annual report 2013/2014 - mfaa · whose members hold at least diploma level qualifications and are...

ANNUAL REPORT 2013/2014

President’s Report 4

CEO’s Report 5

MFAA State Councils 6

Partners and Sponsors 8

MFAA Board 10

MFAA Strategic Direction 11

Support and Represent Professional Credit Advisers 12

Lobby for the Interests of Professional Credit Advisers 16

Develop and Deliver Services that Enhance the Professional Skills and Careers of Professional Credit Advisers

20

Facilitate Stakeholder Engagement 26

Promote MFAA Professional Credit Advisers to Consumers 28

Financials 31

Table of Contents

MFAA Annual Report 2014 / Table of Contents / 32

The Board’s focus is to continue to represent

its members and be proactive with potential

legislative changes. Also to re-engage with its

membership and ensure they understand the

value the Association delivers while continuing

to lift the professionalism of the industry.

Thank you for our ongoing support and look

forward to working with you all on building a

bigger and better Association.

higher educational and professional standards

than required under the NCCP Act.

The MFAA has developed into an association

with good relationships with government and

the regulators such that it is able to advocate

its views on behalf of members knowing they

will be listened to, respected and in many

cases, adopted.

This now brings me to the year just past. From

an advocacy viewpoint much of our effort

has gone into the Financial System Inquiry.

Our central platform has been to pursue the

need for improved competition in the lending

sector aided by a strong, revived securitisation

market, in the interest of our members and the

consumers they represent.

We have also taken a role in the housing

affordability debate and to that end have

collaborated with the Real Estate Institute of

Australia in ensuring Canberra takes a lead in

developing a national housing policy. The body

of this report provides more details of other

lobbying initiatives by the MFAA.

I take this final opportunity to thank my

dedicated team for their ongoing commitment

to help MFAA members thrive but also for their

unselfish commitment to the cause – all those

members who served on the Board, councils

and committees and Tribunal panels over the

past twelve and a half years.

To all members in general (even the occasional

negative blogger!) thanks for allowing me the

privilege of leading your Association. I have

great faith that you will equally support my

successor.

Phil Naylor

MFAA CEO

As members are aware, I will finish my role

as MFAA CEO after twelve and a half years in

December.

That upcoming event has caused me to reflect

on the changes in the Association over that

period.

At first glance, the most evident change is

the size of the association: 2002 – 2249

members; 2014 -10,469 members. This is

reflective of the fact that mortgage brokers now

are responsible for 50% of new mortgages

compared to around 20% in 2002. But most

of the important changes have been not of

quantity but rather of quality.

I refer, in particular, to the dramatic increase

in professional standards displayed by MFAA

members.

In 2002 there was no mandated minimum

educational requirement for existing members

and only a Certificate III qualification for

new members entering the industry without

experience. I should point out however that a

number of members voluntarily completed the

Diploma in Mortgage Lending, a qualification

which the association, before my time, was

instrumental in establishing and members in

WA were required to complete qualifications

under the then, WA legislation.

Disciplinary Rules did not exist (coming

into effect in 2004) which meant the MFAA

(or MIAA as it then was) had no means of

sanctioning inappropriate and unprofessional

conduct by its members, a failing for which it

was often criticised in the trade and general

media. There was no national legislation

regulating the sector, with only WA, NSW, ACT

and Victoria having any laws at all, which,

unfortunately and inconveniently, were not

uniform and, with the exception of WA, were

not really enthusiastically enforced. The federal

government, at that time, also had no interest

in federal legislation.

It seemed like ‘sport’ for the media, particularly

the tabloid TV programs, to expose so-called

broker ‘cowboys’ and ‘rogues’. Mind you, while

there were some of those around, the media

never let the facts get in the way of a good

story and sought to give the impression that, by

definition, a mortgage broker was someone to

beware of.

Much of my time in the early days was spent

attempting to convince the media, consumer

groups and regulators of their skewed view

of brokers, a task made much easier by the

increase in MFAA education standards and

its preparedness to publicly expel or suspend

members, unlike most other professional

associations at the time. Clear allies in this

task were also consumers themselves who

continued to be attracted to brokers in droves

because of the value they provided, highlighting

the correctness of the old saying – ‘the

customer is always right’.

The upshot of all that history is that we now

have a well-respected professional association,

whose members hold at least Diploma level

qualifications and are bound by rigorous

standards under the MFAA Code of Practice,

Disciplinary Rules and Constitution which the

ACCC, during the past year, acclaimed as

The mortgage industry has enjoyed the largest

growth in both volume and percentage since

2007. Buoyed by the lowest interest rates in

Australia’s History, Overseas Investment and

Capital Appreciation in housing.

This in turn has seen the MFAA increase

membership for the first time since 2007 and

attract younger members to the Association

which all bodes well for the future.

While there are still a number of challenges

for the industry, with the Government running

enquiries on Housing Affordability and the

second review of the Financial Services System

with the outcomes of these still not yet known.

Phil Naylor has decided to resign after 12 years

of service to the Association. Phil has done a

tremendous job in shaping the Association from

its early days and bringing it to the forefront

and envy of many industry associations.

I am pleased to announce that Siobhan Hayden

is the new CEO of the MFAA. Siobhan has an

extensive knowledge of the Finance Broking

Industry in her position as Chief Sales Officer

with Finware Software. For the past eight years,

Siobhan has consolidated Finware as a leading

supplier of data, software and web services

to the mortgage broking industries in both

Australia and New Zealand.

Prior to this, Siobhan was a Senior Project

Manager with Woolworths where she honed

her skills in one of the biggest reengineering

projects ever taken to improve productivity and

delivery times from the warehouses to the retail

stores. This included negotiating with one of the

biggest unions in Australia.

Add to this Siobhan has an extensive

background in Human Resources with Guinness

Ireland and Mayne Nickless Ltd. Siobhan

also holds a Bachelor Of Commerce (Human

Resources and Industrial Relations) and Master

of Business Administration.

The Board is very excited with the appointment

of Siobhan to the CEO’s role and looks forward

to working with her in making the Association

one of the best Industry bodies in the country.”

The Board has also decided that the

Association needs to change its constitution

and restructure to make it more effective and

re engage with its membership.

This is a significant milestone in the MFAA’s

history and gives control of the Association

back to its members.

Like all good businesses the Association needs

to change with the times and continue to attain

best practice in its chosen field.

MFAA Annual Report 2014 / President’s & CEO’s Report / 5

CEO’s ReportPresident’s Report

4

Tim Brown

MFAA President

New South Wales & Australian Capital Territory

Donna Beazley - Vice President (November 2013 – June 2014) Councillor (July 2013 – November 2013)Oxygen Home Loans

Scott Bolton - Councillor(November 2013 – June 2014) Vice President (July 2013 – November 2013)Aussie Home Loans

Chris Carn - CouncillorNAB Broker

Rob Fitzgerald - Councillor(retired September 2013)SAM Loans

Semeara Hannouf - Councillor(appointed November 2013)PLAN Australia

Stuart Garvey - Treasurer(August 2013 – June 2014)Councillor (June 2013 – August 2013)Midstate Financial Services Pty Ltd

Deena Janes - CouncillorYour Client Matters

Fred Obeido - CouncillorProforma Financial Solutions

Philip Patterson - Councillor(appointed March 2014)Keystone Financial

Warren Prince - President(retired June 2014)Big & Little Home Loans

Lindsay Rogers - Councillor(appointed November 2013)Aussie Newtown

Valentine Tyson - Councillor(retired March 2014)Prestige Mortgages Bowral

Sarah Wells - Treasurer(retired August 2013)Red Concierge

Elizabeth Wilson - Councillor(appointed November 2013)Wilson Financial

Queensland

Julie Anderson-Tofts - Councillor(Appointed November 2013)Citibank

Ray Dib - Councillor(Retired November 2013)Club Financial Services

Ken Groves - Councillor(Retired November 2013)Financial Integration

Mark Lewis - Councillor(Appointed March 2014)

Wayne Marks - CouncillorLadybird Home Loans

Ryan Mau - CouncillorSmartline

Neil Meurant - Councillor(Appointed November 2013 – Retired July 2014)

Vicki Mitchell-Taylor - Councillor(July 2013 to November 2013) Vice President(Appointed November 2013)Aussie Lutwyche

Tracie Palmer - Councillor(Appointed November 2013)

Jeana Scott - President(Appointed November 2013) Vice President(July 2013 to November 2013)Kandu Finance Solutions

Lisa Sanders - Councillor(Retired November 2013)Your Future Strategy

John Trubicyn - Councillor(Appointed November 2013)Place Finance Solutions

Andrew White - Councillor(Retired February 2014)Loan Market

South Australia & Northern Territory

Steve Aspinall - President(Retired November 2013)Angas Securities

Leah Busby - SA CouncillorBlackfish Finance

Mitchell Blackburn - SA CouncillorRespond Finance

Fiona Gray - Vice-PresidentALI Group

Wendy Higgins - SA Councillor(Appointed November 2013)Mortgage Choice Glenelg

Gerald Jones - TreasurerBernie Lewis

Michelle Murphy - NT Councillor(Appointed November 2013)Loan Market

Brenton Rolton - SA CouncillorSmartline

Tony Schelling - NT CouncillorMortgage Choice Darwin

Marissa Schulze - SA CouncillorRise High Financial Solutions

Amanda Scott - President(Appointed November 2013)SA Councillor(July 2013 to November 2013)ANZ Bank

