australian broker magazine issue 7.24

Inside this issueOpinion 20Get back to broking basicsInsight 22How to achieve your profit potentialMarket talk 24WA and ‘Resources Boom Mark II’People 26Building in Bidwell: Q&ACaught on camera: SPECIAL 25 – 29

Westpac and women in broking; Liberty Financial’s road ‘show’; Resimac turns 25; Deposit Power’s go-kart charity meet

Brendan O’Donnell

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D-Day delayedIndustry negotiates for last-minute consumer disclosure reprieve Page 2 >>

Increased market share and lending competition on the way: O’Donnell

Branded brokerages will form the vanguard of new growth in the third party mortgage channel, and could right the almost “oligopoly scenario” of current

major bank dominance.Set to join as managing director

of BEAT Home Loans on 15 December, outgoing Choice Aggregation Services CEO Brendan O’Donnell said the next wave of growth will come from branded brokerage businesses – and he expects BEAT could be central to this renaissance.

“Everyone is talking about the fact that broker market share can grow north of 50 to 60%, and the

reality is that yes it can; I am a big believer in that,” O’Donnell said. “But the only way it can go there is by creating alternatives in the market and more competition, so for me, I really do see BEAT playing a role in growing market share for brokers.”

Exiting one of the industry’s most successful aggregation businesses, O’Donnell said while aggregators have matured and will remain competitive, the ability for branded businesses to compete directly in the consumer space and not be dependent on brokers would ensure their market traction in future.

“It’s really hard to get brokers to diversify into the alternatives outside the four majors, because they have really strong propositions, so by building your own national branded brokerage you can actually achieve a lot more, I think,” he said.

As managing director of BEAT, O’Donnell’s ambitions include growing market share for the brokering channel, and creating a more level playing field with the banks. He said BEAT would target growth through acquisition, as well as recruitment, particularly of new-to-market brokers following the introduction of new NCCP legislation. While arguing this will be a sustainable push – not “growth for growth’s sake” – he claims that in three years, BEAT will be a significant player in the market.

6 cont.>>

Fixed rate appealCredit Ombudsman calls for brokers to inform clients about fixed rates Page 4 >>

‘Super’ model?Supremacy of ‘superbrokers’ questioned amid growth of model Page 8 >>

Branded brokers to take on the banks

ISSUE 7.24

December 2010

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Australian Broker is the most-often read industry publication, according to independent research carried out by the Ehrenberg-Bass Institute for

Marketing Science at the University of South Australia in December 2008.

The research also found that brokers rate Australian Broker as the best for both news content and feature articles, followed by sister publication MPA.

Overall, on all categories, Australian Broker ranks top followed by MPA. The results were based on a sample of 405 respondents who were the

subject of telephone interviews.

Eleventh-hour disclosure reprieve sought

Mortgage industry players are expecting that negotiations with Federal Treasury will result in an extension to the 1 January implementation deadline for NCCP consumer disclosures, which could gift brokers with a last minute reprieve.

Following severe delays in releasing the final form of the disclosures required of lenders and brokers as a result of an extension to the consultation process with industry, key players are arguing there is not enough time before 1 January to implement them.

Speaking with Australian Broker at the end of November, Aussie Home Loans chief executive Stephen Porges said 1 January is going to be “really pushing it, because we still haven’t finalised all the disclosures that are needed”. “Say they [Treasury] lock down all the disclosures within the next week, which is highly unlikely, then everyone is due to have all their documents, have all their brokers trained and have everyone ready for implementation on 1 January. With holidays and that sort of thing, it’s next to impossible.

“We are definitely making progress on the regulation, but the preference is still very much to delay it for about three months,” he added. Jon Denovan of Gadens Lawyers said it is hoped the commencement date will be postponed until 1 April 2011.

At time of going to press, Treasury had made no final decision on an extension period, though Porges said the industry is working “collaboratively” with Treasury for the best outcome.

NCCP disclosure requirements

• Lenders and lessors give credit guides

• Brokers give credit guides, quotes and credit proposal documents

• Lenders and brokers must give a copy of the credit assessment on request

Stephen Porges

Porges revealed progress has been made on the shape of the disclosures, which initially shocked industry players by being reminiscent of the onerous Financial Services Reform (FSR) regime for financial advice, which it was hoped would be avoided.

“I think there has been progress – it is getting to be a much more realistic regime now,” Porges said. “We are pro-regulation, as long as it’s sensible regulation that is better for the consumer, rather than regulation for regulation’s sake.”

Aussie is preparing its franchisees for the incoming regime, despite the lack of clarity. “We’re doing as much training as we can, but you’ve got to train around the different pieces, so it’s very difficult,” he said. The final shape of the disclosures – and a possible extension – will be decided on by mid-December.

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themselves against complaints by making certain a borrower fully understands the break fees they may face when trying to discharge a fixed rate mortgage.

