involved”, but more about the length of time that they have taken to do so, and the approach they seem to be taking now that they have eg. ” education via the MFAA is the answer”.

As per my earlier post, I don’t believe that securing an agreement with lenders, dependent upon brokers completing yet more MFAA courses, benefits anyone other than the MFAA.

If they truly represented brokers, they would have been shouting from the rooftops on this issue long ago, not coming to the table late, and in a manner calculated to add to their revenue stream.

As I said in my earlier post, the MFAA won’t represent one part of their membership against another, particularly when “the other” makes up a good many MFAA board positions and sponsors most of the MFAA activities.

That’s why thet were silent on upfront commissions being slashed & trails being deferred for the first year, by some lenders.

Oz Boy August 3, 2009

Too little too late, this has been on the cards since January this year and now in July they are starting to talk to lenders. So Mr Naylor when do you think we might see something from your talks, 09, 10, 12 months after regualtion or when your numbers are so far down because all the brokers have left!! Get back to having lunch and let us get on with it.

Comment August 3, 2009

Keith, there are already a couple of other broker representatives, such as the AIPB & FBAA. In my view, neither of them have achieved any substantial benefit to brokers, and the current broker dissatisfaction is evidence they have not achieved much. Maria is part of the AIPB, but as you are calling for yet another association Keith, you obviously aren’t satisfied they are representing brokers effectively. So, I’m coming from the same place as you, I’d like outcomes. I’ve been a member of the FBAA since its inception but will probably cancel my membership this year.

But really, if anyone is relying on anyone else for success than themselves, why are they in business? Even if a new group had 13,000 members like the MFAA, it would take $1,000 from each member just to start to run the effective marketing campaign you suggest, plus start up & admin costs. I’m happier to hang on to my money and get on with it. Sure, there are issues, and we won’t give up pursuing them, but the sky really isn’t falling.

Keith August 3, 2009

Hi Guys,
I must admit, that I have not taken much notice of other broker groups in the past. I am going to now.

My main gripe with the MFAA is that the aggregators have promoted to brokers and the MFAA & FBAA, that we will not be accepted as brokers unless we are members of the MFAA or FBAA. That’s fine, as in the past there has been no other channel for aggregators to bring pressure to bear on brokers to reach a minimum standard of education. Therefore, we must be a memeber of 1 of them.

However, the MFAA & FBAA are organisations that have been set up for a different purpose other than looking after the interests of brokers. They were set up as organisations who represent ALL members of the finance sector.
We are now in a time when we need strength as a “broker group”.

After many years of “easy times” for aggregators & the MFAA & FBAA, the pendulum has shifted and the power now rests in the hands of the 4 major banks. It is not rocket science to know what they are doing with it. They are clawing back their costs, 1 of which is broker commissions. How do they do it? They make it more difficult for brokers to get loans approved, this makes the broker look unprofessional in the eyes of the client. They cut our commissions and we do not have the strength as individuals to stop them. They implement an advertising campaign to promote their branch networks as the prefered method of dealing with their clients.

There has been no need for change in the past. The broker channel was not threatened in the way it is today. And the MFAA & FBAA do not have the charter to help the brokers.

We must create a new association or join one that already exists to represent brokers only.

I would be very keen to hear from brokers who are members of a broker association AND either the MFAA or FBAA.

Bye for now

Keith

MGR August 3, 2009

Let’s go on strike.

Derek Miles August 3, 2009

All I have seen from so many of these comments has been bagging of the lenders, aggregators and MFAA/FBAA. The basic facts of the matter is that the lenders have the money to lend and we have the clients who want to borrow money. It is a simple equation. If the lenders pack their bags and stop distribution throught brokers, we may as well pack our bags and change our business - because our clients won’t get any money to borrow through us. So the only way to resolve disputes is to negotiate like adults and come up with a system that benefits both parties. As both lenders and brokers belong to MFAA and FBAA, why not use this forum to facilitate the negotiations. Why start another group which is automatically out on a limb with one of the most important parties to the negotiations - THE LENDERS (it is they who have the money to lend - a critical ingredient to the whole debate - remember?????). So stop the personal attacks, get off your bums and talk to the MFAA in adult fashion to constructively negotiate a stystem that will benefit both parties.

Savvy Investor August 3, 2009

Hi MGR,

What makes brokers existence possible is our value to the client as independents and our flexibility and self sacrifice in doing what others hate (finding the devil in the detail and going the extra mile).

Going ‘on strike’ would be seen as self serving at best and give Bank channels a free hand to claim new loans at worst. They would not lose (collectively) if we were to stop sending them business…

Our best option is to continue outperforming the bank staff on costs and service and people will vote with their feet. The problem is that the Banks do not divulge their rework costs, or internal costs of loan origination (because they bundle it so it looks like it is free), so we can never see how really cheap we are relative to their highly paid loan staff members in expensive city office buildings with highly paid managers and their secretaries overheads to fund - or how true their claims are of poor loan submission e.t.c. as they are not open to external audit. Meanwhile, everything about us is constantly in the public arena - other services/retailers are not forced to show their markup on product or divulge their suppliers and associations. Until we get a more level playing field we will always be fighting just for the right to survive.

Xerxes August 3, 2009

Thanks for the lecture Derek.

Being an emotive issue though you would expect some emotions on this topic on a blog sight. Looking through the emotions. Hopefully the message back to the MFAA is that we are concerned about the MFAA’s delayed response. Of course we would like a good outcome from their involvement. However we are also hoping the MFAA is not going to use this issue to produce another MFAA overpriced (revenue raising) online course.

And if any lender decided they did not wish to use brokers (who account for > 40% of all new mortgages written) then I would prefer they came clean and simply withdrew from the broker market (like BOQ did). Then brokers could concentrate on lenders who were committed to the broking industry.

derek Miles August 3, 2009

You have hit the nail on the head Savvy Investor. And as my previous comment, attacking the MFAA/FBAA, Aggregators and Lenders does nothing to foster a trustful relationship. You have to give first before you get. Or, we as an industry, have to prove first before they take notice.

Daniel Thorpe August 3, 2009

Derek, Xerses et al.

Once again read my blog - it is a solution, maybe could be improved. But it won’t be if everyone keeps going around in circles attacking other participants which is totally unproductive.
Fact. I want to stay in broking.
Fact. To do so I need a spread of lenders (and before anyone says there are other lenders out there, I know. - I use the big 4 very sparingly)
Fact. The MFAA via Phil Naylor is currently in a position to do something positive.
Fact. Aggregators have failed their Brokers, once again.
Fact. Lenders and Aggregators run the MFAA - lets change that
Fact. Quality is the real issue, not quantity

So you can either support the kind of solution I have put forward, get Phil Naylor talking directly to Brokers who will support him in getting a solution and maybe in the process change the paradigm that is the MFAA(don;t think Phil will be in love with the Banks after Westpac sabotaged all his work on the National Credit Legislation)but most of all show that we all want the same thing. Refine what I have said or propose an alternative. Anthing else is counter-productive.
As the Bard said’There comes a time in the affairs of men which,when taken at the flood, leads on to victory”
Now is that time. Get behind a solution that we professional Brokers can live with or keep whinging. The choice is ours and ours alone.

MGR August 3, 2009

Writing is on the wall - Westpac & CBA have decided our future - now, they’re just manouevering the henchmen to complete the task.

So, let’s greet them in the appropriate manner by “grabbing our ankles” as a blogger mentioned earlier.

Broker August 3, 2009

Well said Derek Miles, don’t be put off by those that have no comprehension to what is really unfolding at this time. The industry is undergoing a massive restructure pre-licencing of which one intended conseqeunce is that most of the people on this blog won’t be around in 12 months time. Reading some of their comments I wish it were sooner. Phil and the MFAA are doing an above average job at a time when the balance of power has temporarily shifted to the banks. This is not a long term event and most of us know that fierce competition will again return and restore a balanced marketplace.

which will and fortunately most people on the blog won’t ley s most dramatic evolution in its history in preparation stageie wannabes on this site.

broker in the burbs August 3, 2009

MGR, you’re a dry one, but very funny nonetheless. Just heard Joe Sirianni is the new National MFAA President elect.

I’ll stand corrected if I’m wrong here, but didn’t Joe make a comment somewhere that volume for accreditation is a good thing?