Zoe Uyen - SA Councillor(Appointed November 2013)FAST

Stephen Villios - SA Councillor(Retired November 2013)Rams Home Loans

Tasmania

Phil Borsboom - CouncillorWealthWorx

Geoff Colls - Councillor(Retired November 2013)Hobart Home Loans

Peter Crosswell - Councillor(Retired November 2013)

Lance Cure - CouncillorFinance Brokers of Tasmania Pty Ltd

Paul Gilhooly - Councillor(Appointed November 2013)Halogen Home Loans

Bryce Harding - PresidentMurdoch Clark Mortgage Fund

Brady Henley - CouncillorOne Plus One Financial Solutions

Gemma Robertson - Councillor(Appointed November 2013)Wilson Homes Loans

Troy Spinks - Councillor(July-November 2013)Vice-President(November 2013-June 2014)Tassie Home Loans

Ross Taylor - CouncillorSynergy Home Loans (Aust.) Pty Ltd

Damian Vout - Vice-President(July-November 2013)Councillor (November 2013-June 2014)Collins SBA

Victoria

Blake Albones - Councillor(Appointed November 2013) Advantedge

Lee Dittmer - Councillor How Property Loans

Laurie Duffus - Councillor(July-November 2013)Vice-President(November 2013-June 2014) National Mortgage Brokers

Melissa Gielnik - Councillor(Appointed November 2013) Smart Lending Cynthia Grisbrook - President DLV Finance Solutions

Barrie Henman - CouncillorInnovative Financial Concepts (Aust.) Pty Ltd

Voula Kotsiras - Councillor(Retired November 2013)Port Group

Louise Lucas - Councillor

Andrew Morel - CouncillorClub Financial Services

Greville Pabst - Vice-President(Retired November 2013)WBP Property Group

Leith Wickstein - TreasurerChoice Home Loans

Western Australia

Tom Brazier - CouncillorAdelaide Bank(Retired November 2013) Janine Carpenter - CouncillorIn Mortgage & Finance Services Don Crellin - CouncillorResolve Finance Rose De Rossi - Vice-PresidentDiversifi David Devenish - CouncillorProfound Finance Karen Hambleton-O’Grady - CouncillorSimply Mentoring Neville Hamilton - CouncillorSwan Financial Services Marco Meloni - PresidentChoice Home Loans Simon Munkelt - CouncillorPLAN Australia(Appointed November 2013)

Tony Versace - CouncillorP & N Bank

MFAA Annual Report 2014 / State Councils/ 7

State Councillors

6

Australian Capital Territory & New South Wales Sponsors

Gold SponsorCommonwealth Bank

Silver SponsorsCBREGenworthQBE

Bronze SponsorsAdvantedgeALI GroupChoice AggregationCitibankConnectiveDeposit PowerFASTING DirectNAB BrokerPepper PLANStargateSuncorpSt GeorgeVow Financial

QueenslandSponsors

Silver SponsorsCBREGenworth

Bronze SponsorsAdvantedgeALI GroupChoice AggregationCommonwealth BankConnectiveDeposit PowerFASTING DirectMacquarieNAB BrokerPepper PLANQBEStargateSt GeorgeSuncorp Trailer Homes

South Australia & Northern TerritorySponsors

Gold SponsorAdelaide Bank

Silver SponsorsCBREHomeStart FinanceQBE

Bronze SponsorsAdvantedgeALI GroupBankSACommonwealth Bank CitibankChoice AggregationConnectiveConveyancing MattersFASTGenworthING DirectNAB BrokerPepper PLANStargateSuncorp

VictoriaSponsors

Advantedge ALI Group Bank of Melbourne Cherry Solutions Choice Aggregation CBRE Citibank Commonwealth Bank Connective Deposit Power FAST Genworth ING Direct NAB Broker Pepper PLAN Preston Rowe Paterson QBE Stargate Suncorp

MFAA Annual Report 2014 / Partners & Sponsors/ 98

Western Australia Sponsors

Gold SponsorP & N Bank

Silver SponsorsCBREKeystartQBE

Bronze SponsorsAdelaide BankAdvantedgeALI GroupBankwestCommonwealth BankChoice AggregationConnectiveFASTGenworthHerron Todd WhiteING DirectMacquarieNAB BrokerPepper PLANSt GeorgeStargateSuncorpVow Financial

DIAMOND INDUSTRY PARTNER

CONVENTION SPONSORS

PLATINUM INDUSTRY PARTNER

PRINCIPAL INDUSTRY PARTNER

GOLD INDUSTRY PARTNERS

Partners and Sponsors

Support and Represent Professional Credit Advisers

Lobby for the Interests of Professional Credit Advisers


Facilitate Stakeholder Engagement

Promote MFAA Professional Credit Advisers to Consumers

The MFAA Board regularly reviews its Strategic Direction to ensure the Association is appropriately representing its members. We have structured this Annual Report in line with our five main objectives.

MFAA Annual Report 2014 / Strategic Direction/ 1110

July 2013-June 2014 Tim Brown - President

Cynthia Grisbrook - Vice-PresidentVictoria State President

Ray Slack - TreasurerChair, National Equipment & Commercial Finance Committee

Corinna Dieters - DirectorIndependent

Stephen Moore - DirectorChair, National Brokers Committee

Damian Percy - DirectorChair, National Lenders Committee

Darren McLeod - DirectorChair, National Mortgage Management Committee

Marco Meloni - DirectorWA State President

Bryce Harding - DirectorTasmania State President

Amanda Scott - DirectorSA & NT State President

Warren Prince - DirectorNSW & ACT State President

Jeana Scott - DirectorQueensland State President

MFAA Board MFAA Strategic Direction

Did you know?

• The average age of an MFAA Member is 48

• Each MFAA member has an average of 9.2 years experience in the industry

• The MFAA has 12% of members being mentored as they are new to the industry

• The services which members value* most are our information emails, the MFAA Credit Adviser journal

and MFAA News (the fortnightly e-newsletter)

• The fastest growing states for member growth were Victoria, Western Australia and the Northern Territory.

The MFAA devoted 12% of its funds to membership and compliance. At 30 June 2014, the MFAA had a total of 10,469 members, representing a growth rate of 5.46%. A total of 1317 new members joined during the financial year.

Membership growth

As the peak national body providing service and representation to the profession, the MFAA remains committed to strong membership growth. We are proud to maintain high standards for new and existing members in the area of professional development. Indeed, the requirements for MFAA membership exceed the application requirements for the issue of an Australian Credit Licence by ASIC.

A snapshot of you - our members

MFAA Annual Report 2014 / Support and Represent Professional Credit Advisers / 13

Gender Female: 25.4% Male: 74.6%

Type of membership Individual: 76.8% Business: 23.2%

Main broking business activities Residential mortgages: 98% Commercial mortgages: 28% Equipment & General Finance: 21% SMSF: 0.5%

Years as an MFAA member Up to 2yrs 2219 3 or 4 years 1555 5 or 6 years 1338 7 or 8 years 1429 9 or 10 years 1730 Over 11 years 2198


How we help youWe continue to provide a range of important services to help members grow their businesses. Your membership will help you to:

• keep in touch with industry developments: members receive weekly e-newsletters and bulletins and the MFAA Credit Adviser magazine bi-annually;

• find new customers: MFAA members can list their contact details and areas of expertise on the MFAA website and the Mortgage and Finance Help website;

• develop your skills and knowledge: access free and competitively priced education and short courses via ’Pathways’ – our online education portal;

• improve your marketing skills: MFAA members can access free marketing advice including evaluation of online and social media activities, and we provide free content to use in your newsletters and emails;

• access member-only information: the MFAA Member Centre is an online resource providing information on legal and compliance issues, logos for marketing yourself or your business, governance and it also contains a variety of webcasts and recordings;

• have a voice in the industry: members know that the MFAA supports them as part of the profession by putting their views forward to regulators, government and industry bodies; and

• obtain tangible discounts: MFAA’s Member Benefits program offers a range of discounts and special offers, available to you, your immediate family, your business and your employees. Discounted areas include lifestyle, travel/holidays, motor vehicles, insurance, telecommunications/IT and investments.

Maintaining high standards in the industryThe MFAA Disciplinary process protects and enforces MFAA standards, and by doing so enhances the reputation of all members. Members agree to adhere to the MFAA Code of Practice, Constitution and Disciplinary Rules. Penalties may involve expulsion, fines or suspension of membership. Additionally all members must have an internal dispute resolution procedure in place to assist with solving customer complaints.

To ensure that MFAA members meet the highest practical standards, new members are required to hold the applicable Diploma, Australian Credit Licence or appointment, appropriate Professional Indemnity insurance, membership of an External Dispute Resolution scheme, provide criminal history and credit checks, completion of the MFAA Initial Compliance Pack, a certified identity document and their resume. New applicants, inexperienced in the industry, also require mentoring for up to 2 years.

Existing members renewing their membership will need to provide details of their Professional Indemnity insurance and External Dispute Resolution scheme membership, as well as meeting CPD requirements.

Supporting MFAA members MFAA membership staff provide high quality service to both existing members, potential members and members of the public. Feedback from members has been incorporated into the design and development of a new membership management and learning system which is currently being developed and launched in October 2014. Our customer service is designed to assist members in an efficient way and ensure that members have a highly positive experience. The MFAA provides a mix of automated processed (for renewal of membership, for example), online information and contact with membership staff to provide this experience.

