australian broker magazine issue 7.12

POST APPROVED PP255003/06906$4.95 ISSUE 7.12

June 2010

FBAA has member-compliant toolkit

When does the NCCP apply?

Generations at work

Training solutions provider AAMC has provided a toolkit for compliance with the new regulations for FBAA broker members

Provident Capital’s in-house legal team provides guidance on the application of the new credit code

AB asks two experts for their views on the workplace environment and their expectations for current Gen Y and Baby Boomer employees

Page 4 >>

Page 24 >>

Page 26 >>

Associations defend their position

Are industry bodies still broker-friendly?

Industry associations are drawing up their post-regulation plans in order to remain relevant in the eyes of brokers. A question posted on Broker News about the future of these associations led to a barrage of responses and few

defenders, questioning the point of industry associations after the Australian Securities & Investments Commission takes over industry regulation.

However, both the FBAA and MFAA have defended their relevance to the broker market and are positioning themselves to ensure they continue to provide brokers with a valuable service.

Peter White, president of the FBAA, said that the organisation has always been run by brokers for brokers, and it will have a role to play in shaping Phase II of the legislation and working to amend the existing legislation. MFAA CEO Phil Naylor said his organisation would continue to “represent members with a unified voice in political and regulatory advocacy.”

Some respondents on Broker News questioned the ability – or willingness – of the MFAA to represent them on major issues like volume hurdles and commission cuts. When AB posed the question to Naylor, he said it was not the organisation’s responsibility to interfere with commercial arrangements.

Naylor defended the MFAA’s actions on volume hurdles as adequate. “As we have said to our members and the trade media several times, it would be a breach of trade practices law for an association to attempt to intervene in commercial contracts in which we are not a party,” he explained.

“However on industry issues such as volume hurdles, which potentially could have impacted a broker’s obligations under the NCCP, we took action to seek guidance from ASIC as well as provide our members with legal advice on the issue.”

Phil Naylor

page 22 cont.>>

No

Is the borrower an individual or individuals?

Is the loan for personal, domestic or household purposes?

Is the loan to purchase, renovate or improve land on which a dwelling is or will be affixed?

Is the loan wholly or predominately (>50%) for this purpose?

Is the borrower a strata corporation?

Is the loan to refinance existing credit used to purchase, renovate or improve land on which a dwelling is or will be affixed?

Regulated Unregulated

Unregulated

Yes Yes Yes

Yes Yes

Yes

No No

No No

No

Borrower

.

Purpose

http://www.mangomedia.com.au

2

Newswww.brokernews.com.au

www.brokernews.com.au

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Brokers need to future-proof their business

ASIC takes lenders to court

With regulation looming, brokers have been urged to take steps to ensure they are offering more than just traditional mortgage products to their clients. Liberty Financial GM Kendall Mahnken said brokers

could do worse than follow in the footsteps of the non-bank lender and diversify their offering.

“I think it’s imperative that introducers have that future-proofing in their own business models which allows them to have a selection of solutions to then provide to their customers or borrowers coming through the door,” Mahnken said.

When Liberty started out 13 years ago all it offered was mortgage products. Now, the non-bank lender has added vehicle and business finance, commercial mortgages and floor plan finance. “From a broker’s point of view it gives them a company that they know has a diversified or broad selection to help their clients as

their needs change,” Mahnken said, adding that there are often possibilities to offer complementary products with each client.

“For example, someone who needs a home loan is likely to need a car loan at some point, or people who are in the investment space might be looking to get into a commercial property as an investment choice, again that option is there.”

Mahnken is also starting to see borrowers who are willing to stay away from the major lenders. She said the major dislocation that took place at the outset of the GFC is starting to fade away and more choice is coming back into the market – which is a good thing for brokers and borrowers alike.

“Consumers are now looking for alternatives – whether that is regional banks, second-tier banks or non-banks,” Mahnken said. “In fact, this has further been spurred by the RBA starting to make changes in interest rates at the end of last year and into this year. They realise that there are cheaper options elsewhere.”

The Australian Securities & Investments Commission is taking action against Australian Lending Centre and Sydney Lending Centre in the Federal Court of Australia, for allegedly falsifying loan documents.

ASIC claims the unconscionable conduct took place between 2005 and 2008. Incidentally, this is after the companies were expelled by the MFAA in 2004. The regulator is claiming that the two companies contravened the (aptly named) ASIC Act 2001 by

representing loan contracts as mostly for business or investment purposes, rather than personal use. This would mean the borrowers were not protected by the Uniform Consumer Credit Code.

ASIC has also commenced proceedings against AMR Investments, which provided the loans, claiming that it too engaged in unconscionable conduct. Christopher John Riotto is the sole director of all three companies.

The regulator claims that the three companies and Riotto not only

contravened the Act but also disobeyed orders restraining Australian Lending Centre and Sydney Lending Centre from making representations that a person has sought a loan for business or investment purposes, when that person has sought a loan for personal, household or domestic use.

ASIC is seeking orders restraining the two from making false loan representations. It is also seeking payment of compensation to two impacted borrowers.

Kendall Mahnken

http://www.crownandgleeson.com.au

Read the latest issue of Australian Broker online www.brokernews.com.au

http://www.liberty.com.au


4


FBAA offers members compliance toolkit

Members of the FBAA could have a simpler time complying with upcoming regulations, after the industry association revealed an

NCCP toolkit produced by training solutions provider AAMC Training Group. The compliance toolkit allows brokers to access

deeds online and can be bought for just over $300.

FBAA national president Peter White said that brokers will also have the opportunity to customise the toolkit to their own businesses, at an extra cost. “We expect there to be a significant take-up,” he said.

“It will help people with their compliance documentation and the beauty of it is that if people want to customise things to their particular business they can do that.” Brokers who decide to customise the compliance documentation will have to work with AAMC on the cost of that variation.

The toolkit is available online and there have been significant pre-orders, according to White. “I know they’ve been bombarded,” he said. “We’ve had some members contact us and say, why aren’t you giving that away? And

the simple answer is that it comes at a cost as well as a low membership fee.”

The toolkit is an evolving deed and comes with an annual subscription. White said there’s a short course that accompanies the toolkit and earns the broker 12 CPD points.

“The NCCP toolkit will greatly assist brokers in meeting their regulatory commitments moving forward,” White said. “We appreciate that the financial burden of becoming and remaining compliant is at the forefront of brokers’ concerns, and that’s why we’ve partnered with AAMC to provide a solution at the most affordable cost.”

White urged brokers to ensure they have their compliance obligations covered before the new regulations are applied in order to mitigate the stress of last-minute organising.

Commonwealth Bank has launched a program designed specifically to support female brokers, called Women in Focus.

Katrina Rowlands, the principal of Mortgage Success, said the event, which was held in Broome, was inspirational. “Spending time with the Women in Focus [group] in Broome was rejuvenating, challenging, but mostly so very rewarding,” she said.

“I can’t tell you how valuable this process of coaching with women by women was for me personally.”

The Women in Focus program offers a range of services designed

to provide women with the up-to-date knowledge, relationships and support they need to identify and achieve their goals.

The business coaching and networking is facilitated by Deloitte Australia and participants explore a series of questions, ideas and strategies across eight areas of their business to understand what they can do to take their business to the next level.

Present at the event were distinguished WA businesswomen such as Janet Holmes à Court and Marilynne Paspaley. Rowlands said it was incredible to be amongst them.

CBA’s Kathy Cummings said it is important to recognise the contribution that women make to Australian business.

“Women are a key contributor to the business market in general, and are a major source of competitive advantage and ideas,” she said, adding that the bank regularly conducts events solely for women brokers as a means of bringing them together to share

CBA focuses on women

From left to right; Emöke Palos (CBA), Marita Gilmour (PLAN Australia), Katrina Rowlands (Mortgage Success), Bonnie Yeung (Mortgage Innovation), Kathy Cummings (CBA), Joanne Wall (Pinnacle Finance), Janet Holmes à Court (keynote speaker), Janine Carpenter (Independent Mortgage Finance Services ), Sandy Joseph (Mortgage Solutions Australia), Cathy Anderson (Smartline), Maria Zappia (Mortgage Choice), Lee Dittmer (Who Finance), Raechelle Inman (CBA).

their professional experiences. “Participating in Women in

Focus enables women to grow professionally and personally by developing new business and personal insights, building meaningful relationships and creating valuable networks,” Cummings said.