Now, what would you prefer chaps, makin’ like froggies in the simmering pot of water or you simply feel like picking up that bar of soap?

Damien August 3, 2009

Today I just received my “invitation” to renew my MFAA membership; umm I think I will pass on this occasion Phil, unless you can convince me that you are actually going to DO SOMETHING that is in the interest of Brokers, other than training us to just bend over to the majors.

I suppose once I get my ASIC licensing , the MFAA will be totally irrelevant , unless you and your mates at the majors can come up with some other useless crap to justify your organisations existence in order extort further fees out of us.

Enough is enough, and please don’t bother coming up with this too little, too late crappy , we care about Brokers nonsense, just how stupid do you think we are?

MGR August 3, 2009

~ I don’t think Damien is going to get his Golf Day invite~

broker in the burbs August 3, 2009

Broker,

I must admit I couldn’t be bothered reading all the ‘Days of our lives’ posts here & elsewhere sometimes, but when Alan Fels and other significant commentators are alerting the broader community of the negative impact of reduced competition in the market place; it’s not just about a few brokers whinging.

It’s bigger than that.

I too agree that licencing will set the stage for a more professionally aligned industry. It will also cause a number of people to depart and others to reconfigure their practices. All good.

However…in the scheme of things, banks are just product providers. They are not regulators nor are they concerned overly with a third party channel that has access to a free & unfettered cross section of other product providers.

The CBA & Westpac have led a charge to secure their market position and to gain greater control of it. I think we all can understand that.

But whether we are licenced or not, if industry practices conspire to cajole brokers into uncompetive business practices, it is simply wrong.

Brokers broadly feel disenfranchised, particularly when the impression that they are simply lambs to the slaughter and being without any group advocating strongly from their corner.

Brokers have rightfully become cynical about various stakeholders in the industry both with their motives and actions.

Personally, I can’t wait for national licencing to be introduced. It will shake a few cages. But don’t get too hard on some brokers who are simply fed up with the bully boy tactics being employed by product providers.

Hey Dude August 4, 2009

Is it just my suspicious mind, or has all this rubbish about individual lending targets only emerged since some of the major aggregators were bought by a lender?

Is this a sly means of the Big Two forcing out the competition ie Challenger? If you can knock off a lot of brokers - and I, for one, if I lose my accreditation with CBA and Westpac will most definitely NOT be paying to reinstate it - this will weaken Challenger’s investment in the industry.

There is no other industry like this one. The industry bodies are loaded with lenders and yet it is we, the brokers, who feed the lenders with our own self-sourced customers.

However, now that nearly all of the lenders have extended their claw back periods - two years has become the norm with at least one claw back operative up to 36 months - the idiocy of the volumes when membership of an aggregator is meant to be all about aggregating volumes - but in reality, without working through an aggregator it would be impossible for a lender to claw back commission!

The lenders need to be aware that brokers write huge volumes of business and if they persist with this behaviour they will make themselves, not us, redundant

There are plenty or mortgage originators out there who will do deals that the ‘panel of lenders’ won’t do, and these are the traditional suppliers of funding, not the insipid home loan market. I have not yet had a deal that could have walked in to a local branch and just get a home loan. Every deal I have ever written has taken significant due diligence by me, education of the customer and comprehensive planning and preparation before I lodge the application.

My records show that each deal takes an average of 40 hours work from time of first contact with the customer to settlement and after-sales service.

But if that customer has the Death, Divorce, Disaster or even makes a Decision during the following two years to sell the property and close the loan I have every cent of commission taken back from me.

It seems to me that every level of this industry views brokers as the punters. It now costs me nearly $4,000 each year just to be able to call myself a broker. That’s the first million dollars in loans just to pay for COSL, MFAA, PI Insurance, attendances to keep up the points, this year also cost Cert IV and next year will probably cost the Diploma, another $2,000, plus National Licensing fees - and who knows how much that will cost? If WA is anything to go by, $1,000 for the Company and $1,000 for me, another $2,000.

What other industry has this level of expense just through membership criteria? And then we still have to pay to attend professional development days, not even a free cup of tea for our troubles!

But, there are plenty more punters where we come from …. maybe. If this professional persecution keeps up this industry may evaporate as suddenly as it appeared.

We need strong advocacy and we need it now. If our industry bodies aren’t prepared to stand by us they may wake up one morning to find that there is no further need for an industry body as there will be no broking industry to represent!

brokerbroker August 4, 2009

Maybe someone need’s to start up an online petition to Naylor & Co, that they have until a certain date to sort this mess out or those that sign will not renew their membership. The banks and lenders do not care if you are a member or not all they care about is your first year when you have to do the various online courses to get your original membership and accreditations with lenders. After that they don’t care. Aggregators huff and Puff about renewal but that soon goes away. It’d called 3rd party enforcement, and if you write to a lender and tell them this they would probably back off requiring it. Being a member is not an educational certificate, it’s just like being a member of any club but only a few benefit in this case and the majority foot the bill.
I am a member of the MFAA, I have no idea why as I have never been to any of their functions, the only reason I joined may years ago was to do the online UCCC etc, my FB I & FB II, Cert III, Cert IV etc was done through TAFE and my aggregator as it was alot easier.

Xerxes August 4, 2009

broker in the burbs,

I agree with your last post almost totally.

However Licencing increasing professionalism?

I have argued this point with numerous people and still don’t understand the position you hold.

We’ve also had this discussion on other posts. But I’ll say it again. Licencing will not do anything positive for broker professionalism (any more than it did for Financial planing or Real estate salesmen).

Licencing is simply about government bureaucracy/red tape with the government being able to spin the tale that they imposed more control on the finance industry & brokers in particular. The less ethical/moral brokers will continue to operate. The brokers who operate in a less professional manner will continue to operate. Some people will decide to leave the industry due to the higher costs and greater level of government red tape. But those that leave will be proportionally equal across the broking spectrum;

Highly professional, moderately professional, unprofessional, full time, part time, ethical & unethical. There will be no greater departure in any one of these category. So basically there will be a slight reduction in broker numbers directly as a result of licencing. Those of us that remain will have greater costs to operate, more time spent on jumping through ASIC hoops & as a result slightly less effecient businesses. All for no benefit to the consumer.

I understand licencing is upon us & I am well prepared for its commencement. But I don’t have to blindly believe it will have any benefit to brokers or customers.

I am also certain that the MFAA pushed the licencing agenda strongly.

John August 4, 2009

The new legislation coming in next year doesnt say that we have to be a member of the MFAA.

They are only getting involved to try and ensure that the rules are changed to force membership like the Aggregators did. MFAA is fully aware that they have only have member numbers due to a back room deal with the Aggregators and Lenders.

Lots of comments here Naylor…..WHAT DO YOU HAVE TO SAY??? you have paying members here and its a shame that you dont treat your clients (brokers) in the same manner that you expect us to treat ours.

Jack August 4, 2009

Nice one John.

I agree - where are you Phil? Why are we not hearing anything from you?

There are a lot of unhappy MFAA members out here who are extremely disappointed with how we are being represented by our industry body.

A lot of us are still very disappointed with how the commission cuts saga was handled as well. (remember that the MFAA invited Kathy Cummings to a conference and she tried to then sell the commission cuts as a good thing for the industry)

Time to stand up Phil and make some demands rather than take whatever the banks dish out.

Broker August 4, 2009

Wake up John. As if Phil Naylor would respond to your anonymous rantings. The banks require MFAA membership…..or have you forgot?

brokerbroker August 4, 2009

Broker, when was the last time a Bank/Lender asked for a copy of your renewal ?
John is quite correct there are alot of very unhappy MFAA members, if those that are unhappy vote with their feet then I guess Naylor will have to walk. MFAA are there to represent us the Broker………….. All John is saying is for Naylor to get some B**ls and represent us with some passion.

Melbourne broker August 4, 2009

Having been a broker for 8 years and a broker BDM for 6 years before that, the answer to quality is as simple as: if it’s no good, send it back to the broker. Don’t leave the file sitting in some cabinet somewhere. Physically mail all the information received, by email, fax, whatever, back to the broker so it sits on their desk.

I did it when at a bank and it worked. The brokers that didn’t like it didn’t come back and that was fine because they weren’t much chop to begin with. My workload decreased, my settlement ratios went up and my volumes were unchanged.