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* Based on MFAA Market Research Report June 2014

The Anti-Money Laundering (AML) RefresherEvery second year, renewing members are required to complete an online AML Refresher assessment. This program was implemented following discussions with aggregators and the industry who wanted to ensure currency of knowledge in this area. Members obtain a confirmation of completion which can be used for CPD points with MFAA or with other organisations.

Promoting professional credit advisers MFAA members can choose to list their details on the MFAA website and on the newly rebranded Mortgage Finance Help website. Members can display the type of work they do and their contact details. The Mortgage Finance Help website has been created by the MFAA to help home buyers and commercial finance customers find information on obtaining a loan and to help them select a credit adviser.


MFAA Annual Report 2014 / Support and Represent Professional Credit Advisers / 1514

Opposite:

Neurosurgeon Professor Charles Teo AM,speaker at the 2014 MFAA Convention

National CommitteesFour national committees provide input and recommendations to the Board:

National Brokers Committee (NBC)

Comprising ten elected representatives of national aggregator/broking groups and the chairs of state broker forums, the NBC met on six occasions deliberating on the following matters:

• valuations;

• SMSF Lending;

• ASIC Deregulatory initiative;

• PEXA; and

• collaborating with National Lenders Committee on industry efficiency issues.

The NBC chair was Stephen Moore.

National Equipment and Commercial Finance Committee (E&CF)

This Committee, chaired by Ray Slack and ably supported by Joe Zappia as deputy chair, met five times this year and it has been very active through its involvement in a number of relevant issues affecting the sector including:

• Personal Property Securities (PPS) regulation and relevant member education;

• initial development of a mentor/‘buddy’ system for new sector participants;

• review of relevant courses offered via MFAA Pathways learning resources;

• amendment to the Privacy Act;

• member use of technology esp. social media to increase engagement;

• training and entry into equipment & commercial broking; and

• relationships with other industry bodies.

National Mortgage Management Committee (MMC)

During the year the MMC reorganised itself with a formal structure of eight elected members in place of the previous open forum format. Chaired by Darren McLeod, the committee gave considerable attention to promotion of the mortgage manager/non-bank sector to brokers. To this end, committee members were pleased with the attendance at, and interest in, mortgage manager sessions at this year’s MFAA Convention. Other issues considered by the committee included:

• valuations;

• new Privacy laws and mortgage managers; and

• NCCP and Mortgage managers.

The MFAA devoted 20% of its funds to lobbying, stakeholder engagement and governance

Lobbying

Regulators and LobbyingMaintaining strong and positive working relationships has been the traditional mainstay of the MFAA’s philosophy in interacting with regulators. During the year we met on several occasions with senior officers of ASIC (our main regulator) and the Minister and we were delighted to welcome members of the ASIC leadership team to present to the MFAA Convention and other member PD events around Australia. Appropriate contact levels have also been maintained with Treasury, APRA, AUSTRAC and ATO to ensure members’ interests are represented.

Submissions made were:

Governance

MFAA BoardThe Board met on six occasions as well as by ad hoc electronic communications, as required, during the year. The Board’s Finance, Audit and Risk Management Committee, comprising Ray Slack (Chair) Corinna Dieters and Warren Prince met on 10 occasions.

State CouncilsThe six state councils met regularly during the year, providing input to the Board, facilitating local member events and considering at-risk member applications.

CommitteesFeeding into the MFAA Board are four national committees, whose chairs sit on the Board.

SUBMISSION DATE

Housing Affordability – Senate Inquiry March 2014

ASIC Performance – Senate Inquiry January 2014

Electronic Conveyancing - Victoria January 2014

APRA – Guide to Prudential Lending Practices June 2014

Aligning paper and electronic conveyancing requirements - SA February 2014

Review of Anti-Money Laundering and Counter Terrorism Financing Act February 2014

NSW Inquiry into Debt Recovery May 2014

NCCP Fine Tuning - Treasury July 2014

ASIC Deregulatory Review July 2014

16 MFAA Annual Report 2014 / Lobby for the Interests of Professional Credit Advisers / 17


1918 / MFAA Annual Report 2014 / Lobby for the Interests of Professional Credit Advisers


National Lenders Committee (NLC)

This committee comprises ten lender members, four from the majors and six from smaller bank and non-bank members which distribute their products through intermediaries.

The committee, under the chairmanship of Damian Percy of Adelaide Bank held five meetings in 2013-14, ably assisted by Aaron Milburn of Citibank as deputy chair. At those meetings, many matters affecting the third party channel were discussed including:

• the introduction of e-Conveyancing;

• support for the MFAA’s SMSF LRBA accreditation;

• state-based Verification of Identification (VOI) legislation;

• regulatory changes including amendment to the Privacy Act;

• the MFAA disciplinary process & assistance with investigations;

• support for a simpler, consistent, industry-wide accreditation application process;

• closer relations with the MFAA National Brokers Committee; and

• relationships with the EDR schemes.

Opposite:

MFAA Gala Dinner 2014Mad Hatters Theme

• Targeting in-school students, commencing

Year11 and Year12

• Providing a development pathway to complete

a Cert II and Cert III Business Administration

• Customising the qualification to target specific

skills needed within a mortgage and finance

broking back office administration environment

• Combining learning theory with work experience

Mentoring

Mentoring is widely recognised as the most effective method to support and develop new talent. The MFAA has created a minimum standard in mentoring. The MFAA has certified over 75 active Certified Mentors, has engaged over 180 new entrants under this program and has assessed and accredited five aggregator/broker group mentor programs that meet the MFAA’s minimum standards.

Careers Expos

Positioning mortgage and finance broking to potential talent was the driver behind the MFAA exhibition at a range of National Career and Employment Expos in Sydney, Victoria and West Australia. This initiative created the opportunity to discuss the value and benefits of the credit adviser role with school students, university graduates and those considering a second/third career.

Professional Development The MFAA deployed a ‘pull’ strategy to continuing professional development (CPD) by providing members with a variety of choice to maintain, improve and broaden their knowledge, expertise and competence. The range of professional development activities

The MFAA devoted 46% of funds to professional standards, including events and professional development.

Increase and maintain higher professional standards MFAA Professional Standards key objectives focused on deploying initiatives supporting the Professional Credit Adviser Framework:

Attracting Talent With an aging demographic and an industry concern to protect the longevity of our sector, MFAA initiated a number of activities promoting and engaging new talent to the industry and our membership.

Mortgage and Finance Traineeship

Creating an alliance between the Department of Education and Training, State Training Services and the Institute of Strategic Management, the MFAA has built the framework for a Mortgage and Finance Traineeship due for release 2015 (pilot).

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varies according to individual career planning, area of expertise, learning style, identified needs and timing and availability.

Professional Development Choice

Attendance

Self-Managed Super Funds (SMSF Lending) Focusing on the question: Is SMSF Lending and your role in the transaction an obstacle or an opportunity for your business? The MFAA has created an SMSF Lending accreditation program designed on the ‘just-in-time’ training methodology.

Over 250 members have accessed the SMSF Lending accreditation program which provides 22hours of blended learning (video/audio/online assessments/workshop).

Business Transformation The MFAA has been invited to represent the mortgage and finance profession on the No More Practice Transformation series TV franchise (pre-production late Feb 2014). In conjunction with participating financial services industry bodies (FPA, CPA, MFAA) and Sydney University Business School, No More Practice will take business owners through an expert makeover as they receive advice on building business value. No More Practice has assembled a team of leading experts to assess and coach businesses through a transformation journey as they strive to increase value in their business.

20 / MFAA Annual Report 2013 / Develop and Deliver Services that Enhance the Professional Skills and Careers of Professional Credit Advisers


Opposite:

INXS singer, Ciaran Gribbin, speaker at the 2014 MFAA Convention

Webinar

5834

Face-to-face

5082

eLearning

3167

MFAA recruits the right members...

...and disciplinary procedures

...who do the right thing for customers...

...whilst on a structured career pathway...

...that is supported by professional development...

Charles said in his 2012 Australia Day address “I never cease to be amazed by the trust that my patients place in me, a total stranger, at a time when they are most vulnerable”.

Matt Church discussed thought leadership. Great credit advisers position themselves to have life-changing conversations by offering insights and opinions that are relevant, meaningful and delivered in an engaging fashion. This is why you need to think and operate like a thought leader.

Ciaran Gribbin, the current lead singer of INXS, spoke about growing up during ‘the troubles’ in Northern Ireland and the difficulty of starting a career performing in clubs run by the IRA. He has since worked with Madonna, INXS and Paul McCartney, and worked on film scores for major movies. Ciaran told of the importance of trusting in people, building collaborative relationships with like-minded people and how important it is to learn from mistakes.

These, and many other speakers, provided delegates with inspiration, motivation, business strategy, tips for success and practical ideas.

2014 ExpoMart The networking hub of the convention was alive with interactive stands, including international cricket stars, football players and numerous other people of note. The ExpoMart is the largest exhibition in our industry and provides members with an opportunity to see the latest products and services relevant to their business all under one roof. The complimentary ExpoMart Theatrette provided members and visitors the opportunity to hear informative sessions on industry focused topics.

The convention brings together the best in the industry and the networking functions are always a highlight. Kicking off with the Welcome Reception at East, followed by the fabulously themed Matt Hatters Gala Dinner and Ciaran Gribbin’s band keeping the dance floor full all night, to the Comedy Finale Lunch with the hilarious Sam McCool, there were lots of good times had by all.

