truthseeker October 23, 2009

i am so glad to hear this. He deserves everything that comes to him.He is a nasty piece of work

not surprised October 23, 2009

hmm, ’bout time much ?

Xerxes October 23, 2009

The one time ACCC does something. Hit a smaller aggregator that is something of a thorn in lenders sides.

But to hell with competition in Oz. No worries NAB buying 1/3 of all brokers & one of the largest non bank funders. Yep, that’ll be good for competition. St George & RAMS being swallowed up by Westpac, Bankwest & Wizard being swallowed up by CBA. Adelaide & Bendigo merging. Macquarie buying up a number of aggregators. Most of the smaller aggregators being squeezed into merging by volume demands from the big 4.

ACCC, you keep up the good work. You should be proud of your accomplishments. You have overseen the greatest reduction in competition in lending in Oz since Federation. Anti Competition & Consumer Commission.

Brett October 23, 2009

Yes agree Xerxes ACCC thanks very much indeed. ASIC isnt much better and picks on the little guys like a big bully who wets the bed ! Just wait until regulation - jail terms and big fines !

No More Choice October 23, 2009

Actually, Refund Home Loans aggregate under Choice Aggregation Services, which is about to be owned by NAB………

Ken Bruns LoanPlanners SA October 23, 2009

I wish the ACCC great success in this endevour! Further - of course Refund aggregate under Choice Aggregation Services, who else would they go to?

BBB October 23, 2009

Every body needs to take a deep breath here, and stand back for a moment,with comments about competition and the aggregators in this case .
Put simply the ACCC are taking this action as they are alleging that the company and the individual involved, claimed some thing that was not true. That appears that the company & individual claimed they had a special relationship with the ACCC . Tne ACCC are saying that is not the case , all involved will have their day in court, and an independant person will hear the evidence and rule. Until then please stop all the nonsense.

I agree with the comments about the ACCC and competition but let’s get this case in perspective , that is an entirlet different matter.

Xerxes October 23, 2009

BBB,

Could you be more specific in relation to the things over which we need to take a deep breath and the things you call nonsense.

Are you referring to;

criticisms of Refund H/L or
critisms of the ACCC or
the fact the Refund uses Choice or
all of the above?

I personally have no knowledge of the Refund issues (other than the basics presented in this article) which is why my comments related specifically to the ACCC and its apparent inaction on big issues but direct aggressive actions against a small bit player. Classic ACCC, beat up an easy small target but freeze when faced with the real issues & the behemoths (e.g. big 4 banks, big petrol suppliers, big 2 grocery shops, big mining companies etc).

Broker in the 'burbs October 23, 2009

Wayne does have a special relationship with the ACCC.

It’s just a bad one!

It’ll also be interesting to see if Wayne gets a big fine or just a smack on the wrist for this one…& I’m sure the ACCC won’t refund any of that either!!

Gotta be relevant eh?

Keith October 23, 2009

Hi Guys & Gals,

I wholeheartedly agree. I have watched in amazement over the last couple of years as large companies are allowed to swallow up the smaller players. How can this be contributing to more competition and a better outcome for consumers.

I would like to call on “Lending Central” to invite “some decision makers” onto this forum to explain why these events are allowed to happen.

Can Lending Central interview the Chairman (or whatever the head honcho) of the ACCC and ASIC and specifically ask them to share with us why it is the official view to allow these takeovers? Why and how it is in the interests of consumers? And I mean answers, not “spin”.

Can Lending Central request an interview with Doctor Robert Lowe and ask him why the Reserve Bank are going to substantially increase interest rates over the coming year?

I think it is time for an “explanation” from our esteemed leaders about their reasoning in making these decisions.

I suspect, however, that there is way more politics involved than the movers & shakers are prepared to admit to.

Someone made a comment recently about “why did the Reserve Bank reduce interest rates when the banks had told them that they weren’t going to pass it on”.

In the eyes of the public, that decision doesn’t make any sense. It was purely profiteering by the banks. WHY WAS IT ALLOWED BY THE ACCC? Was it a serious case of “croneyism”?

“Political suicide” I suspect. Or not good for certain “job tenure”.

How can 4 banks in a country with a population of 20 milion people be ranked in the top 8 securest banks in the world? The answer to that one, is that these 4 banks have had NO COMPETITION for 200 years.