“We saw some terrible things happen about a year-and-a-half ago when everyone on a fixed rate wanted to move to a variable rate,

The Credit Ombudsman is calling on mortgage brokers for help in ensuring borrowers understand the costly break fees which may apply to fixed rate home loans.

In a draft letter obtained exclusively by Australian Broker, Ombudsman Raj Venga warns mortgage brokers to protect

Credit Ombudsman seeks help from brokersand incurred a lot of break costs,” Venga said. “With interest rates rising, there’s a lot of talk about people going on fixed rates. Brokers must advise clients correctly.”

Venga commented that many borrowers do not understand some of the basic terms of fixed rate loans, and misconceptions surrounding break costs can lead to trouble for brokers. “We have a lot of cases where a borrower alleges the mortgage broker did not advise them of the break costs they would incur in refinancing,” Venga said. “I think it is incumbent on the broker to advise of this. A lot of brokers think they didn’t broker the loan to refinance, so it’s not their problem.”

Venga stated that brokers need to clearly explain that fixed rate loans will not move with the official cash rate, that significant break fees could be incurred if the

loan is discharged within the fixed term and that the rate on offer may increase or decrease during the period from the loan application to settlement of the loan. Though these are very basic facts, Venga said many borrowers do not fully understand the nature of their loans.

One common area of dispute is a borrower’s ability to make extra repayments. “Brokers need to explain that extra repayments may not be possible,” he said. “We have borrowers complaining, saying the mortgage broker knew they intended to pay off a lump sum down the track, and didn’t advise them about this.”

Venga pointed out that of the complaints received in the last year-and-a-half, only one case was found where the lender did not appropriately disclose terms to the borrower.

Mortgage insurance a ‘rort’: OrmondRefund Home Loans founder Wayne Ormond has blamed non-transferable mortgage insurance policies for keeping borrowers trapped in their home loans, rather than the supposed unpopular lender exit fees.

“The problem is not the ‘deferred establishment’, or ‘exit’ fees, but the lack of transportability of mortgage insurance, which has not even been mentioned by either side in the argument,” Ormond said. “Any borrower with less than 20% equity in, or deposit on, their

home loan is required by their lender to take out a mortgage insurance policy. Many borrowers do not understand that such policies only insure the lender against default, not the borrower,” he continued. “The mortgage insurance situation is a rort.”

Ormond said though premiums vary, they are often “quite high”, and while other types of policies are refundable, banks “generally will not refund any amount” of an LMI policy to the borrower.

Instead, Ormond said borrowers are being forced to take

out a new policy, costing thousands of dollars. He called for policies to be made transportable. “Borrowers should not be forced to take out a second policy when the original policy lapses because they have switched lenders.”

The Insurance Council of Australia recently responded to criticisms raised by AB readers. “We do not believe LMI is a bar to refinancing,” a Council spokesperson said. “LMI may or may not be required by an incoming lender. If the lender does, then an additional premium

is payable and the LMI provider is required by regulation to set aside new capital for that loan.”

Wayne Ormond

In the last two years, the Credit Ombudsman received:

• 18 complaints about the level of the fixed rate break costs• 5 complaints about the disclosure or calculation of the fixed rate

break cost• 7 complaints about the alleged misrepresentation of the level of the

fixed rate break cost• 3 complaints about the lender’s failure to fix • 3 complaints about the level of the fixed rate• 1 complaint about the failure to ‘unfix’• 10 other complaints about fixed rate loans, where the issue was not

clearly apparent

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Jeff Zulman will step down as CEO of Macquarie-backed aggregator Vow Financial at the end of 2010, with the former head of Macquarie Bank’s third party mortgage distribution operations, Tim Brown, named as his replacement at the helm.

During his short 18-month stint after joining in mid-2009, Zulman assisted in overseeing the merger of The Mortgage Professionals, National Brokers Group and The Brokerage, which resulted in the creation of consolidated entity Vow Financial.

Zulman comes from a background in merger and acquisition consulting, and is expected to step back into consulting. He will be retained on a consultancy basis for Vow. His departure follows that of chief operating officer Steve Lambert, who left two months prior.

Brown will step into the breach early next year after five years as head of retail broker sales with Macquarie Bank. During his time

at Macquarie, he was heavily involved in facilitating the merger that created Vow, bringing the three groups together for negotiations, and eventually merging the businesses. Macquarie Bank holds a 20% stake in Vow.

“I got to know the shareholders really well, I got to know the business really well… and I felt that I could add some value,” Brown said.

Brown said he thought Zulman had done “some excellent work” in consolidating the back offices of the three groups, getting the businesses onto one platform, and helping them understand the strategy of the group in terms of cross-selling and IT.