If your product offering is compelling enough, brokers will make sure the next deal is submitted properly. Repeat offenders are disaccredited.

It’s a no-brainer, but we all know that this has nothing to do with quality. Kathy, we’re not stupid, regardless of what you may believe.

Divide and conquer, huh? I’ve told clients about these new volume requirements and they are horrified and aren’t interested in going to these lenders unless they have no choice. Clients realise that if they want to come back to us in a couple of years for another loan, we need to be able to stay in business. Tell them all about it!

Savvy Investor August 4, 2009

Hi All,

Remember when Smartline supported the Volume agenda in a previous article and I asked the question why would any broker organisation do that? Here a little totally un-related piece of information from the latest MFAA release “The Chair of the National Brokers Committee and MFAA Vice President, Joe Sirianni (Director of Smartline), has been elected by the MFAA Board as President-elect.” Did not realise there was any tie in there, as the article made no mention he was Vice President of the MFAA at the time he made these comments….

Comment August 4, 2009

If we are saying that the MFAA has dragged their feet, then the other broker associations might let us know the steps they’ve taken to address this issue. Any progress?? OK, then lets give him a go.

Xerxes August 4, 2009

Hi Savvy I,

J Sirianni also sang words of support for “fee for service” encouraging brokers to go down this path. I didn’t realise he also supported banks 3rd line forcing. Next we’ll hear he is pro broker commission cuts.

As many have already pointed out. Don’t expect the MFAA to go “into bat for brokers” anytime soon.

IstXI August 4, 2009

Would’nt want the MFAA in my 1st XI to go and bat for me…………. more like they should carry the drinks or something

Broker in the 'burbs August 4, 2009

Hi Xerxes,

Mate….yep, maybe we should just agree to disagree eh?

Being a WA broker with licencing (and everything that goes with it) I kinda have a view that licencing has it’s benefits. It’s a bit like a cost benefit analysis for me. The upside outweighs the downside imo.

But not for altrusitic reasons mind you….for business reasons.

This might sound a bit arrogant, but just ask a few lenders opinions as to (as a state) who are the most developed and professional brokers to be found and WA gets the nod just about every time.

It’s not because WA people are inherantly more professional (geez I’m a expat Victorian) it’s just that licencing has created a barrier to entry for any drop kick who reckons flogging mortgages might be a good little earner. It demands that a greater percentage of people who having gone through the mill of getting (& keeping) a licence, are usually more committed to the ‘profession’ and professional standards.

It doesn’t guarantee professionalism everywhere, but what does? I could go on & on about the positives, but suffice to say, let’s see how it goes over ‘East’ with licencing over the next year or so.

I reckon you might get a surprise.

brokerbroker August 4, 2009

85% of June quarter new mortgages were written by CBA and Westpac according to one reasearch group. Surley something has to be done they are not that good are they ?????

KeyMan August 4, 2009

Hey BIB you lose me there. Shonky WA brokers have had some of the biggest court cases in the country. Licensing doesn’t make you better it just makes people think you are. I have a motor cycle license that doesn’t mean I stick to the speed limit.

WA state government always has believed red tape is the solution to any issue. Sorry count me out!

Broker in the 'burbs August 4, 2009

brokerbroker,

If I was under the pump to keep all my accreditations, I might feel compelled to put an app or two to either the CBA or Westpac! Just hedging my bets.

Multiply that out by a few thousand brokers!!

And can you hear the whistling shepherds Ralph & Gail, herding their sheep into the sheds.

Baaaaaaaa!!

Broker in the 'burbs August 4, 2009

Keyman,

Mate…I knew I was going to cop a hiding there.. but the Finance Broker scandal was over 10 years ago now.

At the time, brokers were governed by the Finance Brokers Supervisory Board, with positions held by (in the main) practicing brokers!!!! (Dracula & the blood bank)

The scandal was about brokers with ‘A’ class licences who brokered private finance from investors (mainly retirees) into shonky developments (holes in the ground) supported by dodgy valuations (from licenced valuers)

When all this hit the fan, no ‘B’ class licencees (or as they were known then as restricted licencees) were involved. B class licencees represent about 80% of the market (with C class / under 2 years mentoring representing about 19%) can only broker APRA, AFSL & licenced credit provider loans (mainly) and cannot hold a trust account or broker private funds themselves. There would only be a handful of ‘A’ class licencees operating now.

Like I said, there is no guarantee for honesty & professionalism with licences, but as I said, ask a lender or two about how the WA market operates.

brokerbroker August 4, 2009

Well put Broker in the burbs and it was a real shame that the media did nothing to explain it all to the public the way you just did.
We did not know what to call ourselves, mortgage brokers, finance brokers, mortgage originators etc. I simply put on my card…. Finance Manager !!!!!

KeyMan August 4, 2009

BIB
we should be having this conversation on the independentbroker forum but - does Kate Thompson of Mortgage Miracles mean anything?

Broker in the 'burbs August 4, 2009

Certainly does.

But mate, that’s like saying Kyle Sandilands is representative of all Radio Announcers in NSW or the CBA Bank Manager in Karratha WA (who stole over 10 million dollars a couple of years ago and gambled it all away with a bookie) is representative of all Bank Managers or Godwin Grech is representative of all Public Servants, just doesn’t cut it.

We can all pick some ‘outliers’ in any observation, but it don’t make it representative of the majority.

I do take your point though.

Cheers

Gary August 5, 2009

Well done Phil, but it took you a long time to work it out. It is time you stood up to the major lenders, and started looking after the brokers.
Under the current volume based system it is encouraging brokers to support a limited number of lenders whether the loan is the the best alternative for the borrower or not. The borrower is the loser under the current arrangement.

BRIAN TAYLOR August 5, 2009

Oh dear, oh dear what a disgruntled bunch we all are! There is no point in having a go at Phil for having a go on our behalf - that’s his job, albeit a little later than it should have been. I have been saying for a long time now that ALL BROKERS should be speaking with one voice and I don’t care what it is called - our union, our representative body. But there should only be one not three now or even more in the future. By speaking with one voice the banks will listen so to our representative body.

KeyChange August 5, 2009

Brian

That is why I established independentbroker.com.au as a forum for that very purpose. But I get more Russian porn peddlers than brokers signing up and even fewer contributing thoughts or ideas. I get the impression that most brokers want or expect someone else to do it for them……in the words or Daryl from the Castle - “their dreamin”

Xerxes August 5, 2009

Brian,

Most brokers would agree with you that we need a brokers voice.

However it is patently obvious MFAA can never be that voice.

They have a massive conflict of interest (banks, brokers, mortgage managers, valuers, conveyancers etc all members of MFAA). Thus the MFAA cannot speak out against hostile actions of lenders towards brokers.

Once licencing comes in the MFAA may well become essentially irrelavant (the only positive that may come from licencing). Some of us suspect this is why the MFAA are showing an interest in this subject. It may be a niche they can find for themselves to continue pressure on brokers to pay annual membership fees to them.

I don’t have the solution for our common broker issue (no unified broker voice) I just know MFAA is not the answer.

I like Keychanges initiative of independentbroker.com.au however as he says broker participation is minimal.

Some brokers set up AIPB (a good initiative), and as many brokers sledge it as support it.

I would love there to be a ‘credible’ broker voice (union/body/whatever). I would happily contribute to it each year. I don’t know where it will come from.

MMA August 5, 2009

Xerxes - agree with much of what you post. Don’t hold your breath on anything changing after national licencing however.

Those of us in WA who have had to jump through considerable licensing hoops in the last 4-5 years, are still constantly emailed by our aggregators, and by individual lenders, demanding that we evidence our continued MFAA / FBAA memebership, or UCCC compliance paperwork, or PI cover, or COSL membership…..and no amount of explaining that ” I wouldn’t have a WA licence if I hadn’t already provided that 100 times over” carries any weight.

What’s the betting that with the banks & aggregators having their fingers so deeply within the MFAA pie, they still insist on evidence of ongoing MFAA membership as a pre-requisite for continued accreditation - even though we’ll all hold Licences?

KeyChange August 5, 2009

I just posted this on independentbroker.com.au and apologies to LC if I am breaching your policy

Is there a support for a Brokers Union
I think we need to be able to withdraw our business from the offending lenders and we need to do that en masse and in concert. More importantly we need to ensure that those lenders know that we are doing it. I have no confidence that their loan or broker managers would have any idea what was going on and as result would not report anything to superiors. So if we all agree to withdraw business we need to follow that up with a press announcement - ‘BROKERS BAN CBA’ - what will that do their share price?