Mortgage brokers who attended the whole program were awarded 8.5 CPD points from the MFAA.

http://www.interimfinance.com.au


http://www.planaustralia.com.au

6


House price growth to slow

After the successful launch of its residential website, BankWest has turned its attention towards the business broker, with the launch of its business website found at www.bankwestbrokers.com.au.

Aaron Milburn, head of broker sales, said the decision to launch the website came as a result of feedback from brokers demanding a dedicated site to locate the tools needed to service their clients.

And while business brokers have long been complaining that it is increasingly difficult to get deals completed in an environment where it seems banks want to lend only to homeowners, Milburn said Bankwest is actively looking for business.

“We are certainly open for business, however in saying that the focus is on the quality of the deal rather than quantity,” Milburn said. “Brokers can be assured our BDMs are out on the street, keen to meet as many brokers as possible to discuss potential deals.”

The website, which offers business brokers the ability to find current rates, calculators, product information and contact details, is the first stage of a strategy designed to entice commercial brokers back to the lender.

Milburn said the strategy was designed after consultation with brokers, aggregators and Bankwest’s own internal broker sales force, to create an offering

that is streamlined for brokers. “We are always looking for innovative ways to capture quality business and that is why it is vital for us to be out hearing first-hand from our brokers on what we can further do to enhance our proposition,” he said.

Bankwest also gave brokers the opportunity to enter into a tipping competition for the World Cup in South Africa, with the winner of the competition to be announced in July after the final.

They will win a trip to London to watch next year’s FA Cup final.

The latest report released from BIS Shrapnel shows that the company expects price growth for residential properties to slow – but not fall – in 2010.

The ‘Residential Property Prospects 2010 to 2013’ report noted that growth in house prices was stunted in the second half of 2009, as a result of fewer first homebuyers, slower upgrader demand and reduced affordability in light of the rising interest rates.

“The strong price growth in the second half of 2009 was a rapid adjustment to housing variable interest rates that were at 40-year lows,” said Angie Zigomanis, senior project manager and study author. “With interest rates quickly lifting from these ‘emergency’ levels, and the current variable rate of 7.4% now being close to long-term trends, the recent levels of price growth cannot be maintained.”

However, BIS Shrapnel predicts the return of investors to the market will thwart the chances of a fall in house prices. Loans to investors were up by an annual 26% in the March quarter of this year.

“Even though overseas migration inflows are steadily easing, a deficiency of stock is still in place with dwelling construction below underlying demand,” he said. “This is expected to put pressure on vacancy rates and result in stronger rental growth later in 2010. The deficiency of dwellings and improved rental picture will continue to maintain investor demand and assist prices.

“In addition, the current round of interest rate rises is expected to have run its course, with further rises expected to be more moderate,” added Zigomanis.

“Our forecast is for the cash rate

to increase by 50 basis points in 2010/11, and a further 50 basis points in 2011/12. The more stable interest rate environment is expected to underpin purchaser confidence as economic conditions continue to strengthen, and should continue to push through moderate house prices rises.”

Among the state capitals, BIS Shrapnel forecasts those starting from the lowest price base to experience the most solid price growth. Real house prices in both Sydney and Perth are still below

Aaron Milburn

Bankwest turns its focus towards business brokers

their previous peak levels, which BIS Shrapnel said should underpin stronger growth relative to the other capitals. Price levels in Adelaide are below the other mainland capitals.

More moderate growth is expected in Brisbane, Hobart and Canberra due to weaker underlying demand and local economic conditions over the next three years, while the very strong price rises in Melbourne and Darwin have pushed affordability and will limit further rises.

http://www.rapidcapital.com.au

http://www.mortgagebroker.citibank.com.au

8


NAB looks to address broker grievances

Referrers to receive government break

The record result in May beat the previous settlement record by $100m. However, Lawler said he recognised there was still work to be done to build up a solid relationship with the third party channel.

“Recent results aside, we know there is still more to do. We’ve identified a series of limitations in our approach to delivering a robust mortgage experience and have taken steps to address this,” Lawler said.

The first step has been in appointing Charles Weiser to assume the role of ‘GM Homeside Service Experience’. Weiser will start his role on 21 June and will be charged with driving the end-to-end customer experience for Homeside.

Former executive general manager of NAB Partnerships Matt Lawler said the bank would aim to become the “partner of choice” for brokers and would take all the necessary steps to earn that position. Announcing the lender’s highest ever Homeside volume settlements in its NAB Broker business recently, he said his team was working to improve the mortgage experience.

“It is great to see results from the investments we are making to improve our end-to-end mortgage experience,” he said. “We’ve also been extremely encouraged by the responses we have received from brokers – particularly their strengthened support and confidence in recommending their clients use Homeside.”

“This role will deliver a more coordinated approach to the way operational delivery and support teams work together,” Lawler said.

The next step that NAB has taken has been to combine a number of different teams throughout the bank who are involved in the mortgage process to create efficiencies in the management of mortgage applications. This new team will report directly to Weiser.

“We believe these changes will ensure greater oversight of the end-to-end process from application to settlement and create a much better experience for our brokers and their clients,” Lawler said.

“Charles is an experienced business leader, well equipped to deliver a customer-centric Homeside mortgage experience and build on the excellent work the team has delivered over the past few months.”

Lawler, who resigned from his role effective 17 June, added the record settlements were proof that its focus on brokers was paying off. He said the lender’s performance was underpinned by a range of service enhancements.

These included an increase in operational capability and policy and process changes, as well as providing increased broker access to service and support teams to improve issues resolution during the application process.

The Federal Government is set to issue a regulation guideline that changes the way referrals are treated under the National Consumer Credit Protection Act.

As it stands, referrals are largely prohibited. Anybody is able to direct a borrower to a broker to do business but as of 1 July 2010 they would not be able to give a broker information on the borrower so that the broker could follow up the deal.

A source close to the negotiations told AB that the government is going to loosen up that regulation to allow brokers to receive referrals from outside sources.

Referrals will still be regulated to such a degree that there will need to be disclosure documents surrounding referral fees. Consent from the consumer will

need to be obtained but this will still makes it considerably easier to do business.

MFAA CEO Phil Naylor told AB that his organisation had already highlighted the potential problem to members. “As you are aware it will be a breach of NCCP for a broker, lender etc to deal with someone who is not either an ACL holder or a credit representative. This may create problems for brokers and others dealing with referrers,” Naylor wrote to members.

“There is an argument that as referrers are not involved in a credit activity and are not intermediaries under the Act, they are not covered by the Act and therefore there is no problem in dealing with them.”

Naylor said he had contacted ASIC who had informed him that

regulation exempting referrers under certain conditions,” Naylor continued in his communiqué. “We are currently discussing with Treasury and ASIC the terms of that exemption. It is the Minister’s intention to promulgate the regulation on 29 June.”

the regulator would take the view that they are either conducting a credit activity or are intermediaries – and therefore they must either hold a licence or be a credit representative.

“The Minister has indicated he is prepared to approve a

Matt Lawler

http://www.mkmcapital.com.au

http://www.banksiagroup.com.au

For all the latest mortgage industry news, visit www.brokernews.com.au

10


Mortgage protection popularity growsInsurance provider Ali Group said a recent research survey has found that mortgage protection insurance is growing increasingly popular with brokers.

The company commissioned the survey to determine the perceptions, needs and challenges faced by brokers selling mortgage protection. The findings showed that brokers were looking to expand their offering beyond mortgages and appreciated the increasing revenue streams that resulted from having complementary products.

Almost 80% of brokers surveyed said they felt an obligation to provide their clients with mortgage protection to ensure they are financially secure in the event of death or a serious medical condition.

“These are the highly experienced, full-time brokers working from an office rather than being mobile,” Ali head of sales and distribution Darren Smith said. “They believe in the value of insurance.”

experience must go over and above simply providing a transaction.”