“What I bring that is different to Jeff is that sales and marketing focus in building distribution,” Brown said. He previously owned his own business, where he assisted in setting up the financial services arms of LJ Hooker, Elders and Century 21. He has

AFG launches new funding line

Brown takes charge as Zulman breaks with Vow

IN: Industry stalwart Tim Brown to take the helm at Vow

OUT: Vow CEO Jeff Zulman will step back into consulting

also held sales roles at Suncorp and Aussie Home Loans.

Brown said the overall philosophy of Vow under his leadership will be about building brokers’ businesses. “I am a great believer that if their business is successful, then our business is successful, so all my time and effort will be in trying to develop their businesses and make them more profitable, and that will make Vow more successful.”

Brown indicated the group will focus on diversifying income streams through cross-selling.

Vow chairman Peter Neustadt thanked Zulman for his work. “The directors of Vow are very grateful for Jeff’s contribution in assisting to realise the concept of a merged group of mortgage aggregators,” he said.

“A significant amount of work has been done since the merger took place, addressing all aspects of our business – changing the organisation of the three companies, introducing new branding, marketing concepts and new initiatives to benefit our brokers.”

AFG has relaunched its own securitisation business which it says will drive competition in the lending market.

The new business – AFG Securities – comes as a result of AFG securing a warehouse facility with NAB, enabling AFG to fund its wholesale mortgage business and distribute home loan products. AFG managing director Brett McKeon said the only way to drive competition is to ensure

consumers have multiple home loan options from a diverse range of mortgage funders.

“While market conditions are still tight, we believe the time is right for AFG to open up a new line of funding for our members,” McKeon said.

He revealed AFG had been “collecting cash for the last 12 months, on the basis that we want to take advantage of the situation we are all in at the moment”.

With the banking crisis in the early 1990s resulting in the emergence of major competitor Aussie, McKeon has said AFG Home Loans could be next.

Commenting on the AFG Securities relaunch, McKeon said it “requires real skin in the game”, and shows the independent aggregator’s commitment.

AFG Securities products will be added to AFG’s panel of lenders, which McKeon said “will support our brokers to deliver the right product from the right lender to suit every one of their customers.”Brett McKeon

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‘Superbrokers’ not assured of supremacywith professional behaviour and proper customer disclosure. Those who hold both licences and perform on both sides of the balance sheet will come into conflict more often.”

However, FBAA president Peter White believes the superbroker model can work. “I don’t think it’s a bad thing,” White said. “It’s all about diversification of revenue and income streams. I’ve seen people do it, and they’ve done it very well. I have no doubt that people have tried to do it and done a bad job of it, but I haven’t experienced that.”

Russell has warned, though, that brokers attempting to work on both sides of the balance sheet can find themselves in difficult legal situations. “At the moment a lot of mortgage brokers are referring clients to property investment specialists,” he remarked. “These specialists then go about sourcing property for the client directly from the developer, and often rebate quite a sizable commission to the broker. What a lot of brokers don’t realise is that almost all professional indemnity insurers will not insure

Mortgage Choice CEO Michael Russell has spoken out against the so-called ‘superbroker’ model in which mortgage brokers hold both an ACL and an Australian Financial Services Licence.

Speaking with Australian Broker, Russell said the traditional broker model is becoming a “range of hybrid transformations”.

However, Russell expressed doubt the hybrid model can be done well. “I cannot see a professional mortgage broker working under NCCP having the capacity to be as compliant and competent also under

AFSL, and advising on both sides of the borrower’s balance sheet.”

Russell added that while he has yet to see an individual operating under both licences do so in a way that gave equal attention to both roles, he has seen businesses employ both mortgage brokers and financial planners successfully.

Separating the role of mortgage broker and financial planner is a matter of reducing potential conflicts of interest, Russell said. “That degree of separation protects both parties should the investment go sour. Conflict can be overcome

mortgage brokers for that sort of business activity.”

According to Russell, this can put mortgage brokers at a considerable risk, as litigious clients who have bad property experiences could attach them as respondents in courts. Russell said even those found not to have acted unethically can be liable for hundreds of thousands of dollars in legal costs, which they cannot recoup.

“We are operating in an environment where they aren’t aware of the risk,” he said.

Instead, Russell has suggested that brokers look to health insurance, life insurance, general insurance and clients’ other borrowing needs as potential revenue streams. “Mortgage Choice is heading this way,” he said.

While White believes the superbroker model can yield success, he agrees that insurance can be another viable revenue stream.“It all interrelates,” he said. “If people have the skills and legal right to give that advice, I don’t see why they shouldn’t.”

Firstfolio hooks mortgage to cash rateFirstfolio has launched Australia’s first variable rate home loan tracking the RBA cash rate for a minimum of three years, though the loan will not be distributed through brokers. In contrast to recent major bank

moves, the home loan – with no entry or exit fees other than standard external valuation and legal fees – will be linked to the RBA rate for three years from settlement, and comes in response to consumer demand for rate protection.

Termed the ‘Cash-Rate Linked Loan’, it will be launched under Firstfolio’s New-Loan brand, and will have a starting rate of 7.25%. It will only be available online.