The only way we can make such an announcement is if we have sufficient numbers of brokers subscribed here (independentbroker.com.au) - so for crying out loud, get of your a***s and sign up now!

BRIAN TAYLOR August 5, 2009

Brokers won’t sign up to yet another representative body - I repeat only one is required that has the total support of ALL brokers. I will be standing for WA Council of MFAA next month and want to make a difference. Vote for someone who wants to make changes and instigate improvements. Contact me on http://www.needaloaningeraldton.com or by email at taylorbd@bigpond.com

Xerxes August 5, 2009

MMA - You’re quite right & in the process you’ve dashed my hopes on the one tiny possible positive from licencing.

Keychange - good man (I’m with you - No CBA)

Brian - good luck & be uncompromising in your support of brokers.

KeyChange August 5, 2009

It’s not a representative body it is a forum - a platform for brokers only - no membership no fees just a place to argue and hopefully agree. The MFAA has not and can not provide this.

Savvy Investor August 5, 2009

MMA,

I would expect the license number displayed on your e-mails would be enough proof. ASIC will likely provide a search like the ABN/ACN search to ensure the licensee is able to be checked by anyone concerned. Shame the same requirements probably won’t apply to the Banks for their individual loan officers. Their level of disclosure is shockingly inadequate compared to other brokers.

BRIAN TAYLOR August 5, 2009

The reason why banks fear brokers is that they don’t directly “employ” us so they do not control what we do which is totally different to a bank in house lender who has to toe the company line. Instead of trying to rule us, they should be trying to woe us which, if I remember rightly, was the way things used to be only a couple of years ago.
We are not a direct cost to any bank as weonly get paid by results unlike bank employees who get paid regardless of results.
The bank that will end up as the best lender will have no in house loan officers and relies totally on broker input and the money saved will be used to reduce interest rates thus achieving more sales for less cost.
Or is that too inovative!

Savvy Investor August 5, 2009

Hi Brian,

Have been stating the same for ages!

We pay all expenses (car, phone, internet, education, office) and only get paid if we actually bring in a loan! If we bring them nothing we just get updates from their standard list (which costs them almost nothing).

If they used only brokers they would not have to pay for management, offices, Super and workcover and payroll taxes and redundancies. We are so cheap as a channel that I am amazed they would not appreciate this variable low/no-cost work flow. Yes, they may have a small overhead in pre-vetting the apps to ensure they are ‘good’ loans but that is really what they are being paid for by their depositors and shareholders, and as for processing through outside channels - that gives them an outsourcing edge… like their call centers (whoops, enough said)…

Broker in the 'burbs August 5, 2009

You don’t have to be a member of the MFAA or the FBAA to get a WA Finance Brokers Licence.

But you can’t sign up with an aggregator unless you are a member of one.

You don’t have to be a member of the FPA to secure an AFSL.

But many licencees demand that their representatives are members of the FPA, because licencees choose to be members and to secure their professional mark, CFP.

The ACCC have been tested on the matter and if aggregators demand membership of a trade group with their sub originators, then it appears they can.

I don’t like it, but it is what it is.

It’ll be interesting to see what happens though.

brizbroker August 6, 2009

Wow another blog regurgitating the same complaints. Nothing wrong with venting but once again everyone is missing the obvious. Until we all start sending fewer deals to the big 4 and more deals to the alternatives, no amount of blogging or lobbying or blaming about licensing, training or volume will make one iota of difference.

Nothing is going to change until we change.If we want to get any of the existing or proposed changes reversed, we need to have something to bargain with. Something the banks want. BUSINESS. We already give them all our business so what do we have left to bargain with? NOTHING. Right now Aggregators, MFAA, FBAA and all us brokers hold ZERO bargaining power with the banks because of the market share they control, and he who holds all the gold makes all the rules. So it has been for all of time, and so it shall remain for all of time.

Don’t be mistaken into believing that because we introduce 40% of loans, the banks value us. When we actually used other lenders, the banks gave a damn about us, but that’s the only reason why. They wanted something from us. Now they have all our business, and we have shown them over the last 12 months that no matter what they do, they have no reason to fear us taking market share away from them. They have systematically reduced commissions, failed to provide adequate service, introduced volume hurdles, and now the next stage of their assault is rolling out. Make no mistake, this is not about quality. It is a smokescreen for getting further quantity. The aggregators cant fix it. Phil Naylor or anyone else at the MFAA cant fix it. Only one thing can fix it, and that is us.

So lets stop blaming everyone else for these things. Take responsibility and recognise that until we change and start supporting other lenders, we will achieve nothing. The MFAA may have its faults, but they didnt write 85% of all loans to two lenders over the last 3 months, did they?

What is it about this that we as an industry cannot seem to get into our skulls????

Broker in the 'burbs August 6, 2009

Briz,

Commend your sentiments but if it is that easy a solution, why haven’t the thousands of brokers nationally, taken up the non bank flag with gusto, if it is in their interests to do so?

I mean, as you say, better rates for some non banks, better commissions, immediate trail, often no clawback provisions…..it’s got me beat. NB: Some may argue non bank exposure to capital market pricing volatility, DEF’s, LMI and less flexible credit policy kills non bank alternatives compared to bank product.

Remember, 20 years ago, when Aussie Home Loans were securitisers (not brokers) where they challenged the banks with their proprietry product, great marketing AND controlled it with their very own distribution network. It was BIG and it worked.

I think we’re on the cusp of a similar business model being introduced once again to challenge the banks.

But as far as broker originated business goes, it doesn’t even seem to be a bank / non bank argument when you look at the numbers.

I mean, if brokers want to punish the CBA & Westpac, why not start pumping business to the ANZ who haven’t (as yet) imposed draconian measures on brokers. I mean they’re a bank (last time I looked), with comparable pricing & product design. They’ve got branches and happy smiling branch staff!!

So why ain’t the ANZ gaining market share on Ralph & Gail’s tellers.

Not a rhetorical question brizzy.

Why do you think that is?

Xerxes August 6, 2009

BIB,

That is a good question. Could be a complicated answer.

ANZ pulling out of 80% low doc early, ANZ leading the charge on LVR reduction in a FHOG heavy environment, ANZ not being quite as edgy on pricing (0.6% pro pack discounting), fixed rates (& rate lock policy) not usually as competitive in a rising fixed rate demand environment.

ANZ are by far my favourite among the big 4 (in fact I can’t stand the other 3).

Do you have other explanations why ANZ is not a bigger player with brokers?

KeyChange August 6, 2009

Briz

As I have said - it would take months for CBA to notice even if half of us stopped sending them business. Sign up with the forum (with another 500 mates) and we then can make a press announcement “Independent Brokers Forum Places Black Ban on CBA” - they would very likely take a big instant hit on their share price and they would have to take notice. I don’t think it’s any coincidence that one hour after first saying this yesterday the independentbroker.com.au web site was hit with a DOS (denial of service attack)- maybe just a coincidence.

Broker in the 'burbs August 6, 2009

Hi Xerxes,

You’re right. It is complicated.

But it is indicative of the broader market dynamics with brokers. Even though ANZ’s product & pricing compare reasonably well with the CBA & Westpac, when you run the numbers and policy, the pillars & not the stumps have the edge.

And that’s the key issue across the board.

Brokers in the main are diligent and strong advocates for their clients, irrespective of whether the underlying products selected favour the broker or not.

Product providers do not have the same dilemma.

It’s easy for product providers.

Product providers simply compete on price, product design and credit policy. If their offer ticks these three boxes AND they own more of the product market (e.g. CBA, Bankwest, St George, Westpac) AND your product competition is running 3rd 4th or 5th on just about every measure(whether bank or non bank)….well they’ve got their ducks lined up just nicely.

So, what’s the solution.

Remember the airline industry some 10 years ago or so. I remember (in my corporate days) of my employer having a choice between flying Australian Airlines or Qantas. That’s it. In fact that was it for everyone. Their pricing, routes, service, food were practically identical.

But that’s all their was, so the pricing was horrendously inflated.

Then came all manner of competitors. Some failed, some succeeded, but out of it all came competition and lower prices. Maybe the corporate sector wouldn’t choose Tiger Airlines, but thousands of other consumers will. And they advertise, promote great prices and the rest of it.