As for the increase in interest rates, that seems to me to be “flogging the wrong horse”. Tax cuts and stimulus payments are inflationary. Why not reverse the tax cuts? Reversing the tax cuts will take money out of the pockets of those who don’t borrow money. Most people who borrow money (on a large scale, to buy a home or to expand their business) are creating wealth for themselves. They are not the ones who blow their money on alcopops every Friday & Saturday nights and electronic gadgets and who couldn’t give two hoots about interest rates. Not their problem.

Can Lending Central get us some “valid answers”?

Keith

QLD Broker October 23, 2009

Gotta agree with Xerxes & BBB’s comments here. Those simply taking cheap shots at Refund & Wayne Ormond you are a disgrace. Cyber bullies at their worst. You simply poison our industry.

John October 24, 2009

Are refund MFAA members?

Paul Eldridge October 24, 2009

I have met Wayne and his team on a number of occasions and we have delivered training to their franchisees.

My observations of Wayne and his team is that few work harder or put more into their business.

Sensationalist headlines sell. It’s a lot harder to report on stories where you comment on how hard people work.

It would be nice to wait until the matter is resolved before passing judgement.

Consumer Action October 24, 2009

With the new National Code coming in ,the days of brokers obtaining kick backs from lenders will end.About time.
Wonder how brokers will survive on a client pay by service style of brokering?
What say $250 a deal?
ROFL.

QLD broker October 24, 2009

To Paul Etheridge, I haven’t met Wayne but agree with your latter comments, Unfortunately there are some among us (re comments 1 & 6 above) that just love sticking the boots in whenever they can.

Xerxes October 24, 2009

Consumer Action,

Please give us more. I could do with a good laugh.

Brett October 24, 2009

Dear Consumer action, if you think ANY savings will be passed onto the consumer, your sadly mistaken. In fact bank loan margins are already climbing. So enjoy ! As far as Im concerned consumers deserve poor service, higher rates, no advice and to beg for a loan. Back to the future !!

Lender October 25, 2009

Many lenders are aware that a large amount of the bad loans come from brokers.
As per the financial services,ASIC,GOVT shall pass a law that brokers only are paid by the borrower.The days of lender kick backs will end.
Question where does the MFAA stand on brokers getting under the counter kickbacks?
The second phase of the National Code,which will include business loans,will put a end to brokers.

Jane L October 25, 2009

Very good comment,where does the MFAA stand regarding brokers being paid by lenders?

Consumer Action October 25, 2009

Consumer groups all over Australia welcome the new National Code.The next push will be to remove kickbacks from lenders to brokers,to no longer allow brokers to be paid their brokers fees by the settlement funds (to be paid direct by the borrower) and another issue is the cost of broker fees,which should be limited to no more then .25%
After all the borrower needs to be comfortable with the costs.
All around Australia Consumer groups are now putting pen to paper and the push for the Federal Government to act sooner then latter.

NSW broker October 25, 2009

Well I charge as much as i can,after all it is a business.
Just the way I was bought up in the motor trade.

tell me? October 25, 2009

Where does the MFAA ect stand regarding fees and kickbacks finance brokers get from the lenders/banks?
Should brokerage fees be capped via a set %?

Phil October 25, 2009

Consumer Action .24% !! a joke, again you get what you pay for. For example Good Financial Planners certainly DO NOT work for .25%. Those same industry funds that advertise they do not charge fees have been the biggest loosers in the past 18 months, because they are no flexible. Planners have gone through regulation, had extra burdens of useless disclosure statements, had PI cover costs sore. Meanwhile the banks have bought MLC, Colonials, AVIVA etc. Same as they have bought the smaller banks, lowered broker commissions and now trying to influence regulation to suit lenders. AGAIN as I keep trying to tell you id**TS mortgage rates were lower because of non bank lenders. They don’t have sales staff and could not be competitive if they had to employ them nationwide… hence brokers. So called Bad brokers sell bad loans structures to people with bad credit and Bad payment history. Otherwise they wouldnt be there.Sometimes its through no fault of their own, job loss, divorce, long term injury etc. But sometimes it is and you know what … everybody comes in the door and says get me the money.
We need Banks to stay out of the broker market and good riddence. But we also need non bank lenders to sell loans with income protection insurance built in. Whether we charge a fee upfront, at the end , sideways it doesnt matter. However non conforming, bad credit loans the onus should be put on these lenders via brokers doing due diligence. The fees for this should be industry pre-set. My experience is these lenders never approve a loan unless the customer is better off. Often these loans keep people in their homes. However the customer needs to take some responcability for their bad habits. But again I reiterate if you think any savings will be passed onto the customer from banks, your kidding yourself !