The MFAA National Convention is a highlight on the industry calendar providing professional development and significant networking opportunities with like-minded people.

2014 MFAA National Convention The 2014 MFAA National Convention was held at the Gold Coast Convention & Exhibition Centre. More than 1,000 members gathered from 14-16 May for three days of professional development and networking.

The theme of the convention, ‘Life-Changing Conversations’, reflected the role that our members play in the largest and most significant decision that most individuals make. It’s fair to say that in Australia we are mad about property whether it’s residential, commercial, office, as a place to live in, or a place to rent, for capital growth or yield. As a result, the conversations members have with their clients can, and often do, change their lives.

Convention speakers provided insights and knowledge to help attendees build and improve business, expand their client base and fine tune their ability to conduct successful life-changing conversations. The emphasis was on delivering practical and actionable ideas providing a plan to take away from the convention and implement into their business. Held for the first time, the Industry Leaders Roundtables consisted of small groups of people having access to industry leaders in a relaxed, informal, conversational roundtable session. There were 10 topics to select from and the roundtables were interactive, informative and enabled attendees to ask questions of industry leaders thereby providing thoughts and ideas to implement when back in the office.

Speakers included the internationally acclaimed neurosurgeon, Professor Charles Teo AM, who shared some of his life lessons and just how difficult but necessary these life-changing conversations are and how he couldn’t offer his patients rock-solid guarantees, but he can offer one thing: hope.

22 MFAA Annual Report 2014 / Develop and Deliver Services that Enhance the Professional Skills and Careers of Professional Credit Advisers/ 23


rogues in the finance and the credit sectors, remains very robust. While any change to staff numbers may impact on broking businesses through a lower level of regulatory observation, ASIC has confirmed that it will continue its audit processes through random checks and as a result of public complaint.Despite the current regime of identification and verification of customers under national AML/CTF legislation, due to the ongoing nature of mortgage fraud and its impact on purchasers and vendors alike, both the federal government’s enhanced customer due diligence standards and the states’ and territories’ augmented standards in verification of identification have combined to increase the identification requirements of both vendors and purchasers. The introduction of e-Conveyancing over the past year in some states has also led to augmented standards of due diligence which has impacted on brokers.

MFAA Tribunal The MFAA Tribunal is chaired by the accomplished Hank Spier and the very capable Michael Terceiro is deputy chairman. The Tribunal acts on alleged member breaches of the MFAA Code of Practice, Constitution or Disciplinary Rules. The process is designed to improve the public perception of the industry as a whole through the Association’s self-regulatory disciplinary process recently re-authorised by the ACCC and endorsed by ASIC. While ASIC takes high-level action on financial services and credit sector breaches, the Tribunal will additionally act on misconduct breaches of ethics, fairness and honesty by members – something ASIC is less likely to handle. The MFAA Tribunal during the year 2013-14 ordered the expulsion from the Association of three members for misconduct; suspension of three members; and cancellation of membership of a further five – see the separate report from the Tribunal Chair.For volunteering their expertise and often a great deal of time and effort in sometimes quite complex and challenging matters, the MFAA would like to sincerely thank those Members who served pro bono on various Tribunals convened during the year.

Legal and Compliance

Standards MFAA has been invited to represent the Mortgage and Finance profession on the No More Practice, Business Transformation TV series franchise (pre-production late Feb 2014). In conjunction with participating financial services industry bodies (FPA, CPA, MFAA) and Sydney University Business School, No More Practice will take business owners through an expert makeover as they receive advice on building business value. No More Practice has assembled a team of leading experts to assess and coach businesses through a transformation journey as they strive to increase value in their business.

Regulation Most broker businesses have now incorporated their compliance obligations and responsibilities into their daily business. The disclosure requirements of the NCCP Act are now much better understood across the sector, although the MFAA continues to strive for improvements. The MFAA’s commitment to advocacy on behalf of its members dealing with regulatory authorities and the government is a key focus in its push to remove unnecessary compliance obligations which have little or no demonstrable public benefit.The major change of the past year has been amendment to the Privacy Act 1988. Brokers are, in general, caught by the Privacy Act’s obligations on small businesses which collect personal information for a benefit. The changes to the Act saw the combination of government privacy principles with those regulating the private sector into the new Australian Privacy Principles. The regulator, the Office of the Privacy Commissioner, now has enhanced powers to investigate and penalise those who are found to have breached regulatory obligations. The national credit regulator, the Australian Securities and Investments Commission (ASIC), suffered a very public budget cut but announced that, while its services and facilities might require adaptation, its primary roles, including its focus on protecting the public from

25

Those people were:

Jason Bridgett, QLD

John Carson, NSW

Peter Catramados, VIC

Don Crellin, WA

Sam Crowley, NT

Garry Dowd, VIC

Rob Emmett, VIC

Barrie Gaubert, NSW

Craig Green, QLD

Terry Jewson, VIC

Peter Kelly, SA

Warren Prince, NSW

Jim Socrateous, NSW

Anne-Marie Syme, WA

Sof Tsialtas, VIC

Darren Turner, QLD

Information The MFAA website’s Member Centre contains a regularly updated ‘Legal and Compliance Resources’ page. This page provides Members with an extensive and far-reaching range of information on relevant technical, legal and compliance issues. These broker-focused guidance documents are designed to assist compliance with governance rules and with regulatory requirements for all Australian jurisdictions in which the mortgage and finance community operates.

24 / MFAA Annual Report 2014 / Develop and Deliver Services that Enhance the Professional Skills and Careers of Professional Credit Advisers


MFAA News The MFAA member email changed to a fortnightly schedule in January 2014, and now features regular marketing and business insights for members as well as important compliance and membership information.

MFAA On Air The MFAA’s video series grew in popularity to become a fortnightly feature in January 2014, addressing key issues affecting credit advisers and giving them practical tips to help build their businesses.

MFAA Credit Adviser journal The MFAA rebranded its Mortgage and Finance Brief magazine as the MFAA Credit Adviser journal, and the first edition was published in May 2014. Now a biannual publication, MFAA Credit Adviser delivers valuable guidance for members on a range of business issues and remains the second most highly rated communications channel by our members.

Equipment & Commercial Initiative The MFAA announced a partnership with Certified Practicing Accountants of Australia (CPA Australia) in June 2014, which will involve an advertising campaign for MFAA credit advisers who are accredited in SMSF lending, as well as for MFAA equipment and commercial finance credit advisers.

MFAA Convention The Convention blog received the highest amount of user traffic ever in 2014. The MFAA Convention stand also featured free professional website reviews, free corporate photography for members and social media sessions.

Excellence Awards There were a record number of finalists in the 2014 MFAA Excellence Awards – with winners and finalists receiving publicity in both trade and local media.

Mortgage & Finance Help website The MFAA conducted research that demonstrated that the existing consumer website Essentials of Borrowing was not performing well in terms of organic search on Google. Our site was not coming up in a prominent position when people were looking for information about mortgage and finance online. Including terms such as ‘mortgage’ ‘finance’ and ‘help’ in the brand name and URL was important, so in May 2014 we rebranded the Essentials of Borrowing site to Mortgage & Finance Help.

Social Media The MFAA now has over 7000 members and industry representatives that it engages with on a daily basis via social media channels: LinkedIn, Facebook and Twitter. The MFAA has a Klout score of 50, which reflects the strong social engagement between the Association and its members.

Facilitate Stakeholder Engagement

202726 / MFAA Annual Report 2014 / Facilitate Stakeholder Engagement

Opposite:

Melissa Gielnik, winner of the 2014 MFAA Mortgage Credit Adviser of the Year Award

• communicating and advocating with political

stakeholders.

Through its media and PR activities, the MFAA aims to position the association as the industry leader regarding mortgage and finance brokers in Australia, raising professional standards, elevating industry benchmarks, advocating members’ interests and being a thought leader on issues where credit services touch consumers. The MFAA proactively distributed over 30 media releases throughout the year on strategic and tactical topics that promoted the interests of various stakeholders. This generated more than 180 print/TV/online/radio mentions and appearances.

Local marketing campaigns A group of MFAA credit advisers in the Newcastle (NSW) region worked with the MFAA to create a campaign that encouraged consumers to work with an MFAA Credit Adviser when looking for a home loan. The campaign featured advertisements in local newspapers, a radio promotion and a search engine marketing campaign that drove Newcastle homebuyers to a specific website landing page.

Consumer content In May 2014 the MFAA launched free consumer content for both consumers and members. Distributed weekly, these articles covered the main areas of interest for first home buyers, property investors and business owners. The articles are featured on the MFAA’s Mortgage & Finance Help website, and are also posted on the Mortgage & Finance Help Facebook page. MFAA members have really embraced this initiative, and are repurposing the content as part of their own marketing material.

The MFAA devoted 22% of funds to marketing and communicating including consumer awareness. MFAA advertising campaign Recognising the importance that MFAA credit advisers play in the lives of their clients, the MFAA devised a campaign that encouraged consumers to ‘Start a life-changing conversation with an MFAA Approved Credit Adviser’.

The campaign was executed via a Facebook competition, which gave entrants the chance to spend $5000 with their choice of one of four different companies: Qantas, Accor, Freedom Furniture or Wattyl. Supported by Facebook advertising and a search engine marketing initiative, the campaign was also featured on eBay.