So in our industry, we need better competition. Not just competitors mind you. Competitors with pricing, product and credit policy grunt. With some serious financial backing to market their offer to the Australian borrower as Aussie John did once.

Too many ‘competitors’ are doing it on the cheap. If you want brokers to place you’re business, put some effort into it. Help brokers to help you. Provide marketing incentives…advertise…market….do more….think outside the square….hold broker meetings to ask ‘how’, develop mini conferences, roadshows. AS the NIKE boys & girls say….just do it!

In my ever so humble opinion.

Savvy Investor August 6, 2009

Hi brizbroker,

Sorry but my experience has been the opposite of yours. I have found it takes a lot of whinging and whining and keeping things in the public eye until enough of them realise it really is a problem and will not just go away on its own (and the mass media picks it up as is slowly happening now).

A well known online auction site in Australia (of which I was a big part in its hay days) learned to its detriment that eventually people will do something about it - but it will take potentially years of whinging about bad policies and poor service and many of the biggest and best players leaving before their share of the market falls enough to force them to make appropriate changes. As a result, they are now a fraction of what they once were and could have become. Over 300,000 sellers moved to their competitor. They may be winning back some business now but it will be a long hard road to recovery and they are a lesson to those that seek to impose their will on the free market with draconian business practices and refusing to listen to their customers feedback.

Keep the writing happening, but where possible lets try to stick to the facts and ways we can improve the situation. I hear your frustration and share it, but it does not help solve the problem, it just hides the issues in a mass of emotive outpourings… Keychange, I love your Independent Broker website and it is often a more appropriate forum for many of these discussions and a great resource for what is happening in the industry. One of the few places you can really nut out the real issues, hope you have it back on line now.

KeyChange August 6, 2009

It was only down for 45 minutes - I think it was a test of our defences.

Comment August 6, 2009

Keychange, CBA would actually LOVE that “ban”. The only brokers that would ban them are the ones that don’t use them much - exactly the brokers they are trying to dis-accredit. It would be the perfect opportunity for the CBA to publicly state “we were getting rid of those brokers because they aren’t up to our standards”. We should be about creating bridges, not burning them down.

Savvy Investor August 6, 2009

Sorry Comment,

They are doing that already, so would be a weak reply to “brokers are banning CBA” headlines.

On the other hand I would agree that we have to work together to overcome these issues and being divisive can only lead to more reprisals (violence begets only violence). I will not divert a client away from CBA just to punish them (unless I am no longer accredited with them and so can not write the loan).

If they have the best fit product then I will do what is best for the client even though it may not be in my own best interests. This is what makes brokers stand out and why our clients keep coming back to us. That won’t stop me discussing the issue with the client as to what CBA is doing to the broker market, but the decision is their to make, first, last and always.

John August 6, 2009

While you lot are still writing loans for the Majors you are part of the problem so pull your heads in and stop blaming the useless MFAA for the problems you are fueling.

KeyChange August 6, 2009

Comment we haven’t introduced a single new loan to Westpac since they cut commissions - there hasn’t been any conflict of interest as we have always found better options albeit maybe St George. But that’s over 12 months with several staff brokers. We were prior to that asked if we wanted to become diamond or platinum whatever etc and they were our largest single lender. So I don’t agree that we are the type of broker they want to lose. I believe they want to lose all of us.

John August 6, 2009

I am with you Keychange they dont want brokers.

Aggregators and MFAA are just holding on to keep their skim as long as they can while they try and change their business model to allow them to jam us into another corner.

Xerxes August 6, 2009

Comment,

You do present some strange ideas for a 15 deal a month broker, among other things.

1: You are unhappy with Maria for standing up to NAB
2: You oppose brokers making a strong stand against CBA
3: You appear to be opposed to a broker representitive body who exists only to represent brokers
4: Your comments seem to indicate you are unhappy with brokers being unhappy with the MFAA’s poor performance.

I guess variety is the spice of life.

BRIAN TAYLOR August 6, 2009

Am I getting the impression that we are all very happy wingeing and doing nothing?

KeyChange August 6, 2009

Brian - Speak for yourself!

Comment August 6, 2009

Xerxes, if anyone reads my comments in their full context and agrees with you, then that’s fine. It won’t spoil my day.

Xerxes August 6, 2009

Comment,

Your last comments seems to suggest you are unhappy with how I have summarised your postings. Is there anything in my summary points that inaccurately reflects your positions?

I’m not sure how else to read your position on these 4 points.

1: You were extremely hostile towards Maria in several posts.
2: You shot down Keychange’s call for a ban on CBA
3: You shot down Keith’s call for a true broker industry body speaking out for the best interests of brokers
4: Your comments appear to show resistance to the wider broker condemnation of the performance of the MFAA.

You’re perfectly entitled to your opinions. It’s interesting to hear a contrary view. I have found that I seem to strongly disagree with almost everything you post. Variety though, is still the spice of life.

Comment August 6, 2009

If I were to put my hopes on making a positive change for brokers, on either:

a) your posts & whether you agree
b) a broker association with less than 20 members
c) Phil Naylor’s stated intentions

I’d pick C. But I’d put my money and livelihood on on myself and getting on with it, not relying on any of the above.

broker in the 'burbs August 6, 2009

Is that right eh…Does Maria’s crowd have less than 20 bodies does it?

You know, I wouldn’t mind knowing what the AIPB’s strategy (& tactics) actually is. I’ve asked that once before in this forum (the thread where Maria got stuck into the Nab I think it was) but no response.

Does anyone here know exactly what the AIPB plan to do. Not the motherhood statement stuff, but you know, plans, goals, strategies.

Cheers

Xerxes August 6, 2009

Good question ‘burbs,

Calling Maria!

What I cannot understand is why a true broker would show hostility towards a broker group struggling to gain some presence and broker representation. Good luck to AIPB I say. They certainly don’t need brokers dishing them.

brizbroker August 6, 2009

Guys, we achieve nothing by arguing over semantics. The issues all of us face are common issues; from volume and accreditation hurdles to service delays and everything in between. They all represent threats of one form or another to our industry and the competition which sustains its existence. All of these issues are a direct result of Major Banks dictating terms in the broker market and at its most basic level, the reason for this is the dominance they are enjoying. Put simply, they wouldn’t dare to implement any of these things without real consultation if they weren’t in a position to do so.

There are several reasons they enjoy such dominance, and I think all reasonable people on here understand that those reasons range from policy to product to rate and even borrowers lack of confidence in non banks as a result of GE and others behaviour during the last year or so. Having said that, we are 2 years into the GFC and should all have realised by now that while there have been casualties, those non bank and regional lenders still standing are standing for a reason. Their business models have been proven to be robust, reliable and deserving of our advocacy. We should also realise that we need to do more to help ourselves.

So what can we do to adjust? Overcome? It is our job as well as anyone else’s to advocate the services of alternative lenders, and it is our role to fight harder for them. They are doing their part; providing us with competitive alternatives that are well priced, well featured and broker centric. It’s in ours and our borrowers interest (no pun intended) to do more to support them.

They don’t have the marketing budgets or PR pizazz of the big banks, so we have to shoulder arms and do some of the lifting. It’s up to us to be well armed with lender and product information and to sell their virtues to our customers. We have to do it better. Harder. More. Sure they wont suit everyone, but as it stands we give them almost no support. We can do better. This is not about changing habits overnight and dropping major banks. No one can realistically expect that. Its simply about making a conscious effort to promote the alternatives more assertively than we have done since the onset of the GFC, and to back the guys that have toughed it out and stood by us by not cutting our commissions or introducing volume hurdles. That is a more than reasonable ask, in my view.

I have argued and continue to argue that by directing around 20% of business to alternatives such as non banks and regionals, we would achieve several goals;
1. competition would exist in reality, not just in name, meaning major banks wont be quite so unilateral in their approach to things.
2. competition will insulate our customers from unreasonable or unjustified rate increases outside RBA, which the banks have already indicated and demonstrated a willingness to perform, and
3. we will insulate our industry and individual businesses from further major bank measures to further control us, reduce commissions, run us out of business or anything else that may or may not be part of their agenda.

Look, none of us really know what they are planning. What I know is that they are banks, and their first duty is to their shareholders and if they have market dominance they can behave however they wish. Do the maths.