Firstfolio executive director Mark Flack said: “With further potential rate rises in the next 12 months there is a growing amount of customer uncertainty around the movement of home

loan rates and their relationship to the RBA cash rate. We decided it was possible to offer a transparent home loan product that was linked to the RBA rate.”

Speaking with AB, Flack added that the group had managed to deliver the commitment to track the RBA rate by assuming the risk of any movement in its wholesale funding costs, and that three years was considered an acceptable risk.

Flack called the new offering a “great product”, and said the group is “actively exploring” the idea of bringing to market a product linked to the RBA rate for the life of the loan.

However, Flack said the group was unable to deliver the product through mortgage brokers, as current funding arrangements did not deliver margins big enough to negate the risk.

Ultimately, he said Firstfolio wished to offer the same products online as through the third party mortgage broking channel at appropriate terms to reward these introducers, but it would be more likely if the group was able to secure alternative funding sources.

Flack said brokers would have to wait and see. “We’re really testing the market here, and seeing what the appetite is.”

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Franchise marketing firm 10 Thousand Feet has identified mortgage broking as one of the strongest franchise sectors in its 2010 Franchisor Sentiment Survey.

Ian Krawitz, head of intelligence at 10 Thousand Feet, said franchisor optimism in mortgage broking has grown at a steady pace despite the downturn in the housing sector.

Krawitz stated that mortgage broking franchisors still believe the market will perform strongly, because mortgage broking as a whole has a good business model. He commented that, despite fluctuations in the housing market, franchisors still see long-term demand. “Every Australian wants to own their own home. It’s not a market that’s going to go away or go anywhere.”

The strength of mortgage broking in comparison to other

Unilateral rate rises from lenders are not on shaky legal ground according to Gadens Lawyers, despite consumer protection laws prohibiting “unfair” contract terms.

Recent reports have claimed that, following the government’s use of consumer protection laws to crack down on mortgage exit fees, the same approach could be applied to stop unilateral rate rises by mortgage lenders.

However, Gadens senior banking and finance partner Jon Denovan told Australian Broker that lenders have a “unilateral right to vary interest rates” under existing law, and that reports to the contrary are “proceeding on completely wrong assumptions”.

“The courts have considered these [contract] clauses many times, and it is clear that a clause in a loan contract which provides that a lender may vary interest rates will be subject to an implied duty to act reasonably,” he explained. “There’s no need for an express clause in a loan contract to say that the bank will act reasonably, although many banks

The MFAA’s CEO Phil Naylor attended a Canadian mortgage meet in late November to detail the current global predicament faced by the mortgage industry following the GFC.

At the annual conference of the Canadian Association of Accredited Mortgage Professionals (CAAMP) in Montreal, Quebec, 1,500 delegates heard from the CEOs of the leading mortgage industry associations in Australia, Canada and the US.

In a panel session titled ‘The State of the Mortgage Industry – A Global Perspective’, Naylor spoke on Australia’s current conditions, and said the financial crisis had all but wiped out non-bank lenders, and without some source of capital, the sector will surely die.

He said the MFAA has been studying Canada’s market and believes, “our market needs funding similar to that provided by your Canada Mortgage and Housing Corporation (CMHC) to revive non-bank lending.”

Addressing compensation, Naylor spoke of how Australia’s Big Four

are inserting such a statement as they re-write their contracts.”

Following a Reserve Bank cash rate rise of 0.25% in early November, all major banks increased their standard variable mortgages by between 0.35% and 0.45%, leading to suggestions such rate rises could contravene the unfair contract provisions.

However, Denovan said while there are many cases that show that lenders cannot act unreasonably, there is certainly no sign that any mainstream lender in Australia has acted unfairly in relation to interest rates. “It’s a shame that the Liberals and Greens are trying to score political mileage by making ill-informed claims,” he added.

Claims have been made that lenders in Australia may soon have to stipulate under what circumstances they will be able to raise interest rates unilaterally in their loan contracts, following a similar trend in the UK market designed to keep lenders honest.

ASIC was unable to provide a formal position on this topic when contacted by Australian Broker.

banks recently slashed fees for brokers and how the response of some brokers was to begin charging consumers for their services. He said those brokers have been successful at convincing clients they offer more than just transactions and that the added value of advice is worth the cost.

At a time when Canadian mortgage professionals are grappling with overlapping provincial regulations and licensing, Naylor spoke of Australia’s recently introduced National Consumer Credit Protection Act and how the MFAA was able to ensure established standards for members were included in the final draft of the newly minted Act.