Over a four-week period, the campaign saw the number of ‘likes’ on the MFAA’s Mortgage & Finance Help Facebook page climb to over 12,300. There were 3,237 competition entries, but more importantly there was a huge increase in traffic to the Mortgage & Finance Help website, resulting in 1,699 individual credit adviser searches through the site.

Media & PR During 2013/2014 the MFAA focused on:

• building and maintaining a positive image of

the MFAA’s strategic direction amongst key

stakeholders;

• promoting the MFAA and its members as

industry leaders and experts in the finance

broking sector;

• generating effective communications that

resulted in positive media coverage of the

MFAA’s activities, policy positions and its work

on professional standards and financial services

regulation; and

28 / MFAA Annual Report 2014 / Promote MFAA Professional Credit Advisers to Consumers

Promote MFAA Professional Credit Advisers to Consumers

29

Free marketing adviceIn March 2014 the MFAA began offering free marketing advice to members. More than 100 members had taken this up by 30 June 2014, and welcomed the opportunity to have their website, social media, advertising and content management activities reviewed.

Opposite:

Comedy Finale Lunch, MFAA Convention 2014,Gold Coast Convention and Exhibition Centre.

When you’re looking for a home loan or business finance, MFAA Approved Credit Advisers can save you time, money and effort. An MFAA Approved Credit Adviser is not your average mortgage broker.

member platform. Part of the cost has been expended in the financial year.

The association is well placed to improve from the losses over the past couple of years with substantial investment in technology, communication and member engagement overall.

I would like to thank the staff and members of the Finance, Audit & Risk Management Committee and a special thank you to Phil Naylor for his support over the years and his passion for the

success of our industry.

Ray SlackTREASURER

There was considerable work by the board and management over the financial period with a focus on member engagement. There has also been improvements in a number of revenue and operating cost areas. Although the forecast profit was not achieved for the full year, it was close to a break even profit position with a loss of $12,391 however, this converts to a positive earnings before depreciation with a net cash surplus of $140,474. Furthermore, there is a positive net cash inflow from operating activities reported through adjustment in balance sheet items. The result for the year is a positive net cash from operating activities of $423,289 compared to a loss position the previous year with ($74,815).

Some areas worthy of comment in the financial year are a positive outcome of $270,000 in compliance and qualifications revenue and the management team and staff are to be congratulated for the result. There was a lag in receipt of membership revenue which had an impact on the budget, however, with membership growth of 5.46% for the year the revenue position has now improved and there is further growth forecast in this area. We now have a more cost effective publication and digital media which reduces the operating and production cost. A decision was also made by the board during the year to invest in a new web site and

FINANCIALS Year ending 30 June 2014Treasurer’s Report

“...the key issue for the Association in the next year will be bedding down its new educational requirements and promoting awareness of the high standards of MFAA Approved Brokers”

MFAA Annual Report 2014 / Financial Report/ 3130

Opposite:

MFAA consumer awareness campaign led to a big increase in online member searches

Director’s Report

DirectorsThe directors of the Association in office during the financial year until the date of this report are shown below. Directors were in office

for the entire period unless otherwise stated. Number of Board Meetings attended of possible meetings is noted against each director.

Tim Brown (5 of 5)

Corinna Dieters (5 of 5)

Steve Aspinall (1 of 2) Retired 20 November 2013

Craig Green (2 of 2) Retired 20 November 2013

Cynthia Grisbrook (5 of 5)

Bryce Harding (5 of 5)

Martin Leedham (2 of 2) Retired 20 November 2013

Darren McLeod (5 of 5)

Marco Meloni (4 of 5)

Damian Percy (5 of 5)

Warren Prince (5 of 5)

Ray Slack (5 of 5)

Amanda Scott (4 of 4) Appointed 20 November 2013

Jeana Scott (4 of 4) Appointed 20 November 2013

Stephen Moore (4 of 4) Appointed 20 November 2013

Your directors present their report on the Mortgage & Finance Association of Australia (‘the Association’ or ‘MFAA’) for the year ended 30 June 2014.

32

FINANCIALS Year ending 30 June 2014


Key performance indicators used by the entity:

The KPIs set for the Association for the year ending 30 June

2014 were: 10% new members (12.6% achieved); retention

rate 90% (92.2% achieved).

The effectiveness of the advertising and PR campaigns is

measured against industry benchmarks of broker market share

and consumer surveys of recognition of MFAA logos.

Success of lobbying is measured against the Board’s

assessment of the appropriateness of the legislation for

members’ purposes.

Corporate informationThis financial report covers the Mortgage & Finance Association

of Australia (MFAA) as an individual entity.

The Mortgage & Finance Association of Australia is a company

limited by guarantee, incorporated and domiciled in Australia. Its

registered office and principal place of business is:

Mortgage & Finance Association of Australia

Suite 12, 40 Yeo Street

Neutral Bay NSW 2089

Members’ LiabilityThe liability of the Members is limited.

Members’ ContributionsEvery Member undertakes to contribute to the assets of the

Association if it is wound up while the Member is a Member, or

within one year after the Member ceases to be a Member, for:

(a) the payment of the debts and liabilities of the

Association, contracted before the Member

ceased to be a Member;

(b) the expenses of winding up the Association; and

(c) the adjustment of the rights of the contributories

among themselves.

Principal activitiesThe principal activities of the Association during the year were:

(a) providing lobbying especially on the Financial

System Inquiry, representational services,

professional development services, publications,

convention and like events for members’ benefit;

(b) increasing member professional standards

via professional development programs and

ensuring compliance with MFAA Code of Practice

and MFAA Disciplinary Rules for the benefit of

consumers; and

(c) raising the MFAA profile with stakeholders and

consumers.

Ongoing Objectives, strategies and performance indicators

The Strategic Objectives of the association are:

• support and representation of professional credit

advisers;

• support of professional credit advisers through higher

education standards and higher levels of professional

standards;

• promotion of consumer awareness of MFAA credit

advisers;

• lobbying to advance and protect the interests of

professional credit advisers; and

• facilitating stakeholder engagement.

The strategy for achieving those objectives are:

• ongoing review of professional standards via professional development programs, membership criteria, Constitution, Code of

Practice and Disciplinary processes;

• advertising and PR campaigns on an ongoing basis;

• lobbying in respect of legislation or proposed

legislation impacting members; and

• convening appropriate forums to engage

stakeholders.

Amount of Members’ ContributionsThe amount of the contribution under Members’ Contributions

above must not exceed $10.00 per Member in any

circumstance.

Review of operationsFollowing the reduction in members in the previous financial

year as the result of MFAA’s implementation of higher education

standards, the current financial year saw a 5.46% net increase.

SEGMENT REVENUES SEGMENT RESULTS

2014 2013 2014 2013

$ $ $ $

MEMBERSHIP

Membership 4,256,730 4,287,605 3,652,449 3,537,344

Administration 268,711 319,889 (4,185,256) (4,118,546)

PROFESSIONAL STANDARDS

Events 2,263,210 2,363,175 346,896 29,475

Professional Development Courses

943,979 768,341 446,712 412,381

Marketing/Merchandising income 327 515 (49,122) 515

MARKETING & COMMUNICATIONS

Marketing/Merchandising 383 327 (86,230) (49,122)

Publishing – Print & Digital Advertising

241,764 510,365 (186,962) 69,135

Total Revenue/Results 7,974,777 8,249,702 (12,391) (119,333)

Accordingly total national membership of the Association as at

30 June 2014 was 10,469. Included in this figure are 9,925

members with ACA/CA status.

Although 775 members left during the year, the vast majority as

a result of the leaving the industry, the association welcomed

1,317 new members.

The total number of employees as at 30 June 2014 was 24

(2013: 21).

Likely developments and expected results of operationsAs new brokers are continuing to join the industry (exceeding

the number of those exiting), MFAA membership is projected to

increase during the next 12 months.

At an Extraordinary General Meeting on 24 September 2014,

members voted to amend the Constitution to change the Board

structure so that it was controlled by those who comprise the

vast majority of members – brokers and mortgage managers

-and elected directly by the members, as opposed to the previous

system of election via state councils and national committees.

Further information on likely developments in the operations of the

Association and the expected results of operations have not been

included in this report because the directors believe it would be

likely to result in unreasonable prejudice to the Association.

Environmental regulationThe operations of the Association are not subject to any

particular or significant environmental regulations under a

Commonwealth, State, or Territory law.