While many of the brokers surveyed had referral relationships

with a financial planner or insurance broker, this did not prevent them from offering mortgage protection, he added.

Interestingly, the research showed that the ‘typical’ broker that is most successful in providing mortgage protection was likely to be a suburban or regional broker with ‘middle Australian’ owner-occupiers and first homebuyer-style clients.

Smith said the finding was not surprising considering the drive shown by full-time, professional brokers to strengthen revenue streams, following lender commission cuts and the GFC.

Significantly, 85% of brokers surveyed stated that they believed that mortgage protection cover is critical for their clients to consider. According to the findings of the research, the brokers with the greatest success in writing mortgage protection offer it at the application stage – with 80% of survey respondents choosing this time to raise the matter with customers.

“This relates directly to a brokers’ service proposition,” Smith said. “Brokers focused on ensuring an excellent customer service

http://www.ncf1.com.au


http://www.freesymmetry.com.au


12


LoanKit doubles membership in six months

Mortgage Choice’s corporate influence on LoanKit is paying dividends already, with the aggregator announcing a doubling in the number of brokers on its books, in the six months since it was acquired by the publicly listed broking house.

LoanKit chief Kym Rampal said the aggregator was able to increase its membership to 106 by standing apart from competitors with its two flexible membership options. It offers members either non-exclusive full aggregation or simply the leasing of its software.

Brokers have the option of being a credit representative or holding their own licence. A number of Mortgage Choice executives worked closely with Rampal to broaden and fine-tune the aggregator’s mortgage tools and services before its offering was relaunched last month. “Now that LoanKit has fully relaunched as the aggregation arm of Mortgage Choice, we are focusing on recruiting as many brokers within our target market as possible, while continuing to

Funding sought for equity release centre

Kym Rampal

provide comprehensive, specialist service to our existing broker members,” Rampal said.

“Our three ‘Compliance in a Box’ options have met with resounding approval from LoanKit’s current and potential brokers in the lead up to national regulation.”

Rampal said that he received plaudits for the features and benefits, which he said allows brokers to maintain their independence while gaining from the shelter offered by a corporate compliance department.

“I feel fully satisfied that I made the right decision in joining forces with Mortgage Choice and our brokers have expressed similar sentiment,” Rampal said. “We are very much appreciating the advantages of having experienced

and professional in-house teams to handle all aspects of our offering.”

LoanKit manages not to fight with Mortgage Choice for business because the brands appeal to different brokers. Rampal said that LoanKit is aimed towards established brokers and the aggregator generally does not accept any broker that does not have at least two years’ experience. Mortgage Choice, on the other hand, tends to attract newer entrants to the mortgage industry.

NICRI is seeking to have the government make financial and legal advice compulsory for all borrowers of equity release products under Phase II of the new credit regulations. Schilg said that borrowers ought to be provided the advice through a service such as ERIC.

“This would ensure uniformity of advice – all prospective borrowers would have access to the detail they need to make an informed decision regarding accessing equity in what is, in most cases, their major asset in retirement,” she said.

NICRI’s current equity release information service provides consumers with general information and has a booklet that gives a balanced view of the suitability of these products. “This new proposal would see NICRI’s current information service enlarged considerably with solicitors and financial advisors on hand to speak directly to prospective borrowers,” Schilg said.

“Issues of concern currently

being seen within the industry – such as undue family pressure, and misunderstandings with interest rates and default clauses – would be recognised and dealt with before borrowers signed their contract.”

Although some lenders are being consulted in development, Schilg insists there is no conflict of interest. “Lenders are not responsible for the model, but some have shown support and their input is necessary,” she said. “They are the ones who work with all the applicants, and it is also in their best interests that borrowers are well informed and protected.”

Schilg said that if the Federal Government agrees to fully fund the proposed ERIC service, it would be open to all applicants of reverse mortgage and equity release products and to those that want to access general information before applying.

However, she said consumers would still be free to see their own advisers and solicitors if they wish.

The National Information Centre on Retirement Investments (NICRI) has called on the Federal Government to fund the Equity Release Information Centre (ERIC). It would provide financial, legal and general advice to consumers seeking to access equity in their home via

an equity release product such as a reverse mortgage.

“The ERIC model is designed to ensure future reverse mortgage and equity release applicants have access to independent uniform advice – financial, legal and general,” said Wendy Schilg, CEO of NICRI.

LoanKit’s three ‘Compliance in a Box’ options have met with approval from current and potential brokers

http://www.cashflowfinance.com.au


13www.brokernews.com.au

National Finance Club is closing the gap between banks and non-banks by enabling brokers to track the status of a loan from application to settlement. The mortgage manager launched its electronic lodgment system earlier this month. NFC managing director Andrew Clouston says the e-app system is a huge leap forward for the non-bank lender.“The ability to promote flexibility in product choice is essential in today’s increasingly competitive market,” said Clouston. The system allows brokers to complete the application online for the client and the data will be self-verified as it is entered. Then using a login and password to access the NFC system, the broker can track the status of any – and all – loans lodged with the mortgage manager. NFC says the e-app will be supported by a national network of business development managers.

First homebuyers and self-employed borrowers are at risk of falling into mortgage arrears, according to a new report by Standard & Poor’s. Recent figures from the ratings agency revealed that a growing number of borrowers are missing mortgage payments as a result of rising interest rates. The report found that the number of borrowers who had missed repayment deadlines climbed 0.19% up to 1.44% in the March quarter. Arrears rates for sub-prime borrowers, which account for about 10% of home loans, rose to 12.24%. S&P predicted first home buyers who entered the property market when interest rates were historically low, and self-employed borrowers who are more sensitive to economic conditions, will be the most sensitive to rising rates.The Reserve Bank of Australia left the cash rate at 4.5% in its June meeting, as it paused to gauge the global recovery. However, economists are predicting rates will increase to 5% by the end of 2010.

In a sign that this is an election year, the Federal Government has promised to increase competition in the banking sector by forcing down mortgage exit fees. According to a report in the Australian Financial Review, the Labor government is also looking to enforce tough new responsible lending rules for loans to small businesses – a move the banks say will increase the cost of credit. So, while mortgage brokers could turn out to be winners from Labor’s election push, the embattled commercial broking sector could face further hardships. Mortgage brokers who have maintained their relationship with their client would likely be the biggest beneficiary from any new rules introduced. They would be able to collect the upfront commission from any new loans the borrower took out, whereas those who have lost touch with their former clients might see their trail book evaporate. The government, which has been decimated in polls since the introduction of the Resources Super Profits Tax last month, has hired a financial services consulting group to examine mortgage exit fees before announcing any measures – as early as next month.

The surge in Australia’s population which has underpinned a strong increase in home prices is expected to slow in the next two years, according to BIS Shrapnel. The forecasting group said that the strong growth Australia has experienced recently comes as a result of an unusually large number of foreign workers and students receiving visas. This number is expected to fall, though, meaning that the bulge in demand will slacken as those visas start to expire. BIS Shrapnel predicts that the high of 299,000 immigrants in the year to June 2009 will fall to 240,000 by June 2010. It will then drop to 175,000 in 2011 and 145,000 in 2012. “Most of the rise in net overseas migration over the past three years has been the result of a surge in the number of long-term visitors, not permanent migrants,” said BIS Shrapnel senior economist Jason Anderson. “The increase was greatest in 2008/09 when the net population gain from long-term visitors accounted for 74% of the national net overseas migration gain of 298,000 persons.” While a decrease in population growth could slow down the property market it would also relieve the RBA of inflationary pressures, allowing it to hold rates down and making property investment a more attractive proposition for borrowers.

INDUSTRY NEWS IN BRIEF

Rate hikes pushing arrears up

Population growth expected to slow

NFC launches tracking app

Labor promises mortgage competition

http://www.oxfordfunding.com.au


14



Taxing time for brokers

With the end of financial year looming, Australian small business owners, including brokers, report they are working

overtime to fulfill their tax reporting obligations, spending the equivalent of almost one Sunday a month or nearly

60 hours a year going over their books.