Dumbfounded August 6, 2009

Brokers are moaning about lenders being on the MFAA board!

Who’s fault is it? Who voted them in?

There are thousands of Brokers and a handful of lenders, yet lenders hold a prominent place in the MFAA. There is an election process, so once and for all vote them out at the next opportunity!

BRIAN TAYLOR August 6, 2009

What I am seeing is three representative bodies - MFAA, FBAA and now AIPB.
In the words of a WW11 general - divide and conquer!
This situation must be bliss for the banks.
Combine resources and ALL pull in the same direction.
I ask the question as to why Maria felt it necessary to set up a new body when she could be on the MFAA council fighting from within?
And I haven’t heard any comment from FBAA on any of the above comments or was it so small I missed it.
finally let us get behind Phil Naylor rather than chopping him off at the knees. At least he’s having a go!

BRIAN TAYLOR August 6, 2009

I forgot to remind everyone that “Phils Forum” is on 2nd September in Dalkeith. Make sure your ALL there to have your say.

broker in the 'burbs August 6, 2009

brizzy,

That’s fine, really it is. I know that brokers are here to research products and to work hard for their clients to look at as many loan options as commercially relevant, but briz, just because some good old boys whack up a website, get some wholesale bucks and do some white labelling, does not make them a credible lender.

I’ve looked at many, many non bank lenders and I wouldn’t use 90% of them for reasons of management, post settlement service, DEF’s and a host of other reasons.

Now, for the people up the back…I use non bank products as a first option. My pipeline is about 70% non bank to 30% bank at the minute (including regionals) so I walk the walk.

But,

If Bill Bloggs sets up his mortgage management company with a few of his mates in downtown nowhere, why in blazes should I support that for a 20bps advantage?

Yes, I understand your plea. Write more non bank business.

But, if it were that easy, why aren’t the buggers doing it?

You know damn well why they aren’t.

Even your numbers suggest that you write 80% bank business, so in essence you’re supporting the bad guys to the tune of 4 to 1, yes?

Look, I’m not trying to be confrontational briz, but the reality is that the CBA & Westpac have the market in their clutches ‘at the moment’. But things will change & for the better.

But in the meantime, it doesn’t cost a non bank a lot of money to market themselves efficiently or to think laterally to get their product sold.

Brokers aren’t non bank philosophical soldiers. We look at what’s there, research it and offer it, if appropriate, whether it’s a bank or a non bank.

But there are no free lunches for the non banks unless they get off their collective ‘bottoms’ and work the market hard, as they should.

Cheers

brizbroker August 6, 2009

‘burbs, I actually write about 50-60% to non banks on average, and about 20% to regionals. The rest goes to majors, but that can vary a bit from month to month. Horses for courses, but with non banks in the forefront wherever suitable. Im sure it can be the same for you from month to month. But you and I and a handful of others don’t mega volumes make. I’m lobbying for others to try and refer about 20% of their business towards the alternatives so that as an industry we actually move some measurable volume to the guys who have created our existence. I’m acutely aware of the banks strengths and their ability to write deals the non banks cant, whether that be high LVR or family equity deals for example, or their ability to do a wider range of non standard deals and postcodes etc etc. But that kind of business makes up only a small percentage of mine and I would imagine most other peoples business, across Australia. The overwhelming majority of Australians with mortgages live in metro areas, are PAYG and have average LVR’s well below the 80’s and 90’s. That sort of business shouldnt NEED to go to a major in 95% of cases.

I also accept that there are several fly by night smaller mortgage managers around, who like you I wont deal with. Having said that, I dont have any issues at all with organisations such as Mortgage Ezy or Homeloans ltd, resimac, firstmac, afm or challenger for example. These are not fly by night businesses and have weathered the GFC as well as anyone. There isn’t a one size fits all approach, but there are enough really good organisations around on most aggregator panels offering really good products, price and service, that it shouldn’t be too hard to find a deal for them every now and then. Even if people cant get 20% over to them, half that would be fantastic. From what I understand they are getting about 1 or 2% at the moment and that’s rally not good enough support for the quality of their offering. We either want these guys to be around and competing, or we dont. If we starve them of oxygen, its own own silly fault.

Not sure what they can really do to market themselves better. I see the various alternative lenders are pretty active in marketing themselves in industry mags and the like. They are at all the PD days I attend, and their BDM’s are among the most responsive and helpful I deal with, so I’m not sure how much more we can ask of them. They show up, they return as, they give us good products. We have to come to the party a bit, too. They cant do all the lifting. I have never said it was easy, but you asked why people don’t use them- I think its apathy. Its not because they don’t have great offers for us to take to our clients. What do you think it is?

Xerxes August 7, 2009

Interesting back & forwards between Briz & Burbs,

From my perspective you are more or less on the same page (as am I).

Just adding my 2 cents.

I think there are several reasons why brokers are not using smaller players more:

1: Brokers are hesitant to use a lender not on their aggregation panel. Because your trail is less secure if it is not being paid through an aggregator. There are some very unscrupulous lenders around.

2: Many (not all) of the smaller players have hefty DEF’s (a fee that I find is anti competitive when excessive). Any lender with a DEF greater than ‘about’ $1,000 lasting longer than ‘approx’ 3 years needs to review their policy and determine if they want to plug in full time to broker world.

3: Least course of resistance mentality. It is often easier for a broker to sell a ‘name’ lender at or around 5% with moderate DEF’s.

4: Pricing, many (not all) are off the mark on pricing. If you are not in the sub 5.1% range you need to sharpen your pencil. Brokers are rarely going to have their number 1 recommendation being a 5.25% loan.

Savvy Investor August 7, 2009

I would only add Better Mortgage Management, Merchant Managers, M PLus and Victorian Mortgage Management Group to this list - but otherwise have to agree with Xerxes, and the two Burbs in all respects. If there are other lenders we all use, that do the job, we should help them get the messages out there and promote more competition. That is what built the broker market initially and will help rebuild it too. Rather than ban someone, let market forces take their course (tell clients of the alternatives) - do your jobs as brokers find the better products and don’t just sit in your comfort zone.

BRIAN TAYLOR August 7, 2009

Briz, I would like to write more non banks - tell me which ones you use so I can give it a go.

broker in the 'burbs August 7, 2009

Whoops, apologies briz…I thought the 20% non bank call to brokers was reflective of your model. I was wrong.

Xerxes has observed correctly here; we’re on the same page, as are most of us are. He (Xerxes) has also summarised nicely the key issues of why Mr or Mrs average broker stick with the majors.

You know, as I was driving into my office this morning, I was thinking again about the way non banks market themselves.

Now, stay with me here briz, as I drift around a bit.

I attended a workshop put together by Austereo (the radio group) once and listened to some guy who was selling radio as ‘the’ medium for branding awareness. Without going into all the details, the message was clear, no branding, no client recognition.

That’s obvious. Not only is that an issue with clients, it’s an issue with how brokers see the field.

Now, when translated into the experience of non bank branding, there would be only a few non banks who brand up well nationally with brokers (like First Mac, Challenger, RAMS - mark II etc) but clients really no nothing about ‘em.

If I asked 20 people on the street to name three lenders, they’d rattle off 2 or three of the majors easily, but conversely, if I asked them to name any non banks, most wouldn’t know one.

But that hasn’t always been the way. Aussie Home Loans, Wizard Home Loans and RAMS come to mind as three of the most successful non bank & distributor brand names that (at least until the GFC hit) did have significant client recognition.

They went hard at the market & made their brand well known to the Australian public, which in turn allowed brokers to leverage off this recognition, with dare I say it ‘easy sales’.

But if you put up AFC or M Plus, or even First Mac, most customers wouldn’t have the foggiest.

That’s why brokers went in droves to work for Aussie, RAMS & Wizard for the branding awareness and the lead generation opportunities gained form being associated with them.

Anyway, the point I’m making is that, non banks today don’t resonate with clients as they once did. They don’t have the appearance of offering better deals. (Whether they do or don’t)

And in my opinion, the vast majority of brokers have simply been conditioned to think big four and act accordingly, unless they feel comfortable themselves that the non bank market will offer them something. Brokers have taken the kings shilling and are paying for it now, by hugging the majors and non banks have not been robust enough to make a mark with their branding.