Andrew October 25, 2009

IMO kickbacks to brokers should be done away with and brokerage fees capped at a % of no more .5%.
I’ve never known a broker to put a client where the broker missed out on a good earn from the loan.
With lo doc all but gone,the new Code and the talk of business loans being tied to the act and few lenders doing bad credit,the private lenders dropping out and the fact that the two mortgage insurance companies not wanting broker loans.I ask where is the future for brokers?
Would suggest down the toilet.

VIC Consumer worker. October 25, 2009

Its nice to have a Federal Government on our side for a change,bring it on the new act will be like shooting apples in a barrel.

Phil October 25, 2009

Great… death of brokers and back to bank 3%+ margins. There really is no excuse for stupidity and ignorance!!

Xerxes October 26, 2009

It appears the lunatics have escaped from the asylum.

Brokers do not get kickbacks from lender. They are paid by lender for the work they do. Why do people get so hysterical about businesses getting paid for the work they do?

Banks have the choice of employing loan managers or employing mortgage brokers or a combination of both (most lenders choose a combination of both - for good reason). If they employ loan managers they need to pay for the loan managers office, tel, fax, mobile, office equipment, HR costs, salary, sick pay, holiday pay, support staff costs, insurance, long service leave, etc etc etc. If they choose to employ a broker, they pay the broker enough to stay in business & the broker has the responsibility to manage these costs.

The vast majority of brokers do not earn big money. I’d guess the majority of brokers would net between $40K - $90K / annum. And significantly less during the first 2-3 year of operating.

For all you anti broker posters. Can I inform you that brokers are one of the main drivers of competition (in a heavily rationalised market palce) in the lending market place. If there were no mortgage brokers, lending margins would increase. In other words, no mortgage brokers = you pay more for your loan.

seeker October 26, 2009

I have to agree with truthseeker, ken and not suprised on this. I wish the ACCC all the luck and help in the world for this one. It dosent appear that brokering has anything to do with the action. It seems it has to do with the franchisor/franchisee relationship. since franchising is growing so rapidly, all franchisors not just this one need to know that they will be held accountable for things they do or say.

VIC Consumer worker. October 26, 2009

Of course brokers get kickbacks from lenders and the borrower pays for it you idiot.

Xerxes October 26, 2009

Vic Consumer worker,

Name 1 lender who pays kickbacks to brokers. I don’t know of any.

The off topic & ignorant comments in this blog have gone to statospheric levels. Is there a full moon at present?

Phil October 26, 2009

Vic Consumer wanker,

I you call getting paid commission a “kickback” then what about any other sales profession. Whats the difference?? The difference is the Broker industry would be one of the few that discloses it. When the banks reduced this commission did it get passed onto the consumer ?? NO it did not !! Will and further cuts be passed onto the consumer no !

Your the idiot mate !

Broker in the burbs October 26, 2009

Dear Vic consumer worker,

1. If brokers didn’t exist, you would be ever so delicately ’screwed’ by the banks, as it’s only brokers and non bank lenders who attempt to drive competitive behaviours (and resultant products) in the marketplace.

2. If banks stopped paying commissions on broker introduced loans, are you that naive to believe that the banks will reduce their interest rates accordingly or would they simply take the ‘margin’ straight to their bottom line? It’s not rocket science Vic!

3. Brokers pay for offices, Professional Indemnity Insurance, Compliance, aggregation fees, trade group membership, external complaints resolution schemes, accreditations, car expenses (for off site appointments), education minmima, product software applications and in WA licencing costs etc. Should I do this for free should I?

4. If brokers are such a poor alternative, why do so many borrowers start with broker first? Are you advocating that borrowers should go ‘direct’ and just *hope* that they’re getting a suitable loan product for their particular circumstances?

5. Kickback - a definition. “An illegal, secret payment made in return for a referral which results in a transaction or contract.”

* Commissions are not illegal nor are they secret if disclosed (which obviously they are). Commission / brokerage fees are not kickbacks. You are simply wrong.