Not all upbeat, the mortgage meet was also told that the worst is not over for the US economy, with CIBC economist Benjamin Tal telling delegates the US housing collapse is unlikely to rebound soon, and it will take until 2017 for house prices to rise to the point where the average person in the US is able to claw out of negative equity.

franchise sectors, Krawitz indicated, can be seen in the newest rankings by Topfranchise.com.au, which saw Smartline rank as the top franchise in Australia and Mortgage Choice rank at number four, down from number two last year. In a survey of franchisees, Smartline ranked number one in six out of eight categories: lifestyle, passion, the levels of support franchisees feel from the franchisor, the intention to renew franchise agreements, and the financial benefits franchisees feel they receive.

Commenting on the results, Krawitz said: “It’s no surprise to see a mortgage broker take out the number one position for passion, as the mortgage broking industry as a whole tends to have business owners who are more passionate than other sectors of franchising.”

The sector has a great deal to offer franchisees when compared

one of those franchises that pays good dividends as you get into it,” he said.

“With other franchises, there’s less certainty from a lifestyle perspective. If you open a retail franchise, every day when you open up that store front, you’re thinking, ‘Where’s the money coming from to pay my employees and keep the doors open?’ With mortgage broking, at least you know you have that trail income.”

to other franchise opportunities, according to Krawitz. As banks change their commission structure, mortgage broking franchisors have added new products such as health and life insurance to help them with trail income.

Krawitz commented that even in the midst of uncertainty in the housing market, there is much to recommend mortgage broking in comparison to other franchise endeavours. “Mortgage broking is

Mortgage broking tipped as top franchise sector

Source: Topfranchise.com.au; results released 29 November

Ranking Rating Franchise system Unit/locations Participation

1 81 Smartline 200+ 65%

2 79 Signwave 20 61%

3 75 Mrs Fields 27 48%

4 75 Mortgage Choice 300+ 45%

5 73 Mister Mint 95 81%

Mortgage broking tipped as top franchise sector

Banks in the clear for unilateral rate rises

Naylor briefs CAAMP amid subdued outlook

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Non-banks see fixed rate potential

Borrowers absorb rate pressureThe third quarter residential mortgage reports from ratings houses Fitch and Moody’s have shown a stabilisation in delinquencies despite the rate hike pressure of earlier in the year.

While both ratings agencies reported a spike in delinquencies on low-doc loans, Fitch said mortgage performance “has on the whole been stable”.

During the September quarter, delinquencies were recorded by Fitch in 3.97% of the low-doc market. However, prime RMBS delinquencies fell from 1.32% in the previous quarter to 1.3%.

The Fitch report also expressed confidence in a bounce-back on the low-doc market, saying that while rate rises were responsible for the jump in delinquencies, it expected borrowers to readjust their funding to remedy any missed payments in the medium term. However, the credit rating agency said any “strong adjustment in performance over the next few quarters is … unlikely”.

Fitch senior director Natasha Vojvodic believes the data shows borrowers are adjusting to rate rises. “Full-doc borrowers definitely seem to have [absorbed the delinquencies],” she said. Vojvodic points out that the data does not take into account the

Melbourne Cup Day rate rise, but said Fitch believed borrowers will cope with this rise as well. “We’re expecting borrowers to absorb that, but it really depends on how much rates rise in the next year,” she said. “Borrowers are still paying lower rates than they were before the rates started to fall.”

However, Moody’s analyst Irene Kleyman warned that borrowers’ ability to adjust to the rate rises may change, and that the data may not reflect the hardship some homeowners are experiencing. “The transactions we’re looking at are quite seasoned,” Kleyman said. “It’s a relatively obvious expectation that delinquencies will go up should the interest rates continue to rise.”

FBAA president Peter White agreed with Kleyman, saying borrowers are feeling the stress of the rises in spite of absorbing them. “I think people are adjusting, but I would daresay if you spoke to the industry ombudsman, their level of disputes is rising,” White said. “A lot of it is a hardship issue. In general, I still think there’s a fair bit of pain out there.”

White believes the interest rate rises will still prompt many borrowers to seek out better deals. “It is a refinance market out there,” he said.

Non-bank lenders have come out in support of the idea of a mortgage redesign that would see a style of fixed rate product offered to borrowers for the life of a loan, and more risk shouldered by lenders.

Federal Greens MP Adam Bandt recently introduced a bill that, if passed, would require banks to offer mortgage rates at a fixed rate above funding costs, among other fee and rate reforms.

The move followed similar calls by Australian Centre for Financial Studies research director Kevin Davis to overhaul Australia’s “anomalous mortgage design”, where the vast majority of borrowers are at the mercy of banks raising their variable rates.

Provident Capital’s head of lending distribution Steve Sampson and Australian First Mortgage director Iain Forbes indicated such products could add value to the lending market.

Davis said in a recent paper that Australian housing mortgage contracts have a unique characteristic where homebuyers sign a contract which gives banks the right to “change the loan interest rate whenever and to whatever they want”.

“This flexibility given to banks is of considerable value to them, but exposes borrowers to risks to which they arguably should not be exposed,” Davis wrote.