Qualifications and Special Responsibilities of Directors

Tim Brown

(National President)

Mr Brown is CEO of Vow Financial, Sydney NSW

Cynthia Grisbrook

(National Vice-President)

(State President MFAA Victoria Division)

Ms Grisbrook is Principal, DLV Finance Solutions, Melbourne VIC

Ray Slack

(National Treasurer)

(Chair National Equipment & Commercial Finance Committee)

Mr Slack is Director, Macarthur Finance & Capital Pty Ltd,

Campbelltown NSW

Damien Percy

(Chair National Lenders Committee)

Mr Percy is General Manager, Third Party Mortgages, Bendigo

and Adelaide Bank Ltd, Adelaide SA

Warren Prince

(State President MFAA NSW/ACT Division)

Mr Prince is Owner Operator, Big & Little Home Loans,

Weetangera ACT

Bryce Harding

(State President MFAA Tasmania Division)

Mr Harding is Manager,

Murdoch Clarke Mortgage Management Ltd,

Hobart TAS

Corinna Dieters

(Additional Independent Director)

Ms Dieters is Director, Seaview Consulting,

Canterbury VIC

Amanda Scott

(State President MFAA SA/NT Division)

Ms Scott is Senior BDM – Broker Distribution ANZ Bank,

Adelaide SA

Marco Meloni

(State President MFAA WA Division)

Mr Meloni is Principal, Choice Home Loans,

Leederville WA

Jeana Scott

(State President QLD Division)

Ms Scott is Finance Consultant, Kandu Finance Solutions,

Wellington Point QLD

Darren McLeod

(Chair National Mortgage Management Committee)

Mr McLeod is Head of Third Party, Firstmac Home Loans,

Brisbane QLD

Stephen Moore

(Chair of National Brokers Committee)

Mr Moore is CEO Choice Aggregation Services, Sydney NSW

FINANCIALS Year ending 30 June 2014FINANCIALS Year ending 30 June 2014

34 MFAA Annual Report 2014 / Financial Report/ 35


compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

• all non audit services have been reviewed by the

board of directors to ensure they do not impact the

impartiality and objectivity of the auditor; and

• none of the services undermine the general

principles relating to auditor independence as set

out in Professional Statement F1, including reviewing

or auditing the auditor’s own work, acting in a

management or a decision making capacity for the

Association, acting as advocate for the Association

or jointly sharing economic risk and rewards.

Insurance of officersDuring the year, the Association paid an insurance premium to insure the directors of the Association for professional indemnity and office bearers’ liability, association reimbursement and entity insurance.

The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Association, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Association. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities.

Indemnification of auditorsTo the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year.

Non audit servicesThe Association may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Association are important.

Details of the amounts paid or payable to the auditor (Ernst & Young) for audit and non audit services provided during the year are set out below.

The board of directors has considered the position and is satisfied that the provision of the non audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

The directors are satisfied that the provision of non audit services by the auditor, as set out below, did not


Auditor’s Independence Declaration Copy of the auditor’s independence declaration as Copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 36. Signed in accordance with a resolution of the directors.

Sydney 3 October, 2014

Tim BrownDIRECTOR

Raymond SlackDIRECTOR

Non audit services (continued)During the year the following fees were paid or payable for services provided by the auditor of the Association, its related practices and non related audit firms:

SEGMENT REVENUES

2014 2013

$ $

AUDIT SERVICES

Ernst & Young:

Audit and review of financial reports and other audit work under the Corporations Act 2001

40,000 46,000

Total remuneration for audit services 40,000 46,000

OTHER SERVICES

Ernst & Young:

Tax compliance services 18,000 6,500

Total remuneration for other services 18,000 6,500

Total remuneration paid to audit firms 58,000 52,500


A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

Ernst & Young 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001

Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au

Auditor’s Independence Declaration to the Directors of Mortgage & Finance Association of Australia In relation to our audit of the financial report of Mortgage & Finance Association of Australia for the financial year ended 30 June 2014, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. Ernst & Young Daniel Cunningham Partner Date: 3 October 2014

STATEMENT OF COMPREHENSIVE INCOME

2014 2013

NOTES $ $

Revenue 5 7,974,777 8,249,702

Depreciation, amortisation & impairment expense 6(a) (152,865) (138,587)

Employee benefits expense 6(b) (2,921,227) (2,953,211)

Other expenses 6(c) (4,913,076) (5,277,237)

Profit/(loss) before income tax (12,391) (119,333)

Income tax expense 7 - -

Profit/(loss) attributable to members of Mortgage & Finance Association of Australia

(12,391) (119,333)

Other comprehensive income/(loss) - -

Total comprehensive income/(loss) for the year (12,391) (119,333)

The above statement of comprehensive income should be read in conjunction with the accompanying notes.



STATEMENT OF FINANCIAL POSITION

2014 2013

ASSETS NOTES $ $

Current assets

Cash and cash equivalents 8 4,465,158 4,329,810

Trade and other receivables 9 367,020 417,562

Other current assets 10 140,449 192,306

TOTAL CURRENT ASSETS 4,972,627 4,939,678

Non current assets

Property, plant and equipment 11 44,039 71,660

Intangible assets 12 404,781 242,084

Other non current assets 13 5,482 5,482

TOTAL NON CURRENT ASSETS 454,302 319,226

TOTAL ASSETS 5,426,929 5,258,904

LIABILITIES NOTES $ $

Current liabilities

Trade and other payables 14 3,041,857 2,836,263

Provisions 15 317,588 335,263

TOTAL CURRENT LIABILITIES 3,359,445 3,171,526

Non current liabilities

Provisions 16 53,880 61,383

TOTAL NON CURRENT LIABILITIES 53,880 61,383

Total liabilities 3,413,325 3,232,909

Net assets 2,013,604 2,025,995

MEMBERS’ FUNDS

Members’ funds 2,013,604 2,025,995

Total members’ funds 2,013,604 2,025,995

The above statement of financial position should be read in conjunction with the accompanying notes.

STATEMENT OF CHANGES IN MEMBERS’ FUNDS

2014 2013

$ $

Total members’ funds at the beginning of the financial year 2,025,995 2,145,328

Profit/(loss) for the year (12,391) (119,333)

Other comprehensive income - -

Total comprehensive income for the year (12,391) (119,333)

Total members’ funds at the end of the financial year 2,013,604 2,025,995

The above statement of changes in members’ funds should be read in conjunction with the accompanying notes.

STATEMENT OF CASH FLOWS

2014 2013

NOTES $ $

CASH FLOWS FROM OPERATING ACTIVITIES

Membership subscriptions received (inclusive of goods and services tax)

4,840,365 4,516,491

Receipts from customers (inclusive of goods and services tax)

3,983,659 4,363,740

Payments to suppliers and employees (inclusive of goods and services tax)

(8,582,355) (9,105,554)

Interest received 181,620 150,508

Net cash flows from operating activities 21 423,289 (74,815)

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for intangible assets and property, plant and equipment (287,941) (105,033)

Net cash flow used in investing activities (287,941) (105,033)

CASH FLOW FROM FINANCING ACTIVITIES

Net cash flows from financing activities - -

Net increase/(decrease) in cash and cash equivalents 135,348 (179,848)

Cash and cash equivalents at beginning of the year 4,329,810 4,509,658

Cash and cash equivalents at end of the year 8 4,465,158 4,329,810

The above statement of cash flows should be read in conjunction with the accompanying notes.



Notes to the financial statements

1. Corporation Information

The financial report of the Mortgage & Finance Association of Australia for the year ended 30 June 2014 was authorised for issue in accordance with a resolution of the directors on 3 October 2014.

Mortgage & Finance Association of Australia is a company limited by guarantee incorporated in Australia.

The nature of its operations and principal activities are disclosed in the directors’ report.

2. Summary of significant accounting policies

(a) Basis of preparationThis general purpose financial report has been prepared in accordance with Australian equivalents to International Financial Reporting Standards (AIFRSs), other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001.

Compliance with IFRSsThe financial report complies with Australian Accounting Standards as issued by the Australian Accounting Standards Board and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

Historical cost conventionThese financial statements have been prepared under the historical cost convention.

Functional and presentation currencyThe functional and presentation currency of the Association is Australian dollars ($).

Critical accounting estimatesThe preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Association’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 4.

(b) Revenue recognitionRevenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the Association and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

i) Subscription and sponsorshipRevenues are recognised as revenue in the year to which the service relates with the unearned portion deferred.

ii) EducationRevenues are recognised when received, which is the point at which the Association has control of the monies.

iii) EventsRevenues are deferred when received, and recognised as revenue when the event occurs.

iv) Interest revenueRevenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

(c) Income taxMortgage & Finance Association of Australia is a non profit organisation for taxation purposes. Accordingly, the Association’s mutual income is not subject to income tax while non mutual income (such as interest income) in excess of specified levels is subject to tax at prescribed rates.

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to

apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Current and deferred tax balances attributable to amounts recognised directly in members funds are also recognised directly in members funds.

(d) LeasesLeases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases (note 19). Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight line basis over the period of the lease.

(e) Impairment of assetsGoodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely

independent of the cash inflows from other assets or groups of assets (cash generating units). Non financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

(f) Acquisition of assets The purchase method of accounting is used to account for all acquisitions of assets (including business combinations) regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the value of the instruments is their fair value as at the acquisition date based on the best available evidence of the price at which the instruments could be exchanged between knowledgeable, willing parties in an arm’s length transaction. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the cost of acquisition over the fair value of the Association’s share of the identifiable net assets acquired is recorded as goodwill (refer to note 2(j)). If the cost of acquisition is less than the fair value of the net assets of the business acquired, the difference is recognised directly in the statement of comprehensive income, but only after a reassessment of the identification and measurement of the net assets acquired.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.



2. Summary of significant accounting policies (continued)

(g) Cash and cash equivalentsCash and cash equivalents in the statement of financial position includes cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above.

(h) Trade receivablesTrade receivables are recognised initially at fair value and subsequently measured at amortised cost, less an allowance for impairment. Trade receivables are due for settlement between 30-60 days from the date of recognition.

Collectability of trade receivables is reviewed on an ongoing basis. Debts, which are known to be uncollectible are written off. An impairment provision is recognised when there is objective evidence that the Association will not be able to collect all amounts due according to the original terms of receivables. The amount of the impairment loss is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

(i) Property, plant and equipmentPlant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Association and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred.