Finally, if you were a borrower seeking a mortgage but your credit profile is not perfect, the security you can offer is regionally based, your partner has just started a new job and is on probation and you’re self employed, tell me, would you know what to do and where to go, with complete confidence.

Maybe you could, however I’d bet that your Veda report will get another three enquiries this month, and then (after a bit of soul searching) you might just call a broker.

Best of luck!

Xerxes October 27, 2009

Well said Burbs.

JRH October 27, 2009

Vic Consumer Worker,

You are the idiot, do you truly think that if brokers left the marketplace that banks would reduce their loans by the fraction of a percentage that brokers are paid? Not a chance in hell.

Savvy Investor October 27, 2009

If You reduce competitors how can you be increasing competition? That is just impossible. By removing brokers you reduce competition as the latest surveys all prove. People are sick of the banks but are sticking to them anyway… why? When you are a Banks customer you can choose any of that Banks products but when you are a broker’s client you can choose any product on the market from any provider and so the product providers have to stay competitive.

As to the kickbacks argument, banks only pay brokers when they perform and brokers have to pay the overheads of staying brokers regardless of whether they write any loans, so from a Banks perspective the cheapest channel is the broker channel. Their only issue is control of the business, the workers are cheap but not loyal to a particular product line, which is good for the clients but again forces the lenders to stay competitive.

I know of few professions where you have to do so much for so little return as the broking industry given its huge compliance costs. No Real Estate Agent or Car Salesman asks the buyer “is this product affordable for you? Do you know the costs involved?” they just sell it and for more than .5% commission too.

They also won’t check if the next car yard down the lane has a cheaper one for you and try to get you a better deal because they ethically feel they should.

Savvy Investor October 27, 2009

HI All,

Looks like our foreign debt has blown out to “53 per cent of our GDP” according to SMH today in their article on “Balance of Power”… Now I realise it is not as bad as the US but they were far worse off to begin with and whilst they have a huge debt they also have a much larger workforce and global power base to pay it off with than we do.

John October 27, 2009

Well said guys.

Consumer worker October 27, 2009

How come the kickback from the lender is not in $s shown on a loan cintract?
As the borrower pays for the kickback.

Phil October 27, 2009

To Consumer Worker - have you the capacity to take out a loan??

As you would see that in most cases commission is in the loan contract. However its the percentage that goes to the Aggregator/Franchisee and not just to the broker. Therefore a broker is lucky to get .5% from a bank, however Non Bank Lenders do supply higher commissions as the broker channel as costs are lower. If you had “bothered” to read several posts above you will note that recent commission cuts by the banks WERE NOT PASSED ONTO THE CUSTOMER !!!!!! Any further cuts will also not be passed on.

and note read the following -

http://www.mortgagebusiness.com.au/breaking-news/2871-abandoning-major-banks-could-save-borrowers-53b

Purely because of BROKERS !!

Xerxes October 27, 2009

Consumer worker

You appear to be doing wonderfully well communicating using words. A marvelous advance from clicking noises.

If you could find someone with an above 3rd class reading and writing ability they will be able to point out to you the section in your ‘cintract’ identifying the commission payable. I think this equates to that which you call ‘the kickback’

Every loan contract involving a broker clearly identifies the commission payable to the broker/aggregator.

Click clock clack.

Lawyer P October 27, 2009

Of more concern is the National credit code,rather then “KickBacks” Having run a private loan book for over 15 years,our company like many will be pulling out of the loan market.
At a weekend forum,most if not all private lenders at the think tank,will be pulling out from next June forward.
At best count around 500 million will be lost to the mortgage industry.
i for one have no interest in placing clients money at risk under this new act.
Well done Consumer groups,another win to the 4 banks.

Consumer worker October 27, 2009

Xerxes,type area!
Your thoughts on the National credit code?

Martin Peters ex UK October 27, 2009

IMO,we are going the same path as the UK,I was over their working,just no money in brokering,thus I came here.

Government boy October 27, 2009

Xerxes, great all we need another smart arse broker.

Broker in the 'burbs October 27, 2009

Lawyer P

In your opinion, what are the legislative &/or regulatory ‘nukes’ that will kill your business?

Cheers

Xerxes October 27, 2009

Consumer worker,

My thoughts.