“If a bank faces an increase in its funding costs, this can be passed on to existing borrowers. That applies regardless of whether the increase in funding

costs is something affecting all banks or only an individual bank – although competition may impose some constraints in that latter case.”

Davis proposed – as have the Greens – that new loans should be offered where the interest rate is tied at some fixed margin (set at the outset) over a relevant indicator lending rate.

Sampson claims that innovation is always a good thing. “I have always been at a bit of a loss to understand how investment products have levels of ‘caps and cuffs’ and use derivatives which reduces investment risk, but these tools have not been utilised in the borrowing market to reduce borrowers’ risk,” Sampson said. “The proposed type of lending might force the banks to derive more profit from fee income, so if a fixed margin was introduced it would be prudent to look at the level of fees earned on the loans at the same time,” he explained. “It would create close competition on price, but features are also a very important part of loan selection.”

Meanwhile, AFM’s Iain Forbes claims to be a “believer in fixed rates”. “Most of my mortgages on my investment properties are on fixed rates, which does not concern me when rates are increased,” he said. “The only issue is when the mortgage comes out of a fixed rate and needs to be re-negotiated, which raises the question: do I keep the property, or sell it?”

A six-step reform plan to improve risk sharing and competition

1. APRA should make public data on mortgage characteristics and terms

2. Prohibit loan contracts giving lenders discretion to change rates on existing loans

3. Loan contracts should allow variations in rates charged if conditions are well defined at the outset and are verifiable by reference to objective information

4. Lenders should not charge exit fees if the loan is over three years old and the customer wishes to exit when it is time for a reset (renegotiation) of terms

5. At a loan reset date, borrowers should be able to transfer to another lender upon payment of outstanding principal, without the mortgage having to be discharged. If the loan is in good standing a new valuation should not be required

6. Deferral of establishment fees should only be achieved by explicit addition of the amount which would otherwise have been charged into the initial loan principal

Source: Australian Centre for Financial Studies research director Kevin Davis

Westpac rubbishes Moody’s data

Westpac has questioned the accuracy of Moody’s data which showed them as the only bank among the majors to record an increase in both 30+ and 60+ delinquencies. A spokesperson for the bank said “the data produced by Moody’s does not reflect the latest data we have”. Westpac said the Moody’s data was not a fair representation of its mortgage portfolio, as it represents only around 10% of the bank’s Australian mortgages, and that the mortgages the report refers to represent a much greater dollar value than the samples of the other major banks. Westpac was quick to quell any negative conclusions that may be drawn about its arrears performance. “Westpac’s arrears performance is materially below CBA and NAB’s, and this is a point not mentioned in the report,” the Westpac spokesperson told Australian Broker.



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Funding a major hurdle for ‘Fifth Pillar’

SEQUAL warns regulators away from products

ING Direct executive director of mortgages, Lisa Claes, agrees, saying non-bank institutions will not be on equal footing with the Big Four, and will have a difficult time securing funding. “It’s not an equal race in terms of access and cost of credit. If you have a higher credit rating, which the majors do, it will be cheaper for you to borrow funds to on-lend to your customers.”

Swan’s proposal arises from consumer demand for more choice and competition, and political pressure to do something about it. However, Steven Ramage, Citibank’s director of mortgages, has questioned the fundamental assumption that further competition will benefit Australian consumers. “I don’t think there’s necessarily a need for more competition,” Ramage commented. “We have four major banks. Banks

Recent consumer outrage over the major banks’ interest rate rises above the official cash rate has prompted a flurry of political activity. As both sides of politics try to address public dissatisfaction with a lack of competition, Treasurer Wayne Swan has proposed the creation of a so- called ‘Fifth Pillar’ of banking, made up of credit unions and building societies.

FBAA president Peter White has expressed doubt that non-bank lenders like credit unions and building societies can live up to Swan’s vision as a new pillar in the banking sector.

“I think it’s a big call to term it a fifth pillar,” White said. “I can’t see credit unions and building societies really trying to compete against the banks. They do, but it’s a whole different structure.”

SEQUAL CEO Kevin Conlon has reiterated that the federal government regulations of the reverse mortgage market are nothing more than a health check of the industry.

“Some months ago, I predicted that the regulatory review being conducted by Treasury was a health check of the industry,” Conlon said. “I’m confident this is the case.

“Reverse mortgages are not offered in Australia without a no negative equity guarantee,” Conlon added. “All SEQUAL members are obliged to provide a no negative equity guarantee, and we welcome the decision to reinforce this fundamental consumer protection through a statutory obligation.”

Conlon has gone on to defend the industry against its critics, citing its historical standards of practice. Reverse mortgage and equity release loans are generally

need to be large in order to work on the world stage.”

In an exclusive interview with BrokerNews TV, Ramage said he believes the size of the Australian marketplace limits the number of players that can realistically participate. “We are a small market. Four major banks suit us,” he said. “There is still a gap of somewhere between 10% and 20% where other players fit in the banking market, and mortgages perhaps. There are enough players in there to fill that.”