Depreciation is calculated using the straight-line method to allocate their cost or re-valued amounts, net of their residual values, over their estimated useful lives, as follows:

Plant and equipment - 2-10 yearsLeasehold improvement - Over term of lease

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Gains and losses on disposal are determined by comparing proceeds with the carrying amount. These are included in the statement of comprehensive income.

(j) Intangible assets

(i) SoftwareSoftware has a finite useful life and is carried at cost less accumulated amortisation and impaired losses. Amortisation is calculated using the straight line method to allocate the cost of software over their estimated useful life of 4 years.

(ii) GoodwillWhere an entity or operation is acquired, the identifiable net assets acquired are measured at fair value. The excess of the fair value of the cost of acquisition over the fair value of the identifiable net assets acquired, net of any restructuring costs, is brought to account as goodwill.

Goodwill is allocated to one cash generating unit for the purpose of impairment testing.

The Association performs its impairment testing as at 30 June each year using a value in use, discounted cash flow methodology for the cash generating unit to which goodwill has been allocated.

Impairment losses recognised for goodwill are not subsequently reversed.

(iii) Web site costsCosts in relation to web sites are charged as expenses in the period in which they are incurred unless they relate to the acquisition of an asset, in which case they are capitalised and amortised over their period of expected benefit. Generally, costs in relation to feasibility studies during the planning phase of a website, and ongoing costs of maintenance during the operating phase of a website are considered to be an expense. Cost incurred in building or enhancing a web site, to the extent that they represent probable future economic benefits that can be reliably measured, are capitalised as an asset and amortised over the period of the expected benefits which may vary from 2 to 5 years.

(iv) TrademarksIntangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-generating unit level consistent with the methodology outlined for goodwill above. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed each reporting period to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for as a change in an accounting estimate and is thus accounted for on a prospective basis.

(k) Trade and other payables

Trade and other payables are carried at amortised cost and due to their short-term nature are not discounted.

These amounts represent liabilities for goods and services provided to the Association prior to the end of financial year, which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

(l) Employee benefits

(i) Wages, salaries and annual leaveLiabilities for wages and salaries, including non monetary benefits and annual leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

(ii) Long service leaveThe liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

(iii) Employee benefit on costsEmployee benefit on costs, including payroll tax, are recognised and included in employee benefit liabilities and costs when the employee benefits to which they relate are recognised as liabilities.

(m) Recoverable amount of non current assetsThe recoverable amount of an asset is the net amount expected to be recovered through the cash inflows and outflows arising from its continued use and subsequent disposal.

Where the carrying amount of a non current asset is greater than its recoverable amount, the asset is written down to its recoverable amount. Where net cash inflows are derived from a group of assets working together, recoverable amount is determined on the basis of the relevant group of assets. The decrement in the carrying amount is recognised as an expense in the net profit or loss in the reporting period in which the recoverable amount write down occurs.

The expected net cash flows included in determining recoverable amounts of non current assets are not discounted.

(n) Goods and Services Tax (GST)Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flow. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.



The Association’s policy is to maintain sufficient cash and cash equivalents to fund its operations. The policy is to hold cash and cash equivalents with institutions that have “Approved Deposit Taking Institution” status. Annual budgets are framed to achieve a 5% of turnover surplus to build cash reserves sufficient to cover 6 months operating expenses.

The Board constantly analyses its interest rate exposure. Within this analysis consideration is given to potential renewals of existing positions, alternative financing, and the mix of fixed and variable interest rates, where applicable.

The following sensitivity analysis is based on the interest risk exposures in existence at the reporting date.

Judgements of possible reasonable movements:

Significant assumptions used in the interest rate sensitivity analysis include:

(o) New accounting standards and interpretationsCertain Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Association for the annual reporting period ended 30 June 2014. The directors have not early adopted any of these new or amended standards or interpretations. The directors have not yet fully assessed the impact of these new or amended standards (to the extent relevant to the Association) and interpretations.

3. Financial Risk Management Objectives and Policies

The Association’s principal financial instruments comprise receivables, payables, cash and short-term deposits.

The main purpose of these financial instruments is to raise finance for the Association’s operations. The Association has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.

The Association manages its exposure to key financial risks, including interest rate and credit risk in accordance with the Association’s financial risk policy. The objective of the policy is to support the delivery of the Association’s financial targets whilst protecting future financial security.

The Board reviews and agrees policies for managing each of these risks as summarised below.

Primary responsibility for identification and control of financial risks rests with the Financial Risk Management Committee under the authority of the Board. The Board reviews and agrees policies for managing each of the risks identified below.

Risk Exposures and Responses

(a) Interest rate riskAt balance date, the Association had the following financial assets exposed to Australian Variable interest rate risk that are not designated in cash flow hedges:

INTEREST RATE RISK2014 2013

$ $

FINANCIAL ASSETS

Cash and Cash equivalents

4,465,158 4,329,810

Net Exposure 4,465,158 4,329,810

INTEREST RATE RISK2014 2013

$ $

POST TAX PROFIT

+1% (100 basis points) 44,652 43,298

-.5% (50 basis points) (22,326) (21,649)

OTHER COMPREHENSIVE INCOME

+1% (100 basis points) - -

-.5% (50 basis points) - -

46

FINANCIALS Year ending 30 June 2014Significant assumptions used in the interest rate sensitivity analysis include:

- Reasonably possible movements in interest rates were determined based on the Association’s current mix of investments in Australia, relationships with finance institutions, the level of investment that is expected to be renewed as well as a review of the last two year’s historical movements and economic forecasters’ expectations.

- The net exposure at the reporting date is representative of what the Association was and is expecting to be exposed to in the next twelve months from the reporting date.

(b) Foreign currency riskAs all transactions are denominated in Australian Dollars, the Association is not exposed to foreign currency risk.

(c) Price riskThe Association has no exposure to commodity and equity securities price risk.

(d) Credit riskCredit risk arises from the financial assets of the Association, which comprise cash and cash equivalents, trade and other receivables. The Association’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. Exposure at balance date is addressed in each applicable note.

The Association trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Association’s policy to securitise its trade and other receivables.

It is the Association’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures including an assessment of their independent credit rating, financial position, past experience and industry reputation. Risk limits are set for each individual customer in accordance with parameters set by the board. These risk limits are regularly monitored. In addition, receivable balances are monitored on an ongoing basis with the result that the Association’s exposure to bad debts is not significant.

(e) Liquidity riskPrudent liquidity risk management is maintained such that the Association maintains sufficient cash and

cash equivalents to fund its operations. As a result, the Association is not subject to liquidity risk at the reporting date. A liquidity maturity analysis has not been prepared as there are sufficient cash and cash equivalents on hand to cover total liabilities.

(f) Fair ValueThe methods for estimating fair value are outlined in the relevant notes to the financial statements.

4. Significant accounting judgements, estimates and assumptions

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Significant accounting estimates and assumptions

Impairment of goodwill and intangibles with indefinite useful livesThe Association determines whether goodwill and intangibles with indefinite lives are impaired at least on an annual basis in accordance with accounting policy stated in note 2(j).

Estimation of useful lives of assetsThe estimation of the useful lives of assets has been based on historical experience as well as manufacturers’ warranties (for plant and equipment) and lease terms (for leased equipment). In addition, the condition of the assets is assessed at least once per year and considered against the remaining useful life. Adjustments to useful lives are made when considered necessary. Depreciation charges are included in note 11.

Impairment of non-financial assets other than goodwill The Association assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Association estimates the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use. When the carrying amount of an asset or the cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.



REVENUE FROM OPERATING ACTIVITIES

2014 2013

$ $

Membership subscriptions 4,256,730 4,287,605

Professional Development income 943,979 768,341

Events income 2,263,210 2,363,175

Marketing income 383 327

Advertising & Public Relations 241,764 510,365

Interest 141,907 193,552

Other revenue from ordinary activities 126,804 126,337

7,974,777 8,249,702

2014 2013

$ $

(A) DEPRECIATION, AMORTISATION & IMPAIRMENT EXPENSE

Depreciation (36,029) (41,687)

Amortisation (116,836) (96,900)

(152,865) (138,587)

(B) EMPLOYEE BENEFITS EXPENSE

Wages & Salaries (2,485,020) (2,665,505)

Defined contribution Superannuation expense (189,277) (210,576)

Other employee benefits & statutory taxes (246,930) (77,130)

(2,921,227) (2,953,211)

(C) PROFIT BEFORE INCOME TAX INCLUDES THE FOLLOWING SPECIFIC EXPENSES

Administration (880,590) (854,176)

Advertising and public relations (428,726) (441,230)

Disciplinary process (201,895) (220,167)

Professional Development (formerly Education) (497,267) (355,960)

Events (1,916,314) (2,333,700)

Legal fees (169,415) (169,404)

Marketing expense (86,613) (49,449)

Publishing (506,354) (634,970)

Rental expense on operating leases (225,902) (218,181)

(4,913,076) (5,277,237)

5. Revenue

6. Other expenses


NUMERICAL RECONCILIATION OF INCOME TAX EXPENSE TO PRIMA FACIE TAX PAYABLE

2014 2013

$ $

Profit/(Loss) before income tax expense (12,391) (119,333)

Tax at the Australian tax rate of 30% (2012 30%) (3,717) (35,800)

TAX EFFECT OF AMOUNTS WHICH ARE NOT DEDUCTIBLE/(TAXABLE) IN CALCULATING TAXABLE INCOME

Income not taxable (1,843,729) (1,835,583)

Deductions not allowed 1,815,818 1,826,614

(31,628) (44,769)

Tax losses not brought to account 31,628 44,769

Income tax expense - -

7. Income tax expense

Tax LossesThe association has accumulated tax losses of $4,615,250 to 2014 that may be treated as an allowable deduction against assessable income derived in future taxable income years. The utilisation of carried forward tax losses would be subject to certain carry forward loss rules.