The ‘Tax Time – Time is Money’ study by American Express and conducted by Galaxy Research found more than 40% of small business owners spend their evenings fulfilling financial reporting obligations and more than one-in-three small business owners undertake tax reporting at the weekend.

“Small business owners are sacrificing almost one Sunday a month to fulfill their tax reporting obligations, taking time away from working on other areas of their business or relaxing with family and friends,” said Jason Fryer, head of small business services for American Express.

While the Federal Government’s Henry Review on tax aims to ease the pain, only 17% of small business owners believe the review will deliver simplified financial reporting and save time and money. An overwhelming 83% of business owners believe there is still too much red tape and regulation attached to small

business financial reporting. “This report reveals small

business owners spend almost two working days preparing paperwork for end-of-year tax reporting,” tax expert Adrian Raftery said. “Many Australian businesses are drowning in a sea of receipts and paperwork, when it comes to compiling BAS and end of financial year reporting.”

The survey revealed the average small business processes more than 100 transactions every quarter, which means keeping track of over 400 receipts a year. “Small businesses can find some respite by streamlining and automating reporting processes,” Raftery said. “While small business owners can’t reduce the level of reporting that is required, they can reduce the time taken to compile statements.”

Raftery said that brokers should be looking for financial products that deliver added benefits to their business and can reduce the time spent recording transactions and collating receipts for tax reporting.

http://www.homeloans.com.au/broker




Australia’s central bank is unlikely to lift rates anytime soon after revealing in the minutes of its June meeting that it was “comfortable” with the current setting of monetary policy.

The Reserve Bank acknowledged that the uncertainty that has developed out of Europe has now clouded the global economic outlook, but seems to remain positive on global growth over the longer term on the back of continued strong growth seen from Asia.

“The fact that monetary policy is now around neutral means that the bar for further rate rises is significantly higher now, especially with the uncertainty created by the problems in Europe,” ANZ senior economist Amber Rabinov said. “Our expectation for a September quarter rate hike is now looking unlikely – unless market sentiment towards the risks out of Europe improves beforehand.”

Rabinov said the bank was fairly clear in its assessment of how the risks around Europe could manifest, with weaker European growth having some impact on global trade. Financial markets are now expecting less growth but it is too early to tell whether rising risk will impact spending decisions by both businesses and households, she said.

“A few months earlier, it had appeared that those economies with poor fiscal positions might be able to wait until economic recovery was more firmly entrenched before undertaking significant fiscal consolidation,” the bank said in the minutes of its meeting.

However, this has not happened and several European countries are now implementing fiscal tightening to improve fiscal positions earlier than expected in their economic recoveries.

Rabinov said that, overall, the central bank is happy with the 1.5% rate rises that it has implemented since late 2009, since this has positioned borrowing rates at around the average levels of the past decade.

RBA comfortable with rates

http://www.eurofinance.com.au

http://www.mortgagehouse.com.au


18


Connective urges brokers to get ACL

AFG expresses concern over mortgage figuresAustralia’s largest mortgage broker is warning of ‘deepening concern’ within the industry following the publication of its latest survey of new mortgages.

The AFG Mortgage Index for May has revealed that the largest proportion of new mortgages (38%) were arranged for refinancing purposes, closely followed by mortgages for investors (37%). New buyers accounted for 10% of sales, however AFG said the most worrying figure is that only 15% of mortgages were sold to upgraders. This is the lowest proportion recorded over the past 12 months and is significantly lower than the 18% average for the last six months of 2009.

AFG attributed the high level of refinancing to borrowers responding to interest rate hikes. “May was very much a month of two halves for us,” said AFG’s general manager of sales and operations, Mark Hewitt.

“We started the month with strong demand, particularly from investors, but the May rate rise, combined with all the other worrying economic news, really took all the heat out of the market,” he said.

Hewitt said that after a period of rebuilding confidence and returning to normal market conditions last year, people are feeling quite uncertain about the state of the economy. This feeling of uncertainty is also borne out by the fact that 77% of buyers opted

Connective has become the latest aggregator to offer brokers the opportunity to continue to write loans as credit representatives under its own Australian Credit Licence, but the aggregator is still advising brokers to obtain their own ACL to stay in control of their own future.

Advantedge was the first to roll out the option for brokers which has been picked up by other major aggregating groups. Connective said that while it believes that it is in the best interest of all brokers to hold their own ACL, it wanted to remove any transitional barriers that could arise for brokers who look to join the group in the future but don’t have their own credit licence, or who may have failed to register by the end of June as required.

Connective’s principal Glenn Lees said the establishment of the ACL entity will overcome any perceived compliance barriers for brokers looking to join Connective. “From the outset we have maintained that brokers should obtain their own licence rather than work under their aggregators,” Lees said.

“The compliance obligations aren’t overly onerous and the vast majority of our brokers would already comply with the pending regulation. Brokers obtaining their own licence will be able to better maintain their independence and control their own destiny.”

However, he said he doesn’t want to be in a position where brokers looking to join Connective are inhibited in any way because they don’t have their own credit licence. “We have therefore established our own

ACL entity for brokers to work under while they work towards obtaining their own,” Lees said.

The credit representative option will not be limited to new brokers, however, with Lees saying it will also be available for existing members.

“More than 80% of our brokers have already registered with ASIC and will apply for their own licence,” Lees said. “They see the merit in maintaining complete control of their business, rather than being told by their aggregator how they must comply.”

Despite this, there is still a small minority of brokers who have not yet registered and Connective wanted to ensure the door remained open to them while they weigh up their compliance options.

Mark Hewitt

for variable loans, with only 3% choosing to lock in rates.

Mortgage Choice data shows a similar trend, with figures from May indicating that new borrowers continue to shy away from fixed loans, despite a minor increase in demand. Mortgage Choice spokesperson Kristy Sheppard warned that borrowers are still very much concerned that longer-term fixed rates are usually more expensive than variable rate loans, and are still attracted by ‘professional packages’ on offer with variable rate mortgages – which include benefits such as rate discounts and gold credit cards.

Even so, she suggested that the desire for variable loans could fall as the cost gap between the two types of mortgages closes.

AFG’s research also revealed that mortgage sales in Queensland and Victoria were more robust than in other states across Australia, registering month-on-month increases of 15% and 9% respectively. Average mortgage size was highest in NSW at $452,000, which was $66,000 higher than the national average. The total number of mortgages sold by AFG in May was 6,624.

Glenn Lees

In May, 38% of new mortgages were arranged for refinancing, 37% for investors, and 10% for new buyers

http://www.vow.com.au



Channel conflict was found to be the top broker concern after a competition held at the recent MFAA convention gave brokers the opportunity to express their concerns regarding the industry. The competition, run by Wealth Today, showed that many brokers are concerned by channel conflict from the banks, tighter lending criteria and potential loss of trails and that these are seen as posing a medium-high to high threat to the success of their broking businesses. When asked what they consider to be the greatest opportunity for brokers to prosper, the general consensus from many respondents indicated the need for brokers to recognise that clients are looking for a full financial services solution from a trusted practitioner and that the opportunity exists for brokers to expand into that role. “The opportunity for brokers to prosper under the new licensing regime is very real. But it won’t happen by continuing to just provide mortgage services,” said Wealth Today’s Julian Musgrave.

Figures from the Reserve Bank of Australia indicated that banks earned $12.7bn in total fees last year, an increase of 9%, from residential and business lending charges. The amount earned on fees from home loans increased by 17% to $1.23bn. “The increase in housing fee income was driven by establishment and early exit fees, with the available information suggesting that break fees on fixed-rate loans accounted for a significant proportion of the overall growth in fees,” the RBA said. “A number of bank customers chose to refinance their fixed rate housing loans with variable rate loans, given the significant fall in the cash rate during the banks’ 2009 financial year.”

Australian banks could survive an economic contraction the size of the 1990s recession, the Australian Prudential Regulation Authority has revealed. APRA chairman John Laker ordered a stress test to be conducted on the country’s largest lenders to determine what would happen if there were a three-year deterioration in global economic conditions. The Reserve Bank of Australia and New Zealand’s central bank also took part. Laker said the results showed none of the 20 banks tested would have failed or even fallen below the minimum amount of top-rated assets on their balance sheets. However, Laker warned banks not to get complacent and take part in the high-risk activities that caused the economic downturn overseas.