The government wants to be seen to be doing something. Only problem is, legislators have next to no working knowledge of this complex industry. As a result, consumers will be worse off. There will be far fewer lending options/solutions for consumers. There will be more red tape for lenders, wholesale funders, originators, CUBS, & brokers alike (more red tape = higher costs = consumer pays more).

Lots of unintended, unforeseen, negative consequences for the consumer.

Typical Labor government approach. Over regulate & over legislate. Big inefficient governments trying to protect the consumer and ending up doing the exact opposite.

You cannot legislate for morality and ethics. There are always going to be businesses (large & small) acting in an immoral way. I say, if they act illegally, prosecute them to the full extend of the law, but don’t over regulate. Australia was well regulated before the GFC and this one of the reasons why the GFC had minimal impact on us. Regulation is good. Over regulation is bad for everyone.

Bottom line is, I can see not one ounce of benefit for the consumer once ASIC takes charge.

Consumer worker October 27, 2009

We agree on one thing.
IMO we will be both out of a job.No lender in their right mind will lend like the “Good old days”
Yes many consumers will be unable to finance or re finance.

Broker in the 'burbs October 27, 2009

Xerxes,

Mate, you know where I stand on the national licencing thing (as a WA broker, we go through the same hoops anyway), but the critical aspects will be (as you say) not so much the issue of licencing for brokers (as I think that’s a good thing) but getting the legislation/regulation right for lenders and consumers alike. There has to be some balance.

Certainly we don’t want to go down the over regulated route, but on the other side of the coin we don’t want to be self regulated (SRO) with the likes of the MFAA do you!!!!)

I mean, if we went down the laissez faire route with an almost unregulated system (as the Americans had) well, we may as well shut up shop and watch the hordes of carpet baggers and other flotsum and jetsum throw the “mortgage broker shingle’ up and screw Mr & Mrs average.

Xerxes, you may well be surprised once the system gets up & running. You’re a professional and really, you’ll thrive in any regulated & licenced environment. It’s the amateurs, sleezebags and assorted dodgy brothers we want out of the system.

I do feel for some of the fringe lenders though, however to be honest, some of these private lenders (albeit many are professional & offer a great niche service - I mean I use ‘em regularly) I’ve come into contact with, are pretty unsavoury, so to see the back end of them is AOK with me too.

Jane. October 27, 2009

A question!
What will happen to the 1,000s of borrowers whom have loans now,that once the new Code comes into place will be unable to roll over their current loan?
sell up time?
As the lawyer said above MANY private lenders WILL be pulling out,a huge hole in the market place.
IMO the small business owner,the slow payer,the person with poor credit history will be stuffed.

Fees shakes head October 27, 2009

MFAA should hold their head in shame.

Bettie October 29, 2009

Hello,

Can anyone provide me with more information about this Wayne Ormond v ACCC thing? I’m currently in the process of enquiring about a Refund Home Loan Franchise and will be attending their one day workshop this weekend in Brisbane and would appreciate any thoughts anyone has.

Cheers.

Xerxes October 29, 2009

Bettie,

Why join a franchise brokerage?

There is not much fat in lender commission payments these days. If a head company is taking their share of the cake, surely you are left with little more than the crumbs (especially after refunding customers, as is refunds policy).

I have had acquaintances open up various brand brokerages and I hear largely sob stories and “if only I hadn’t” feedback.

Generally operating under a franchise set up is a quasi self employed structure. You are self employed, yet generally you are quite strictly lorded over by the head company. In other words you’re self employed, but not very free.

I know nothing of refund. I would imagine most people’s reasons for going with a franchise is based largely on the spin of the franchise sales managers. Eg. - You’ll get X number of leads / month, great training and support, customer brand recognition etc etc etc. From what I’ve heard, the reality is usually quite different once you’ve signed a contract.

Also, get a specialist contract lawyer to advise you on the contract they will want you to sign. Often getting out of franchise agreement is sometimes easier said than done & you can often risk losing trail and having exclusion clauses imposed.

Good luck

seeker October 29, 2009

Hi Bettie
I agree with xerxes. why go with a franchise when you can go straight to the aggregator and get heaps of training and support.
i found a website called blue mau mau. they have recently done a piece on it too, there are links and comments that make you wonder wtf. have a look and make up your own mind. at least you will have heaps of questions. let us know how you went at the workshop.