What is needed, Ramage believes, is the guarantee of securitised markets. “With the GFC, a lot of the securitised markets dried up. We need that market to return. That was the original creator in the late 1990s of competition in the market that brought mortgage rates down.”

Ramage said the government can take steps to ensure the stability of this market and see a natural return of competition to the sector. “Some of the options being looked at include the government guaranteeing those facilities, and that kind of thing will help stabilise the market, bring investors back and make that a reliable funding option,” he said.

Cathy Dimarchos, general manager of commercial wholesale funder Sintex Consolidated, sees the increase of competition, whatever form it takes, as an opportunity for mortgage brokers. Dimarchos said the growth of building societies and credit unions will provide brokers with new alternatives to offer clients, though gaining access to these institutions may prove to be a challenge.

“Whether they can get direct access to the specific institutions is another thing, but it is another avenue,” Dimarchos said. “It might mean they have to adapt to gain access, but it will certainly give another avenue to refer business and to provide clients with alternative options, especially now as banks are not particularly focused on providing that service and rapport with brokers.”

Steven Ramage Lisa Claes Cathy Dimarchos

Kevin Conlon

To see BrokerNews TV’s coverage on Treasurer Wayne Swan’s ‘Fifth Pillar’, visit www.brokernews.com.au/TV/ and watch The Big Story: Are four pillars enough?

only available to people over the age of 60, and some have the highest interest rates and often carry additional fees. However, according to Conlon, of the 42,000 reverse mortgages currently on issue, the Financial Ombudsman has only dealt with four complaints. “Name another industry that has a track record like that. Four out of 42,000. And three were found in favour of the lenders,” he said.

Though Conlon does not believe the federal government regulations set to come into effect in the new year will contain any surprises for the industry, he has offered an admonition to those considering the regulatory action.

“The regulatory review has been viewing three broad areas: disclosure, financial literacy and product design,” he said. “I think it is entirely the business of regulators to look at the first two. Beyond the statutory protection

that is being considered for no negative equity guarantees, I do not believe regulators have a role to play in product design.”

Seniors First managing director Darren Moffatt agrees that the regulations seem to echo industry practices, but adds that any outcomes affecting funding could decrease competition in the marketplace.

“What could be an issue is if there is a requirement for more capital,” Moffatt said. “It could be an inhibitor for competition and new entrants. I think the government has the broad strategy right in terms of protecting consumers, but if an unexpected outcome is a further cut in supply it would hurt the market.”

Moffatt echoes Conlon’s sentiments about the need for increased financial literacy for seniors, but adds that Seniors First has been proactive in taking

on this task. “We have done a lot of work on consumer education,” he said. “There is a huge opportunity and demand. Financial literacy is the role of industry, and industry can play that role most effectively. If the government plays a role in this – as long as it doesn’t exclude industry – that’s great.”


Bluestone set to return to mortgagesBluestone Group has indicated it will soon return to mortgage lending in the non-conforming area. Having withdrawn from lending during the credit crisis, Bluestone CEO Peter McGuinness has announced the group would look to revive its mortgage business. Speaking with the Australian Financial Review, McGuinness said: “We’re looking very seriously at re-entering the market over the next six to 12 months and would stick to the specialist lending area.” His comments followed an announcement that Macquarie Bank had taken a 17.5% stake in the Bluestone Group. The capital raising is expected to help with the group’s expansion plans.

Symond rejects ‘PostBank’ suggestionsAussie Home Loans executive chairman John Symond has told a Senate banking inquiry he is firmly against the creation of a government-backed lender. In his submission, Symond wrote: “There is no rational reason for governments to run a banking business and the risk of banking failure places a potential charge on taxpayers.” Federal Treasurer Wayne Swan has previously suggested that setting up Australia Post as a lender could increase competition in the sector. Symond rubbished the suggestion, telling Australian Broker that “there’s no way I can see the government setting themselves up back in banking. They sold Commonwealth Bank, and for them to go down the line to set up Australia Post as a bank would be totally impractical. The last thing the government should do is to get involved in banking again”.

Home values face headwinds: RP DataHome values rose by only 0.3% during October according to RP Data, and tougher times may be ahead. The property research house’s latest Hedonic Value Index results meant that Australian capital city dwelling values rose 4.3% in the first 10 months of the year. When taken over a 12-month period, property investors will have seen a more robust 6.5% capital gain, due to the double-digit annualised growth prices recorded in late 2009 and early 2010. RP Data said the market peaked in May 2010, with home values tapering off since that time. Research director Tim Lawless said the market was slowing at a controlled pace, though the results would cool further as a result of November’s interest rate rise.