In an effort to encourage NSW retirees to downsize and buy new homes, the NSW Government is offering extensive savings. The NSW budget includes zero stamp duty for seniors buying new homes under $600,000 and up to $22,490 in savings for downsizing over-65s. The discount applies to purchases of newly constructed houses and units, off-the-plan acquisitions, and house and land packages. Other homebuyers aren’t left out of the budget, though: NSW is also offering zero stamp duty to borrowers, but only for off-the-plan purchase or house and land packages costing less than $600,000. There is also a 25% stamp duty cut for homebuyers if construction is already underway.Property accountants Chan & Naylor credit the budget bonuses to the resurgent property market. “NSW Government coffers have been saved by the buoyant property market and strong payroll tax revenue,” said CEO Sal Carrero. “This budget again demonstrates that a strong property and construction sector is critical to the financial health of this state.”

Long-term average findings in the NAB business survey are attributed to the sharp fall in confidence amongst mining companies amid tax fears, as well as global jitters. In the biggest fall since December 2009, business confidence dropped 8 points to 4.6 points – its lowest level in 12 months. Business conditions also slipped 2 points to 5.8 points – the lowest level since January 2009. While mining companies reported the biggest dip in confidence, they also reported the strongest business conditions. The report concluded that weaker business conditions did provide good news for inflation. Some slowdown in growth mid-year has always been expected, according to the survey.

INDUSTRY NEWS IN BRIEF

Banks profit from exit fees

Budget urges retirees to downsize

Channel conflict tops broker concerns

Aussie banks safe from shocks

Business confidence falls

http://www.choiceaggregationservices.com.au


20


Aussie RMBS notes receive vote of confidence The bonds are “as close to

bulletproof AAA as you can find, as long as you’re choosing the right securities,” Mead said, adding that Pimco Australia has continued to boost its base of mortgage bonds despite the effect Europe’s debt problems are having on the international markets.

After the collapse of the US sub-prime market, spreads on RMBS issues blew out to 400 basis points above the bank bill swap rate, from a low of about 15 basis points immediately before the crisis. Pricing has now settled around 100–130 basis

points for Australian issues.The Federal Government had

been looking at ways to increase access to securitisation markets for small banks and non-bank lenders by putting downward pressure on the pricing of the RMBS issues.

Using the Australian Office of Financial Management (AOFM), Canberra offered 110–130 basis points over the bank-bill swap rate for a Suncorp RMBS issue. This pushed down pricing on the issue but also, interestingly, drove up demand, allowing Suncorp to double the amount of the issue to $1bn.

The manager of the world’s biggest debt fund has said returns on bonds backed by Australian home loans outweigh the risk on “bullet-proof” AAA-rated notes.

Pimco’s Australian division manages $28bn of assets and has ranked RMBS issues as its second-most important investment, just behind bank debt that is backed by the government guarantee. Executive vice president and head of portfolio management Robert Mead told Bloomberg that Pimco, which manages $1trn worldwide, owns notes sold by lenders including Westpac and ME Bank.

“Given the high credit quality of Australian residential mortgage-backed securities and the program objectives, the AOFM is willing to invest at tighter levels, but this will continue to be balanced with the desire to encourage continued private sector participation,” the AOFM said in a statement.

“This change in approach is directed towards bringing about lower pricing in the primary RMBS market, which will further support competition for residential mortgage lending and support lending to small business.”

Aussie broker achieves ironman dream Last January, Aussie broker and franchisee owner Tom Mewing completed a half ironman triathlon, despite breaking his collarbone and tearing a tendon in his hip 20km from the finish line. His victory over adversity won him plaudits – but denied him his true dream of becoming a full ironman by completing the Port Macquarie Ironman.

However, the Forest Lake-based broker has realised his dream when he finally heard the words “Tom Mewing, you are an ironman”. The Ironman race consists of a 4km swim, a 180km bike ride and 42km run.

“It was my third attempt to get to the Port Macquarie Ironman

Championships after breaking my collarbone at the qualifying races two years ago,” Mewing said. “The swim went well – apart from hitting a buoy marker and ripping my arm open – can’t sharks sense one drop of blood in 10km of water?”

Despite the setback in the water, Mewing completed that leg of the race in just over an hour. He said he jumped on his bike and was setting a “cracking pace” for the first 120kms, wondering what all the fuss was about.

“I was four hours into the event and at this rate I would have been finished in 10 hours,” Mewing said. “Then the wheels

I would be fine to run the marathon.”

Mewing had a couple of sports bars and a drink but wasn’t able to keep them down and just remembers worrying about the long marathon run ahead of him.

“The run became a shuffle and I barely remember anything except that little man in my head saying ‘one foot in front of the other champ’,” he said. “Four hours later I came into the finishing shoot and will never forget that moment – all my family, Michelle, Chloe and Emerson, were there to greet me home and for an instant I was bulletproof.”

Mewing was rewarded with a hard-earned massage and given food to revive him. “Finally, after three years trying to get to this day, I made it – the announcement still ringing in my ears,” he said.

Tom Mewing

fell off – although not literally. I became sick on the bike and spent the next 60km vomiting over anything in sight. I got off the bike at the seven-hour mark and hoped if I just ate something

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Building approvals plummet in April

Mountain conquerorsRay White real estate principal Stephen Bock has been part of the latest Australian team to conquer the world’s highest mountain. Bock, who is the director of Ray White Team Bock at Manly, and an expedition team made the final push to the summit in severe weather late last month.

Team leader Ronnie Muhl and the three Sydney men left their tent and climbed to the summit, reaching it about nine hours later. The expedition forms the largest Australian team to tackle Mt Everest. They were raising awareness of bowel cancer, Australia’s second-biggest killer, and funds for Bowel Cancer Australia. Bock’s father Robert died aged 60 in 2008 from bowel cancer and he dedicated climbing Mt Everest to his dad.

The Australian Bureau of Statistics produced startling building approval figures for April that showed the country’s tenuous housing recovery is still very much in its infancy.

Results for detached house building approvals reached their lowest level since May last year, falling 13.9%. Detached house approvals have been losing momentum for some time but they managed to maintain relatively high monthly levels. However, this drop was significant and seen across all states and territories.

“Placing this building approvals result alongside recent weak updates for other leading housing indicators highlights the risk that once the impact of past stimulus measures ends, residential construction activity

may slow,” Housing Industry Association chief economist Harley Dale said. “That would be a very detrimental outcome for the Australian economy in the face of a dire shortage of new residential stock.”

Approvals for other dwellings were down by 16.4% in April. However, this followed a one-off surge of 53% seen in March and was expected. In April 2010 the number of seasonally adjusted residential dwelling approvals fell by 26.3% in NSW, 18.3% in Victoria, 2.1% in Queensland, 22.5% in South Australia, 15.5% in Western Australia, and 0.8% in Tasmania.

In trend terms, building approvals fell by 1.1% in the Northern Territory but increased by 4.3% in the Australian Capital Territory.

“Everest is something I’ve wanted to do my whole life and I promised to do it for my father,” Bock said before the expedition.

In a recent e-mail, Bock told how the team had endured extreme weather conditions and two climbers on other expeditions had been killed.

“Many climbers have already left through injury, illness, fear and being kicked off teams if deemed unsafe with technical ability etc,” he wrote. “So far there have been two deaths, one through avalanche and we are not sure about the second. Some teams have lost almost half of their climbers.

“The good news is the Australian team is intact and strong at this point … certainly the scariest place is the icefall.”

Simon Norris

22

Featurewww.brokernews.com.au

The days of being ‘just’ a mortgage broker appear to be a thing of the past, with the impact of the GFC transforming the industry – bringing a reduction in commissions, increased compliance costs

and the introduction of stringent new regulations and licensing. What was once a ‘transaction’ industry of writing a loan, receiving a commission and repeating the process has become a much more sophisticated relationship-based business, where good operators can seize the opportunity to shine as ‘business centres’.