Keith banker. October 29, 2009

Bettie,as a source of income forget mortgage brokering,few start up brokers survive.With the new national Code coming in,general feeling is many lenders will be cutting out dealing with brokers and err aggregators.other issue is the PI insurer and weither they will continue to support the brokers and their required insurance needs.

seeker October 30, 2009

keith, I can see from your comments you feel there could be terrible hardship for new people to the industry, but how do you think this will effect existing franchised brands and non-branded brokers current and future loan books, when their clients re-finance.
insurance can kill alot of good things. like black duck valley (motorcycle park), no insurance no business, do you think that PI insurers are leaning toward brokers being too high of a risk. i wouldnt have thought a broker was anymore of a risk than a bank. ultimately isnt it the bank the broker uses that approves and pocesses the loan.

The New Guy October 31, 2009

Hi Bettie,

When going to the Refund One Day workshop you have to be careful to not let all their words put you up in the air. I was like that when I first went to them.

Don’t get your hopes too high as the One Day workshop is kind of like a hidden interview process to see if you’re the right candidate for their franchise as much as you are for them. Franchise systems are about turning you into one of them, so that your success translate into their success. As Franchises have to keep a branding they have to be vigorous in maintaining their way of doing things, thus losing some freedom.

If you’re new to the business its better to find a Mentor Broker who will lead you into the right direction. I’m currently with MST and they aggregage at 95/95 upfront and trail, and can also give you leads and appointments.

Save your $70K and find someone who will help you. Try http://www.mstactive.com first, or try other aggregators like Connective who are independent and not own by the bank.

If other brokers can post any aggregators they know that are not owned by the bank would be great too.

Cheers

seeker November 1, 2009

hey there new guy,
so has refund h/l ever actually rejected someone from this so called secret interview process. I always got the feeling that with a franchise, if you have the money you pass the process.
Bettie,
did you go to the workshop, one thing I think you have to watch for that many people do not think of. when you buy a franchise you are not only bound by the franchise agreement but also there directions or operations document. the problem is that many franchise companys do not hand that over until you have already paid your money. so really you do not know what you are agreeing to until after you are a franchisee.
doesnt seem that is is right does it. in any other situation you would be expected to read all the terms and conditions and agree to them before continuing. yet you can spend 10s of thousands of dollars on a franchise and even with all of these cooling off periods you still not sure what is going to be governing you until you have spent your money.

Keith November 2, 2009

Consumer Worker.

Will you please get your facts strait before accusing the broker network of getting “kickbacks”. I know of no such thing.

I have been an independant broker for 8 years and have never received anything other than an “upfront commission” plus a “trail commission”. Most lenders currently pay around the 0.5% commission plus GST. On a $300,000 loan that is $1,650. (This amount IS noted in your loan contract) Take off the GST ($150.00) leaves $1,500. The aggregator gets 15% ($225) then I get between 40% & 50% of the $1,500. Between $600 & $750 to go out to the clients home, spend 1-2 hours with them and then take the application, get all the supporting documentation together and then load it & submit it to the lender that the client has chosen. I then have to follow it up every day until the “formal approval”, I then advise the solicitor of the approval. I then get the loan contracts issued to the client with whom I visit again and go through the loan contract to make sure that the lender got it right, and then I return the docs back to the lender. We then make sure that everthing is right for settlement to occur as planned. If all goes well, no problems. The stumbling blocks are: a default may turn up on the clients credit file, the valuation on the property might come in low, the building & pest inspection finds fault with the property, the client is not earning what he/she/they said they were earning, and the list goes on. Every loan application would consume at least 5 hours, sometimes a lot more. (I have spent a whole day on 1 file trying to liase with banks, solicitors and agents trying to get extensions and/or settlements to occur as planned). We are also paid on “settlements” not applications submitted. No settlement, no pay.

I believe that the $600 that I get is well earned.

I also have “never” received any “kickbacks” in any shape or form from any lender.

I can’t speak for brokers who write large volumes.

My goal is to do the best job I can for the client. If I do the wrong thing by them, they are going to find out at the first family BBQ they go to, at that’s the end of my relationship with my client. And my client is the most important asset that I can have. I want him to have complete confidence in me.