And one more thing. Most brokers value propositions are exactly the bloody same. “We’ll find you the best deal, we’ll see you 24/7 & our service is free.”

Brokers really do need to figure out another value proposition in which to survive, that not only embraces non bank business, but a looks at how they pitch new vp’s, within new & sustainable rem models and new business generation strategies.

My business model may not be perfect, but it is different and that’s all I want from it. I also know that to survive you have to adapt.

Both brokers & non bank product providers need to have a serious relook at their business models to challenge the banking stranglehold.

Cheers briz

BTW August 7, 2009

you guys have been going on and on about this - the facts that brokers use mainstream lenders are:
Mainstream: set up fees - less than $500.
Mtg Mgr: Val fee, app fee, sols fee, all totalling up to around $1000-1200.
DEF’s:
Mainstream: approx $1000 first 3-4 yrs.

Mtg Mgr: around 1% in the first 4-5 yrs as is normally the case

Couple that with rates that arent as competitive (as much as you say they are they arent) - brand awareness with the client, more advanced products, and a real person to deal with if you need something sorted.

Not to mention more expensive discharge fees, product switch fees and resetting of DEF’s if you change products as has been the case in my experience. I have heaps of clients that have 3,4,5 loans and there is no way cheaper to do it than under a package.

When deciding if i should put someone with a mtg mgr, why wouldnt i use ING - 5.09 no app ($220 stlmt) no ongoing, $1350 def stepping own $350 each year.
There isnt a mtg mgr out there that competes with that. You might say 4.89% add my trail etc etc - but add up the upfront costs and i think you will find they dont stack up.
Take away the heavy DEF’s at least and then maybe i will be swayed.

Here is a comparison for you -

400K deal.

5.09% 395 pkg fee.
100 stlmt fee.
20360 interest year 1
total cost in year 1 - 20,855

MTG MGR
5.29%
499 app
220 val
350 sols
21160 interest yr 1
22229 total cost.

Add to that DEF’s etc with mtg mgr and the fact the client has a full featured package with offset a/c can change products for less etc etc.

I too am concerned about the way the banks have a hold on the industry too but have to operate in my clients best interest - whichever way you look at it - mtg mgrs products are less flexible and more expensive.
Have a look at the LMI tables as well.

Unfortunately these are the facts gents whether you like it or not.

I invest heavily into client retention to ensure repeat business and whilst not foolproof goes a long way to ensure client come back as opposed to being poached by branches.

I know you guys will go to town on this but as you seem to be having a 3 way conversation and cant understand why most brokers use mainstream lenders, i thought i would let you know.
Btw i rarely use CBA,WPAC, NAB or ANZ prob make up 15% - but there are times when they will do things others wont - 92% on probation, interims with accountant letter etc etc.

Anyway , i know you dont agree but thats the way i see it.

Xerxes August 7, 2009

btw

I don’t disagree.

The only point I would make is I think you could find a better mortgage manager than 5.29%. If you look at my summary a few posts ago I called on the smaller lenders to

1: price in the sub 5.1% range
2: review & remove DEF’s

I think your post is in alignment with mine.

St George & ING are reasonable options for brokers to present to their customers. I hate that St George is now owned by Westpac but I’d still rather write a St George loan than a Westpac loan.

BTW August 7, 2009

i agree with you Xerxes - and wasnt happy when Stg became Wpac either.
Hopefully there can be some competition return, i hate seeing CBA WPAC 85% of loans - they shouldnt have been allowed to merge.

broker in the 'burbs August 7, 2009

BTW,

No argument from me other than the observation that 2 to 3 years ago when non banks were at their zenith (pre GFC), their product cost structures weren’t all that different to the non banks remaining today.

Broadly speaking they still had higher DEF’s, higher app fees, LMI hits, etc etc and brokers supported them with a significantly better market share than those today.

At the time, non banks did capture a fair chunk of the market with heavy marketing, solid broker incentives, broker friendly processing and very flexible credit policies that secured probably 25% plus of the market that historically, wasn’t serviced adequately by the majors / banks.

Non banks have predominantly been recommended by brokers to satisfy niche credit profiles, not stock standard prime clients.

Sure there are exceptions such as RAMS, Wizard & Aussie brokers who sold their in house ‘prime’ products to their prime customers but all three have either dissappeared, don’t have their own product or are owned by a major.

So as a result, most brokers would now probably think that to stick a plain ‘vanilla’, fully verified, sub 80% LVR client into a non bank alternative today, may be seen as being an inappropriate recommendation, based on an unbiased quantitative comparison with the majors.

I tend to agree, however as my business model doesn’t target that credit profile, (thank goodness) I ‘do’ use non bank product regularly and appropriatley.

Comment August 7, 2009

The “2nd tier” is doing much to help their own cause or win brokers from majors, given for example:

- the GE fiasco that we are all aware of, but also Bank of Adelaide caused many problems
- they didn’t HAVE to cut comms, but 2nd tiers promptly followed once a major did
- ING have also culled brokers for volume, hardly mentioned
- Citibank put their variable commercial rates UP 1% (10 basis points) and resi rates up about 0.6% for existing clients, at a time when rates were dropping - their rates are disgusting and aftercare disgraceful.
- AMP have done similar
- Bankwest dropped 98% of broker groups, even prior to CBA buyout
- Heritage withdrew their best 2 products from brokers
- IMB pulled out of broker resi, and the branches poached the broker loans, as BOQ did previously
- They ALL held onto rate reductions, but majors copped much of the blame for that
- Most have postcode restrictions, or don’t like construction, or don’t like anything but vanilla type loans
- securitised books make increases more difficult

Yet, reading much of the above, the finger pointing is not proportionate.

The market we are in is determining where the loans go, and until 2nd tier takes leadership, the majors are going to keep winning. I wonder where most brokers have their own personal home loans - would 70% of us be with 2nd tier or mortgage managers? Maybe lots of us are with majors too.

Comment August 7, 2009

Typo, sorry - 1st line above, of course i mean’t “isn’t”

brizbroker August 7, 2009

BTW, I agree that’s why people don’t use non banks, I just don’t agree the reasons have any merit. I think the arguments are flawed if the general broker community is using rates and DEF as excuses not to support non banks.

RATE.
Firstmac, Resimac and Challenger are all doing better deals than the 5.29% non bank benchmark you posted. They’re actually doing better rates than the 5.09% ING rate you posted. Resimac is offering 4.81% through most those mortgage managers and I believe there is a Challenger product at 4.99%. Both products are priced well below the 5.09% ING rate you have used as the benchmark in your comparison. They may not offer as many splits or goodies and have no offset, but for simple borrowers they are a great product. There are also some very sophisticated products with all the bells and whistles, such as the 5.09% 100% offset product available from firstmac. This product is fee free and offers offset and a range of other sophisticated features, two things the ING product you have benchmarked, cannot claim. There’s nothing wrong with the ING product suite, but with all due respect your comparison is not using the right non bank products.

So in the interests of being fair, lets use the same 400K ING loan at 5.09% and an annual fee of $395, to see how it compares with the better non bank offers. Your benchmark shows that in Year 1, the ING product is $20,855 inclusive of all costs. Year 2 would be an ongoing cost of $20,755. Pretty good product, I think we all agree on that.

Resimac’s 4.81% No fees. App/val/legals etc of around 1K.
First year interest $19240.
Total costs Year 1 $20,240. That’s a saving of $615 in year 1 v ING
Yr 2 onwards $19240 That’s a saving of $1515 per year v ING
Hard to argue that this is not a better deal… but it is a very basic product so may not suit more sophisticated borrowers who want offset, multiple splits, etc etc…

Challengers 4.99% no fees and I believe no upfront fees.
First year interest $19960. Thats a saving of $895 v ING
Yr 2 onwards $19960 Saving of $795 v ING
Again, a pretty good deal but a very basic product.

Firstmacs 5.09% no fees App/val/legals etc of around 1K
First Year interest $20360
Total year 1 costs $21360, but this product includes direct salary crediting and 100% offset , so how much will that save the customer in interest? Depends on the borrower, but used well this is a very powerful product, the difference being this product can cater for more sophisticated borrowers too.
Year 2 ongoing $20360 $395 saving v ING, plus additional savings by using the DSC and offset.

All in all, pretty compelling evidence that the non banks can compete on rate.