The onus is now on brokers to find out as much as possible about their clients, from their financial history to their current situation and future goals. The broker must then propose a ‘not unsuitable’ product for that individual, as well as offer a suite of complementary products to reinforce their service offering and demonstrate true value to the client.

Many clients are time-poor and essentially look to their mortgage broker to provide a one-stop shop of interrelated products, including insurance, financial planning and accounting services. That means today’s broker needs to be technology savvy and significantly more proactive in the broker/client relationship than

Brokers as business centres

ever before – not that this is a bad thing. Good mortgage brokers understand that once their

loan portfolio reaches a certain size, they need never look for a new client again. Their business will come from a suitably serviced database providing quality referrals. And this is not restricted to loans either, but can stretch itself to include the many other services that mortgage brokers provide, which in turn may contribute directly to writing more loans.

Some brokers have even aligned themselves with property developers to provide these clients with access to such products. Others have expanded into budgeting and financial coaching.

It would seem the days of part-time mortgage brokers are over. Not only is the modern mortgage broker required to offer a suite of products and services, they also need to successfully integrate them into their businesses. However, while it may sound straightforward, where can brokers access these additional services and expertise?

Many brokers would consider referring their home loan clients to third party sources as a real risk. Despite entering into contractual arrangements, there is the potential for the third party to build a strong relationship with the client – potentially leaving the broker high and dry.

An option for some may be to bring that resource in-house – creating a true one-stop shop. This also enables the broker to create additional income streams while reinforcing the client relationship. The additional ‘touch points’ created by cross-selling ensure the broker remains top of mind.

For example, financial planning clients must be reviewed every 12 months – and the results of this regular contact speak for themselves. And in reality, cross-selling is very straightforward. Take home insurance as an example. Every home loan client needs home insurance prior to settlement, therefore they need to discuss their requirements with someone. Why shouldn’t this be you, or your in-house resource?

Superannuation is another opportunity: how many of your clients have superannuation and how many have it with you? How many of those clients understand their options regarding the various insurance premiums payable from their super, potentially freeing up cash flow for other strategies? How many people understand how self managed super works?

These areas not only have the potential to provide new revenue streams for brokers, but they also allow them to provide education and added value to potential and existing customers alike. By demonstrating their new value proposition via seminars, newsletters and social media, brokers are able to engage more frequently with current and potential clients – further reinforcing relationships and building up the understanding of the entire scope of services on offer.

Scratch below the surface and it soon becomes apparent that the industry has changed. Mortgage broking as we knew it has gone forever – now welcome to the new world of mortgage business centres.

Simon Norris, director of Club Financial Services, takes a look at what it means to be a broker today. What do clients expect and how can you deliver it to them?

Naylor said the MFAA plans to position itself by ensuring its standards are higher than those that are applying to non-members and also under required legislation. In order to provide value to its members, the MFAA recently embarked on a $1.4m advertising campaign to promote this to the public.

cont. from cover >> The FBAA, however, is taking a different tack. As well as providing the “normal association stuff”, White promises to add value to members’ businesses by bringing out The Finance Professional (TFP) Co-op.

“The cooperative is a platform whereby members of that cooperative will be able to access a whole range of services that will bring value to their businesses –

by either bringing in additional revenues or reducing expenditures,” White said.

“That’s something you’ll only be able to get from the FBAA and it will provide a huge value-add for anyone who works in this industry.” White expects the co-op to be launched in early July, and the FBAA has also recently released a toolkit to help its members deal with compliance

issues associated with the new regulation (see news, page 4).

While the two main broking industry associations are taking different approaches to a post-regulation road, it is clear that their leaders believe they will continue to be a valuable offer to brokers in the future. And, while lenders insist on brokers being a member of one or the other, they are both correct.

Simon Norris


John McGrath

We saw strong price growth in the first quarter of 2010 in most major cities and I predict this will continue through winter. There’s been some speculation that the property market will be

impacted by rising interest rates, and while it’s likely that price growth may slow by Christmas, we won’t see any correction in values.

Supply will remain low for several years so I believe we’ll see ongoing annual price growth of around 6%–8% once this surge in prices subsides. We’re at the beginning of a 3–5 year growth cycle and I believe buyers will look back and wish they had bought in 2010.

Market observations Here are a few of my key observations and views.• Clearance rates have been consistently high, around

70% nationally. New listings are selling quickly as demand continues to outstrip supply in most major cities. Sub-$2m price range is particularly buoyant.

• Traditionally, winter provides buyers with a new opportunity as demand can temporarily subside and days on market can lengthen. I expect that spring 2010 will see a significant increase in economic and buyer confidence as the US recovery continues.

• While most analysts are saying buyer demand will drop off with each rate rise, many buyers in today’s market have been actively looking for many months and don’t want to miss out. I believe demand will remain extremely strong while home loans remain under 8% – but don’t over-commit.

• Upgrader buyers are dominant in our major markets, although new AFG* figures show almost 40% of loans drawn down in April were to investors – the highest number the AFG Mortgage Index has ever recorded. Broadly speaking, the $500,000–$1.5m market is the strongest bracket and it’s interesting to see investors appearing at the upper end of this bracket instead of the traditional sub-$500,000.

• There is still opportunities for first homebuyers to enter the market, however they should factor in the possibility of further rate rises, even though I think they’re close to their peak. There’s still great buying available but I’d advise FHBs to do more research, be prudent and shop around to get the best package.

• The prestige market remains somewhat untested with most activity under $3m right now. We’ve seen a few outstanding sales above $5m but supply and activity is generally low. Increasing executive bonuses will create more demand and accompanying price growth will follow. I see the next 3–4 months will present some great value opportunities.

• Rents are strong due to low supply and less buying activity among first homebuyers. In all major cities rents are up 30% over the past few years. There is a several-year lag between development approval and availability for sale, so this will keep new supply low and demand high for some time to come.

• Canberra is booming with demand outstripping supply even in the apartment market, where we’ve seen a significant increase in stock. This can sometimes soften prices but not so in Canberra – for the first time in history, apartment sales now outnumber houses and prices are very strong.

*Australia’s largest mortgage aggregator

CEO of McGrath Estate Agents John McGrath takes a look at the property market and makes some predictions as to what is in store

McGrath’s market review

1. Continuing strong price growth in major metro markets

2. Main market strength is inner-city metro locations

3. Many regional areas are yet to fully recover

4. Upgraders dominate but investors in metro markets increased

5. Prestige market above $5m largely untested

Key predictions

http://www.loankit.com.au

24 www.brokernews.com.au

Feature

No

Is the borrower an individual or individuals?

Is the loan for personal, domestic or household purposes?

Is the loan to purchase, renovate or improve land on which a dwelling is or will be affixed?

Is the loan wholly or predominately (>50%) for this purpose?

Is the borrower a strata corporation?

Is the loan to refinance existing credit used to purchase, renovate or improve land on which a dwelling is or will be affixed?

Regulated Unregulated

Unregulated

Yes Yes Yes

Yes Yes

Yes

No No

No No

No

Borrower

.

Purpose

The new National Consumer Credit Protection scheme comes into operation on 1 July this year. Leaving aside the administrative issues such as registration with ASIC, the principal issue at a practical level for

brokers is ‘does the Code apply to this transaction?’While at first the answer to this question may appear

complicated, it can be understood relatively simply by working through the flow chart below.

In considering the application of this flow chart, it is important to focus carefully on who will be the borrower and what is the loan purpose, not what is the security for the loan.

Frequently, where the borrower is a company the lender will require a personal guarantee from the directors or shareholders and the security for the transaction may well be a mortgage over the residence of any one or more of those guarantors.

However, the Code will not apply to the loan because the borrower is a company, and as a result the Code will not apply to the guarantee or the mortgage.

Similarly, if the borrower is an individual who is borrowing funds to invest in a company as working capital or to buy shares, and the borrower provides a

mortgage over his or her residence, in this case the Code will not apply. This is because the loan is not for a regulated loan purpose. The fact that the loan is secured by a mortgage over the borrower’s residence does not change this position.