I have also worked for 2 of the big 4 banks, and I can also assure you that they have “promotions” from time to time, and guess what, they often will promote 1 of their loans that are “very uncompetetive” in the wider market.

Brokers provide a service that is VERY consumer friendly and VERY consumer focused.

We save you having to go to 40 different lenders and sit with them for an hour, tell them your story and then try to find out IF THEY have the best loan for you, only to be sold a loan that they are trying to promote this month.

I would be proud to meet with you and show you what benefits that YOU will get from using a broker. I implore with you to try a broker and find out just “how much” you will be better off by using them. You will save time and money AND you will get service that you are completely happy with.

Give us a try, I dare you!!!!

Regards

Keith

Broker in the burbs November 2, 2009

Well said Keith, but mate…your business model has you working more like an indentured slave in my opinion.

On your model, if you write say, 7 deals (which is above industry average) at $300k each, your monthly pre tax earn at 50% is say, $5,250 or $63,000 p.a. with no holidays, no Super, no Sick leave (of course, that’s if you’re self employed).

This of course, is before the other costs too, like travelling expenses, office costs (if applicable) phone/fax/broadband, stationary etc. I’m assuming you’re not paying PI or trade group fees etc yourself (because of the heavy split), but really, it wouldn’t be out of the ball park to suggest your earning net, 30% of the gross commission all up.

Kev, you really should go it alone. You’re a finance professional (having worked for two of the banks yourself). My aggregator charges a hundred or so dollars per deal (that’s it on up fronts). If I write a $300,000 deal at .50% (plus GST), I get the lot except $100 or so.

If appropriate and the product is suitable, I will write a non bank deal through a wholesaler (with no aggregation costs at all) and I can price the end interest rate accordingly. Mid range, I can earn say 1.00% plus 0.25% trail (in full) yet with a competitive end interest rate cost to the borrower.

In the scheme of things, for every 7 deals (prime) you write, your earn equates to say 2 to 3 loans that I’ll write, dependent on who I set them with.

Where is Vic Consumer ’spray’ about all the hangers on and other vultures who pick over the commissions for very little in return.

Sorry for writing so much. Just a pet peeve (brokers getting diddled) with me, that’s all.

Phil November 2, 2009

Dear Keith

Well said, however why are these facts reiterated by the MFAA to the public, but most importantly to the ACCC, ASIC, and what ever other regulation wanker out there would care to read the facts.

TODAY there are numerous articles out there complaining about BANK interest rate margins at the moment -

FACT -

November 2007 the gap between RBA benchmark rate anf the BIG FOURS variable rates was about 1.8 percent. It is now more than 2.7%.
As a result UBS raised their ANZ and NAB earnings expectations for 2010 by 17 percent. If your read ANZ recent profit announcement their earnings growth this quarter is a direct result of higher interest rate margins.

I will be email PHIL NYLOR to explain why the MFAA has not complained to the big four about this why the Wanks are cutting our commissions.

I suggest everyone else do the same and complain loudly, to their aggregators etc.

Yes DONT WRITE ANY BANK LOANS unless absolutely neccessary. We have been take for mugs.

The New Guy November 9, 2009

Hi Seeker,

I was one of those rejected. I have no malice with their decision and it gave me a better opportunity to seek the aggregation model.

Lender4Life November 9, 2009

Hi Keith
That is well put but I have heard this before. You have to go it alone but the trick is to keep expenses low and spend a little on marketing and get your average loan size up. Leave the small loans to the banks as it jags them and they struggle as it is. Keep in touch with all your contacts and also the ones you have lost to competitors and they will come back.
As for Refund , I still and never will like his model and the way he got went about his business to get business. Whenever there is franchise fees and heavy splits of commission , you end up working for nothing. And then when you want to leave its all over and you know the rest.
The mortgage business is a very efficient business. BUT you have to learn to say no to the small business. I know everyone complains that you get it back when you look after some of the smaller stuff but a phone call is sufficient. I don’t see eastern suburbs real estate agents going to Mt Druitt looking for referrals. You need to know your market and farm it well.

Nightmare November 10, 2009

A borrower I know has just refinanced with a Melbourne law firm (MFAA member) over $10,000s in fees/charges ect.
Let us hope once the new code comes into place these type sharks whom hide under the wing of being a law firm will be be put out of the lending market.
ps and the borrower is unemployed.

Nikhel November 23, 2009

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