DEF
All these products offer portability, so unless customers refinance elsewhere the DEF will never come into play. I think we all make a far bigger deal of DEF’s than is necessary. If they didn’t offer portability Id share your concerns, but they do. Lets also not forget that these lenders pay great commissions and don’t claw back. We cant have it both ways.

Anyway, to me when I look at these types of numbers I find it hard to understand why we don’t all support these three products much more. If the only reason is DEF’s, the portability provisions on offer should address those concerns in most cases. Like Ive always said, 20% or so is all we need to give these guys. No one is asking for anyone to write every deal to these lenders.

Steve August 12, 2009

I’m a little confused. Is this quality control or quantity control??????

The CBA are asking for a minimum amount of loan submissions every 6 months. For a broker to be providing QUALITY service to his/her clients minimum submission levels and commissions get taken out of the equation.

Being forced into a corner to submit minimum levels will surely impact on the quality of service being given. All the smoke and mirrors with ongoing training cannot cover this up. The majority of benifit that comes with all this ongoing training is purely economic. The MFAA provide most of these courses and surely profit from them. The CBA (like other lenders) now provide planning services, insurance etc and now appear to want their slice of the training pie.

IMO and online training or ongoing lender training is a waste of funds. lenders have websites that give all brokers access to policy & product changes. Emails also get bombarded to MB’s with such changes. For MB’s who continually lodge inferior applications surely the answer is then to take away accredition until they have sat a refresher course. For MB’s not lodging a deal within say 12 months then maybe a refresher/online course would be appropriate.

Just on a sideline, are lenders going to get rid of the commission penalties for below quality submissions now? I believe that was supposed to fix the “quality” problem.

BTW, no need to answer as I have a suspicion I know the answer.

Oz Boy August 12, 2009

Has anyone here seen the ING requirements to keep your accreditation? They are very interesting to say the least, funny they are not mentioned here yet CBA, BankWest and Westpac are.

Xerxes August 12, 2009

Oz Boy,

don’t dangle that out there.

What are ING’s requirements?

Comment August 12, 2009

Yes Ozboy, I agree as per my post above, ING’s stance hardly a mention. If majors writing 90% of business, ING’s market share must be poor, yet they dismiss brokers. Bewildering.

Savvy Investor August 12, 2009

Oz Boy,

They have been mentioned in various other posts. I think KeyChange on http://independentbroker.com.au documented this as:-

ING require $2M in 2 years average so about 4 x $250 p/a loans.
Westpac require 2 p/a
Bankwest require 6 p/a
St. George around 4 p/a
NAB (who can work this out?)
RAMS 0 p/a?
ANZ 0 p/a!

Given these requirements we would have to write 20-24 (if assume 4 for NAB is worst case) loans just to keep these 5 with volume requirements on our panel also assuming 100% conversion. We have 3 loan writers so this becomes 60 to 72 loans to keep 4 to 5 of our panel on there. If the remaining 20 plus panel members decided to enforce similar requirements we would have to write in excess of 300 loans just to keep accreditations each year… hmmm… I wonder what will happen to the quality of the loans if I have to write that many per year? What about our off panel lenders (we have more than 10 of those too)?

Mind you, as Steve states, this is all about the Quality of the deals and not the Quantity… thats why is it a Volume based system, right?

QLD Broker August 12, 2009

Message to Ozboy, SAVVY, Xerxes & Brizbroker - for goodness sake do us real brokers a favour and bugger off and get a room!
Alternatively go write some bloody loans. I for one am sick of you polluting this site with your dribble.

AB August 12, 2009

I agree. it’s the same guys on brokernews as well. I visit both sites to read the news but am sick of these guys hijacking the blogs. They seem to be on the sites everyday!

Daniel Thorpe August 12, 2009

To the ANONYMOUS Qld Broker, the only “real broker” in Australia writing “bloody loans” and AB. What arrogant stupidity. Here’s 2 clues. Firstly don’t read them if they upset you so much and secondly how can you highjack a blog? Or is that you only want to read blogs you agree with.
The worker bees of the industry, we Brokers, are under attack 6 ways from Sunday and the more information and discussion to try and solve some of the problems the better.
Instead of anonymously spouting such drivel (I believe that was the word you were reaching for),try some constructive comment, even try a little intelligent thinking -you might surprise yourself and come up with something relevant to todays important issues..

Savvy Investor August 19, 2009

Hi Daniel,

Obviously AB and Qld Broker don’t read the news only the comments… Here’s a bit more news you may have missed “NAB pays $385m for Challenger’s mortgage business and $4bln in loans”. Who is still independent out there?

Nosey Parker August 19, 2009

Earth to Phil…come in Phil..it’s been three weeks since your announcement. Phil, do you have an update for us as yet?

Your last utterances from this article.

“We’ve got all the major aggregators involved in the process and once we’ve agreed on criteria we’ll then sit down with lenders and see if we can reach agreement.

“We’ve already had discussion with the lenders and in principle, they’re comfortable with the idea subject to agreed criteria,” he said.

Question from Nosey to Phil.

Phil, have you & the major aggregators agreed on the ‘criteria’ as yet and if so, when do you propose to meet with the bad guys again, given their senior tellers are apparently “receptive to the idea”…..”subject to agreed criteria” of course

When you’re ready mate, no hurry….!!.

PS: This’ll be fun, considering the bad guys have/are buying up the aggregators, but I’m the eternal optimist.

Daniel Thorpe August 20, 2009

Leave Phil alone. Obvously he is waiting for just a couple more takeovers and mergers and then he will have only one to knock on. Good news of course is that the MFAA will be able to sell the boardroom table as a telephone booth will be sufficient for Phil to meet with the ultimate “industry supremo”, whoever that turns out to be.
Irony for all Choice Brokers is that many of them will not be able to put loans with their owner, NAB. Unless of course NAN gives an exemption for Choice Brokers because they now own them so it is in their interest to change the Rules for the no longer independent Brokers. Of course if that happens Phil can then claim a victory from all of his “vigorous representation” so every body is a winner - I think???

Broker in the 'burbs September 19, 2009

As ‘Lucky Phil’ said

“We’ve got all the major aggregators involved in the process and once we’ve agreed on criteria we’ll then sit down with lenders and see if we can reach agreement.

“We’ve already had discussion with the lenders and in principle, they’re comfortable with the idea subject to agreed criteria,” he said.

Phil,

It’s been nearly two months now! Remember the old saying ‘Actions speak louder than words’.

Well, what’s the update Phil, or was this just empty rhetoric?

Broker in the 'burbs October 4, 2009

Tick tick tick tick tick tick…….

Zip, nada, nothing, a blob………..

Earth to Phil..

2.5 months now

Broker in the 'burbs November 19, 2009

“We’ve got all the major aggregators involved in the process and once we’ve agreed on criteria we’ll then sit down with lenders and see if we can reach agreement.

“We’ve already had discussion with the lenders and in principle, they’re comfortable with the idea subject to agreed criteria,” Phil Naylor 31/7/09

Just making the point here.

It been nearly four months now and still nothing to add. Phil has already stated that he’s got an in principle “we’re comfortable’ with the idea of agreed criteria” with the lenders, so Phil, have you progressed the discussions to the ‘agreed criteria’ stage yet?

ex UK broker November 19, 2009

has Naylor ever worked as a broker?

Martin November 19, 2009

IMO the mortgage broker industry is Fiucked.

Paul K November 19, 2009

Hey Phil, stop sending me invites to Golf days,Cert4 courses and cocktail party invites.
I for one will not be renewing my membership,wankers.

Daniel Thorpe November 19, 2009

Agree enirley about the MFAA’s priorities Paul K. Nothing is going to happen. The MFAA will do nothing except issue instructions to Brokers on how to bendover and grab ankle while we are royally rogered. Said instructions will also include the advice to smile while it is happening from the Aggregators.
THIS IS AN AGGREGATOR FAILURE. Aggregators take their cut of our hard earned on the basis that they WILL PROVIDE A FULL PANEL OF LENDERS because of the GROUPS volume.
This has gone completely out the window.
We need neither the MFAA nor Aggregators (unless you enjoy being rogered)

John Nicol November 19, 2009

The MFAA welcomes these changes,I call a bunch of free loaders living of the membership fees of brokers ect.Its about time that brokers started to make comment about this “Outfit’ and what they have done for us ie JACK.