The previous state-based Uniform Consumer Credit Codes were limited to transactions in which the credit was provided wholly or predominately for personal, domestic or household purposes. This covered the purchase, renovation or improvement of owner-occupied residential property. The new Code expands the range of regulated loan purposes to include the purchase, renovation or improvement of residential property for investment purposes, or the refinancing of such credit. In effect, this means that any loan for the purchase, renovation or improvement of residential property will now be regulated by the Code.

In conclusion, in determining whether or not the Code will apply to a transaction after 1 July 2010, focus on who is in fact the borrower and the real nature of the loan purpose. Also note that the purchase, renovation or improvement of any residential property, whether for personal or domestic purposes or for investment purposes, will be regulated by the Code.

There has been a great deal of confusion about what products are covered by the new legislation. Fortunately, Provident Capital’s in-house legal team has agreed to clear up some of the issues

Does the new National Credit Code apply?

http://www.residex.com.au

Finalists announced in MPA 10.9 September 24, 2010 The Westin Hotel, Sydney

Book your table now www.australianmortgageawards.com.au

Organised byOfficial publicationsOfficial event partner Award sponsors

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Feature

nWhile56%ofGenYrespondentssaytheyplantostaywiththeircurrentemployer,ahuge31%saytheywouldjumpshipformoremoneyelsewhere

nFortheoldergeneration,however,72%plantostaywheretheyareandonly20%wouldmoveformoremoneyelsewhere

Baby BoomersGoing in to bat: Catriona Byrne, director, SageCo

In your opinion, what is the biggest misconception from employers regarding Baby Boomer employees?That they are all the same. There is actually more diversity/disparity amongst the Boomer generation than between generations. This is a generation of 5.3 million people representing 26% of Australia’s population, born over a span of almost 20 years.

Another misconception is that they are more expensive. The other is the assumption that they will ‘just want to retire soon’. Many Baby Boomers are happy to work longer, but not the way they are working now. Flexible options are essential.

What is the first thing Baby Boomer candidates ask you when they are applying for a job?Generally a question about the culture and environment.

What do you think Baby Boomers want most from their employer, and why?To feel valued, respected and have an opportunity to share their knowledge and experience – in a structured, managed way.

What would be your top tip for a young manager charged with managing Baby Boomers?Have authentic conversations! All too often we hear of a retirement notice given when it is too late, exacerbating the risk for the organisation. This is generally because nobody has discussed ‘plans for future work/life/retirement’ with the individual.

What we know, we can manage. Thinking differently about ways of working, finding out how they best contribute their skills and experience, and support them through health and wellbeing initiatives.

Challenge your own assumptions about being ‘old’. Don’t fall victim to age discrimination. If there’s a problem, the cause is rarely ‘age’. Deal with the real cause of an issue, not a stereotype.

What’s the best retention strategy for holding onto mature aged workers?We’re currently running a survey for mature employees through our SageCentre. Preliminary results indicate these three strategies to be favoured:

• Work the same role but on a more flexible basis ie varied work hours/location, increased leave

• Provide support programs to help me make decisions about my future – for example finance/well-being

• Provide an alumni so I can retire but be available for project work/specific requests

Finish this statement: ‘employers ignore Baby Boomers at their peril because...’They may not have done the sums on the number retiring x the replacement cost. This can run into millions of dollars over the next few years.

They represent one-third of the workforce so can’t be overlooked in terms of a focus for recruitment and retention.

They hold the key to company knowledge and core relationships which will melt away.

For further insights into recruiting and retaining Baby Boomers visit www.sageco.com.au

At the risk of stirring the generational debate yet again, AB asks two experts for their views on the workplace for Gen Y and Baby Boomers

Mythbusters: generations at work

In January 2010 there was a momentous announcement: babies born from this year would be branded as Generation Alpha. Following in the progressively older footsteps of Gen Z, Gen Y, Gen X and Baby Boomers, Generation Alphas would begin school earlier and study and work for longer, and have an average of five careers and 20 different employers in

their lifetimes, according to data from McCrindle Research. The rolling of eyes was visible all over Australia. Yes, we are tired of generation

brands and even wearier of the ‘generational war’, particularly in the workforce.While it’s true there are some subtle differences in what each generation wants

from work, in general people are just people – and want to be treated with respect. This is borne out by the insights presented below.

AB asked the same series of questions to one expert representing Gen Y, and one expert representing Baby Boomers.

Source: Randstad’s World of Work report


Gen YGoing in to bat: Jason Murray, co-founder/CEO, and Andy Springer, co-founder/talent director of Rookie Recruits

In your opinion, what is the biggest misconception from employers regarding Gen Y employees?That they are lazy, fickle, and want the CEO’s job four minutes after they walk in the door. The reality is that these attributes can be found in any individual regardless of age/generation.

We find that attitude is a bigger determinant of how someone will perform on the job than their birth year. Specifically, in protest to these three areas listed above, Gen Y are not lazy – well, not any lazier than anyone else who can’t be bothered. The best way to motivate Gen Y (or any member of staff) is to take the time to explain why something is important or why it needs to be completed.

Perhaps ask them how they might go about it (rather than dictate the task /process), if they develop the plan of attack they’re much more likely to take personal ownership.

Regarding fickle, the big thing here is that Gen Y simply will not put up with poor leadership the way Gen X and Baby Boomers do, so if they have a mediocre leader, then they will bail because they know that good leadership is out there and they can find it.

If you have a turnover issue, I strongly suggest you look at the manager/leader before simply blaming it on ‘those Gen Y kids’.

Wanting the CEO’s job after four minutes, Gen Y want to make a difference. If they are becoming bored in their role as it is not challenging for them any more then we tend to think that they want a promotion – not so.

They want to do something that will add value to the team or company. My suggestion here is to look for initiatives/mini projects that they can pick up, in addition their day-to-day role, that will stretch their capabilities.

What is the first thing Gen Y candidates ask you when they are applying for a job?They want to understand more about the role and the organisation as a whole.

It’s not just about getting ‘any old job’; they are much more selective about what they do and for whom, the career path, the team, the culture, the industry etc. Salary is usually the last thing they ask about.

What do you think Gen Y wants most from their employer, and why?Great leadership will meet most needs (of any generation). Key areas of focus should be on recognition

and feedback, opportunities to stretch and grow, transparency and communication.

What would be your top tip for an older manager charged with managing Gen Y?Take some time to get to know them on a personal level. Ask more questions and listen to their ideas. Find projects and initiatives that add value and stretch their capability.

What’s the best retention strategy for holding onto young workers?Great leadership and a willingness to change the way things have always been done.

Finish this statement: ‘Employers ignore Gen Y at their peril because...’Whether you like it or not they are the future leaders of your business, your community and this planet!

For further insights into recruiting and retaining Gen Y visit www.rookierecruits.com

nInthepast12months,65%ofGenYreceivedasalaryincrease.12%areexpectinganincreaseof10%ormoreinthenext12months

n55%ofBabyBoomersreceivedasalaryincreaseinthepastyear,8%expectanincreaseof10%ormore,and62%areexpectingabonusthisyear

nOfthoseplanningtoleavetheircurrentemployment,23%areGenYemployeeswhileonly19%ofBabyBoomersplantomoveorganisations

Greatleadershipwillmeetmostneeds(ofany

generation).Keyareasoffocusshouldbeonrecognitionandfeedback


Feature

What was the last book you read?It.was.Who Wants to be a Billionaire?.by.Paul.Barry..It’s.the.unauthorised.biography.of.James.Packer..It’s.the.sequel.to.The Rise and Rise of Kerry Packer,.also.by.Barry,.and.is.the.story.of.James.Packer’s.battle.to.win.his.father’s.love.and.respect.

If you did not live in Australia, where would you like to live?London.–.I.lived.there.in.the.1990s.and.enjoyed.the.city’s.diverse.culture.

If you could sit down to lunch with anyone you like, who would it be?It.would.have.to.be.Billy.Connolly,.because.of.his.classic.sense.of.humour,.his.interesting.life.and.the.experiences.he’s.willing.to.share.

What do you do to unwind?It’s.mainly.sport:.a.bit.of.cricket.and.I.like.golf..I’m.a.very.bad.golfer,.but.I.love.it..I.don’t.get.to.play.enough!