Deferred tax assets have not been recognised in respect of these tax losses as they arise as a result of the Not-for-profit status of the association where tax is assessable only on non-mutual income. Whilst that tax status continues it is unlikely that these tax losses will be realised in the future.

8. Current assets - cash and cash equivalents

(a) Deposits at callCash at bank earns interest at floating rates based on daily bank deposit rates. The carrying amounts of cash and cash equivalents represent fair value. The deposits are bearing floating interest rates between 3.18% and 3.22% (2013:4.37% and 4.47%).

(b) Reconciliation to statement of cash flowsFor the purpose of the statement of cash flows, cash and cash equivalents comprise the following:

RECONCILIATION TO STATEMENT OF CASH FLOWS

2014 2013

$ $

Cash at bank and in hand

1,047,820 494,207

Deposits at call 3,417,338 3,835,603

Net Exposure 4,465,158 4,329,810

9. Current assets Trade and other receivables

2014 2013

$ $

Trade receivables 367,020 417,562

Allowance for impairment loss (a) - -

Net trade receivables 367,020 417,562

a) Allowance for impairment lossTrade receivables are non-interest bearing and are generally on 30-60 day terms.

A provision for impairment loss is recognised when there is objective evidence that an individual trade receivable is impaired. No impairment loss has been recognised in the current year (2013: nil).

At 30 June, the ageing analysis of trade receivables is as follows:

Year Total 0-30 days 31-60 days61-90 days

PDNI*61-90 days CI^

+91 days PDNI*

+91 days CI^

2014 367,020 269,731 - 35,000 - 62,289 -

2013 417,562 399,970 7,000 2,220 8,372

* Past due not impaired (PDNI) ^ Considered impaired (CI)

Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value.

The maximum exposure to credit risk is the fair value of receivables.

10. Current assets - other current assets

2014 2013

$ $

Event deposits 61,126 15,775

Prepayments 79,323 176,531

140,449 192,306

11. Non current asset- property, plant and equipment

Plant & Equipment Leasehold Improvements Total

$ $ $

YEAR ENDED 30 JUNE 2014

Opening net book amount 71,660 - 71,660

Additions 8,408 - 8,408

Depreciation charge (36,029) - (36,029)

Closing net book amount 44,039 - 44,039

AT 30 JUNE 2014

Cost 309,140 179,403 488,543

Accumulated depreciation (265,101) (179,403) (444,504)

Net book amount 44,039 - 44,039


Opening net book amount 86,679 - 86,679

Additions 26,668 - 26,668

Depreciation charge (41,687) - (41,687)

Closing net book amount 71,660 - 71,660

AT 30 JUNE 2013

Cost 300,731 179,403 480,134

Accumulated depreciation (229,071) (179,403) (408,474)

Net book amount 71,660 - 71,660



12. Non-current assets - intangible assets

SoftwareWebsite

GoodwillTrademark

costsTotal

$ $ $


Opening net book amount 213,606 - 28,478 242,084

Additions 276,893 - 2,640 279,533

Amortisation charge (116,836) - - (116,836)

Closing net book amount 373,663 - 31,118 404,781

AT 30 JUNE 2014

Cost 978,763 680,230 31,565 1,690,558

Accumulated amortisation and impairment (605,100) (680,230) (447) (1,285,777)

Net book amount 373,663 - 31,118 404,781


Opening net book amount 232,141 - 28,478 260,619

Additions 78,365 - - 78,365

Amortisation charge (96,900) - - (96,900)

Closing net book amount 213,606 - 28,478 242,084

AT 30 JUNE 2013

Cost 701,870 680,230 28,925 1,411,025

Accumulated amortisation and impairment (488,264) (680,230) (447) (1,168,941)

Net book amount 213,606 - 28,478 242,084

13. Non current assets- other non current assets

2014 2013

$ $

Rental and other bonds 5,482 5,482


14. Current liabilities- trade and other payables

2014 2013

$ $

Trade payables 290,125 261,651

Unearned membership subscriptions 2,483,976 2,340,374

Other payables 267,756 234,238

3,041,857 2,836,263

Fair ValueDue to the short term nature of these payables, their carrying value is assumed to approximate their fair value.

Trade payablesTrade payables are non-interest bearing and are normally settled on 30 day terms.

Other payablesOther payables are non-trade payables, are non-interest bearing and have an average term of three months.

15. Current liabilities - provisions

2014 2013

$ $

Employee benefits 317,588 335,263

16. Current liabilities - provisions

2014 2013

$ $

Long Service Leave 53,880 61,383

17. Remuneration of auditors

THE AUDITOR OF THE ASSOCIATION IS ERNST AND YOUNG

2014 2013

$ $

AMOUNTS RECEIVED OR DUE & RECEIVABLE BY ERNST & YOUNG (AUSTRALIA) FOR

The audit of the financial report of the entity 40,000 46,000

Tax compliance services 18,000 6,500

58,000 52,500


19. Commitments

Lease commitmentsCommitments in relation to leases contracted for at the reporting date but not recognised as liabilities is as follows:

The Association leases various offices under non cancellable operating leases expiring within three years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.

20. Related party transactions

(a) Key management personnel compensation Key management personnel compensation for the years ended 30 June 2014 and 2013 is set out below. The key management personnel are the 12 directors (2013: 12), 1 chief executive officer (2013: 1) 3 department heads (2013: 3 department heads) of the Association. These individuals have been determined to have the greatest authority for the strategic direction and management of the Association.

(b) Other transactions and balancesA former Director, now Chair of the National Regulatory & Legislative Affairs Committee, Mr Jon Denovan, is a partner at Gadens Lawyers, Solicitors. Gadens Lawyers has provided legal services to Mortgage & Finance Association of Australia for several years on normal commercial terms and conditions.

2014 2013

$ $

Within one year 145,380 191,771

Later than one year but not later than five years 6,292 137,364

Minimum lease payments 151,672 329,135

2014 2013

$ $

Short-term benefits 1,019,295 932,661

Post-employment benefits 128,452 134,253

Total 1,147,747 1,066,914

2013 2012

$ $

Legal fees 169,404 116,279

18. Contingencies

Contingent liabilities

GuaranteesGuarantees given in respect of leases amounting to $38,510 (2013: $38,510), secured over cash deposits held at financial institutions. These guarantees may give rise to liabilities if the obligations under the terms of the leases subject to the guarantees are not met.

Director’s DeclarationIn accordance with a resolution of the directors of the Mortgage & Finance Association of Australia, we state that in the opinion of the directors:

(a) the financial statements and notes of the Association are in accordance with the Corporations Act 2001, including:

(i) complying with Accounting Standards and the Corporations Regulations 2001; and (ii) giving a true and fair view of the Association’s financial position as at 30 June 2014

and of its performance, for the financial year ended on that date; and

(b) there are reasonable grounds to believe that the Association will be able to pay its debts as and when they become due and payable; and

(c) at the date of this declaration, there are reasonable grounds to believe that the members of the Association will be able to meet any obligations or liabilities to which they are, or may become subject to.

On behalf of the Board (3 October, 2014)

21. Cash flow statement reconciliation of profit after income tax to net cash inflow from operating activities

2014 2013

$ $

Profit/(loss) for the year (12,391) (119,333)

Depreciation and amortisation 152,865 138,587

CHANGE IN OPERATING ASSETS AND LIABILITIES

(Increase)/ decrease in prepayments 97,208 (105,472)

(Increase)/ decrease in receivables 50,542 118,388

(Increase)/ decrease in other operating assets (45,351) 17,467

Increase/(decrease) in payables 205,594 (62,516)

Increase/(decrease) in employee provisions (25,178) (61,936)

Net cash from operating activities 423,289 (74,815)

22. Events after balance sheet date

There have been no significant events occurring after balance date which may affect either the Association’s operations or results of those operations or the Association’s state of affairs.

Raymond SlackDIRECTOR

Tim BrownDIRECTOR



Ernst & Young 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001

Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au

Independent auditor's report to the members of Mortgage & Finance Association of Australia We have audited the accompanying financial report of Mortgage & Finance Association of Australia, which comprises the statement of financial position as at 30 June 2014, the statement of comprehensive income, statement of changes in members’ funds and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration.

Directors' responsibility for the financial report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.

Auditor's responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity's preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence In conducting our audit we have complied with the independence requirements of the Corporations Act 2001. We have given to the directors of the company a written Auditor’s Independence Declaration.


Opinion In our opinion:

a. the financial report of Mortgage & Finance Association of Australia is in accordance with the Corporations Act 2001, including:

i giving a true and fair view of the company's financial position as at 30 June 2014 and of its performance for the year ended on that date; and

ii complying with Australian Accounting Standards and the Corporations Regulations 2001; and

b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 2.

Ernst & Young Daniel Cunningham Partner Sydney Date: 3 October 2014


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