What’s the most extravagant gift you ever bought yourself?I.bought.myself.a.BMW.M3.about.four.years.ago..I.promised.my.wife.I’d.keep.it.for.five.years,.so.I’m.coming.up.to.the.changeover:.that.was.the.deal,.after.all..I’m.not.sure.what.the.upgrade.is.going.to.be.yet.–.it.depends.on.the.budget.–.but.I’ve.got.a.few.things.in.mind.

What CD is currently playing in your car stereo?It.was.a.birthday.present:.‘The.End’,.by.the.Black.Eyed.Peas..I’m.not.quite.‘into’.all.of.it.yet,.but.it’s.growing.on.me.

If you could give anyone starting out in business one piece of advice, what would it be?Don’t.always.play.it.safe..There.are.often.key.crossroads.in.a.person’s.career.where.you.have.to.make.a.decision.to.either.stick.with.what.you’re.doing.or.make.a.change..I’ve.done.that.at.key.times.in.my.career,.and.it’s.been.difficult.–.but.if.you.take.calculated.risks.they.end.up.being.rewarding.

If I was not working in the mortgage industry, I would like to be…Before.Pepper.I.was.with.Macquarie.Bank….I.don’t.think.I’d.go.back..I.think.maybe.something.a.bit.more.left-field….the.law,.perhaps.a.criminal.lawyer?.That’s.something.that.would.interest.me,.although.I’ll.never.do.it!

Where was the last place you went on holiday?Coolum,.on.the.Sunshine.Coast..That’s.where.we’ll.be.going.next.time,.

too,.as.we’ve.got.a.house.up.there.which.we.bought.about.four.years.ago..That.tends.to.be.the.place.we.gravitate.to,.particularly.for.school.holidays..We’ve.got.the.Sydney.school.holidays.coming.up.in.early.July,.so.we’ll.be.heading.up.there.again..It’s.a.good.place.to.chill.out.

Patrick TuttleCEO, Pepper Home Loans

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Feature Simon Norris

One year onWhat a difference 12 months can make … or maybe not. Australian Broker reflects on the stories that made headlines in the magazine one year ago

Headline: “Voluntary administration: Pisces hoped to ‘fly under radar’ ” (cover page)

What we reported:The decision to place the Pisces Group in voluntary administration and hope that news of this did not leak out nearly resulted in PR disaster for the service provider. “We were hoping the story would fly under the radar,” Pisces Communications business manager Vincent Turner told AB after the ‘crash’ was reported in The Australian. News of the company being placed in the caretakership of insolvency specialist Robert Moodie raised questions about how this affected the e-lodgment services and broker tools used by thousands of brokers. Turner said he was the first to reassure brokers that the decision to place Pisces Group into administration would have no impact on the mortgage services side of the business.

What has happened since? The voluntary administration lasted almost exactly a year, with Pisces Group CEO Jega Rajan telling AB that the company was back in business earlier this month. Rajan remained in his role throughout the restructuring, as did chairman and former Liberal Party leader John Hewson. On its website, Pisces boasts that it is the leading provider of software to the Australian mortgage distribution market, with its platform integrated to every major bank and used by “thousands” of mortgage brokers and mobile lenders across the country.

Issue: Australian Broker issue 6.12

to Chris Dalton, the new CEO of Australian Securitisation Forum, while things are looking more positive for credit markets in general, a lack of liquidity and little interest from international investors will continue to constrain the market for some time.

What has happened since? The securitisation markets are still not back to the levels seen prior to the GFC and many industry players question whether they will ever return to those levels. However, pricing for notes issued has dropped substantially in the past 12 months (from 300+ basis points to around 120 basis points) and second-tier lenders are able to find investors willing to buy their bonds on the open market.AB asked several leading bankers and non-bank lenders what levels would need to be seen to spark a reigniting of the securitisation markets in Australia and the general consensus seems to be that they will need to fall to around 70 basis points above the bank bill swap rate.

With investors finding good value in Australian RMBS issues – which managed to withstand the GFC without a single one defaulting – this time next year we may well be talking about a solid return of securitisation and a flood of new offerings from non-bank lenders.

Headline: “Credit rationing to dampen property recovery” (page 8)

What we reported:With economic conditions as bad as they have been in nearly a hundred years, everyone is eager to know what is in store for property values once trading conditions improve. And with property fundamentals (like falling interest rates and rising rentals) bringing demand forward, it would be difficult to argue against the evidence that values will be on the up in the next 12 months. That is, until you look at the other side of the coin, according to Challenger’s general manager for distribution Steve Weston. Describing it as ‘something that should keep us all awake at night,’ he fingered credit rationing in the residential market as the main factor keeping property values cool. “The main issue is credit rationing in the form of reduced maximum LVRs,” he said, adding that Australia does not seem to be ‘too bad’ when compared to some of the overseas experiences – where maximum LVRs are as low as 60%.

What has happened since? One year on and LVRs that had been forced down are starting to creep back up again. Figures since the start of the year, when the first homeowners grant bonus was withdrawn, show that house price growth has been sluggish at best. Increased LVRs have been partly to blame for that, but so has other tightening measures among lenders, such as an increase in the cost of living allowance. Unfortunately, there are signs it may get worse before it gets better. The latest JPMorgan/Fujitsu mortgage report predicted that lenders would increasingly look to high-value clients to lend them scarce capital, creating a two-tier lending environment. If that happens, it is hard to predict what path house prices will take.

Headline: “Investor confidence holding off RMBS recovery” (page 14)

What we reported:The beginning of June saw the government continue to support smaller lenders and non-banks when it awarded AOFM securitisation mandates to Adelaide’s Australian Central Credit Union and Bundaberg’s Wide Bay Australia Building Society. At the same time, non-bank lender FirstMac announced that through its mandate, it had been able to place its second government-backed RMBS deal priced at $625m, with $126m coming from external investors. However, according

Jega Rajan

Chris Dalton

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Oxford Funding Pty Ltd1800 850 [email protected] page 13

LENDERCitibank Mortgages 1300 651 059 www.mortgagebroker.citibank.com.au page 7

Eurofinance 02 9252 8311 www.eurofinance.com.au page 15

Homeloans Ltd1300 787 866www.homeloans.com.au page 14

Liberty Financial13 11 80www.liberty.com.aupage 3

MKM Capital 1300 762 151 www.mkmcapital.com.au page 8

MORTGAGE MANAGER / NON-BANKMango Media02 9555 7073www.mangomedia.com.aupage 1

Vault Mortgage Corporation1300 798 697www.vaultmortgage.com.aupage 21

www.residex.com.au

The House Price Information People

ToadvertiseinAustralianBroker,CallSimonKerslakeon+61284374786

NON-BANK LENDERMortgage Ezy1800 TOO EZY (866 399) [email protected] page 32

OTHER SERVICESResidex1300 139 775www.residex.com.aupage 24 Trailerhomes0417 392 132page 27

SHORT TERM LENDERCrown & Gleeson1800 735 626www.crownandgleeson.com.aupage 2

Interim Finance02 9971 6650www.interimfinance.com.au page 4

NCF Financial Services Pty Ltd 1300 550 707www.ncf1.com.aupage 10

Rapid Capital 07 5562 2485www.rapidcapital.com.aupage 6

SOFTWARE / ITStargate Group1300 723 [email protected] page 11

AGGREGATOR / WHOLESALE BROKERChoice Aggregation1300 135 389www.choiceaggregationservices.com.aupage 19

LoanKit1800 466 085www.loankit.com.au page 23

Mortgage House133 [email protected] 16 & 17 PLAN Australia1300 78 78 [email protected] page 5

Vow Financial Pty Ltd1300 730 050www.vow.com.au page 18

COMMERCIALBanksia Financial Group1800 333 114www.banksiagroup.com.aupage 9

Think Tank Property Finance1300 781 [email protected] page 31

DEBTOR FINANCECashflow Finance Australia1300 788 945www.cashflowfinance.com.aupage 12

http://www.thinktank.net.au

http://www.mezy.com.au