INDUSTRY NEWS IN BRIEF

I-Financial to beat licence crunchI-Financial Group has guaranteed brokers a five-day turnaround on their credit representative applications should they opt to use the group’s ACL. Announced as brokers struggle to fulfil licensing requirements by 31 December due to an expected ASIC bottleneck, the group said it would process applications within five days, and will offer free PI insurance to any broker who it fails to process providing they have supplied full documentation. I-Financial’s managing director Craig Morgan raised doubts on whether aggregators will have enough time to process brokers as credit representatives, and said this may be due to uncertainty from both brokers and aggregators. “There’s been quite a bit of hesitation among brokers as to which direction they want to go.

Warnings on SMSF borrowingThe Self-Managed Super Funds Professionals’ Association of Australia (SPAA) has issued a warning to brokers over tough new measures involved in SMSF lending, particularly in regard to limited recourse borrowing arrangements. SPAA national technical director Peter Burgess said the most significant and controversial changes to the rules, which came into force on 7 July this year, include the requirement for borrowed funds to be used to obtain a ‘single acquirable asset’, as well as the restrictions imposed on replacing or improving the asset once it has been acquired. “We believe the definition of a single acquirable asset may catch out SMSF members who are not aware of the legislative changes,” Burgess said.

Melbourne dubbed least affordableMelbourne has become the least affordable capital city in Australia, topping Sydney in third quarter data released by the HIA Victoria. Though previous indications were that Melbourne had sunk below Sydney in affordability only recently, HIA Victoria executive director Gil King said the trend had been building for some time. “The reality is we’ve been tracking as least affordable for three quarters in a row,” King said. “It’s hard to believe that Victoria, where the most activity is occurring, is also the least affordable.” While Melbourne’s affordability improved slightly in the September quarter, King said this came in the midst of a downward trend that has seen affordability plunge far lower than last year.

http://www.choiceaggregationservices.com.au

http://www.mortgagehouse.com.au


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Mortgage Choice launches Bluegum

Lift covered bond ban, say analystsAnalysts believe interest rates may continue to rise unless the ban on covered bonds is lifted.

In place since the Banking Act of 1959, the ban was enacted due to the way the bonds subordinate depositors to a bank’s creditors. The bonds are similar to RMBS, but are backed by mortgages or public sector loans, and in the event of a bank’s inability to meet its obligations to covered bond holders, mortgages would be sold and creditors would be paid before depositors.

Analysts have warned that unless the prohibition on the bonds is lifted, Australian banks could face even higher funding costs, and as a result consumers could face further interest rate rises.

Fat Prophets analyst Colin Whitehead told Australian Broker that allowing covered bonds would boost the international competitiveness of Australian banks. “It opens an additional source of funding for banks,” he said. However, Whitehead warned that checks would have to be put in place to ensure that the move would not hurt smaller banks and non-bank lenders. “Whether it’s positive for smaller banks and non-bank lenders depends on the

mechanisms in place,” he said. “There needs to be mechanisms to remove the credit rating disadvantage that non-banks and smaller banks suffer.”

Covered bonds can be a controversial issue as they are secured by mortgages, and favour the bank’s creditors over depositors. “It’s a difficult one because they don’t want to go too far in terms of ways that involve placing non-depositors or other creditors ahead of depositors,” Whitehead said. “That’s not good for consumer confidence.” He believes capping the amount of funding institutions can seek through covered bonds could alleviate this problem.

Whitehead also answered criticism that covered bonds would make the Australian economy over-reliant on housing. “It wouldn’t be that the economy would have an over-reliance on housing. It would just be that the risk associated with that would increase,” he commented.

This risk is what has made many economists and industry experts nervous about allowing covered bonds, as a downturn in the property market could see banks unable to meet their obligations to the bond holders.

Mortgage Choice has unveiled further details of its first white label product suite. Bluegum Home Loans, funded by Advantedge, will offer basic variable, line of credit and fixed rate products, both full-doc and low-doc, at variable rates from 6.88% and fixed rates at 6.84%.

“We looked at features our customers were requesting then worked closely with the funder, Advantedge, to tailor the specifications and pricing,” CEO Michael Russell said.

From its initial launch, Russell said Bluegum will grow to include other products. “We’ve had a number of discussions with Advantedge, and they are looking at introducing a 95% plus LMI loan prior to Christmas. Presently, the maximum LVR is 90% plus LMI. They’re also giving some thought to introducing an offset account.”

Russell added that the decision to seek funding through Advantedge has been well received among its franchisees, and has answered those who may be critical of a product funded by a NAB-owned aggregator. “NAB, in acquiring Advantedge, signalled that they have a vested interest in the continued

prosperity of the mortgage broking industry,” Russell said. “Advantedge are remunerating broker groups at a rate of commission higher than that of their competitors. It sends the right message to the other lenders that there’s enormous value in dealing with mortgage brokers.”

Mortgage Choice chose to market Bluegum as a standalone brand so as not to confuse Mortgage Choice’s branding strategy, Russell said. “In terms of the branding decision, after speaking with franchisees over a long period of time and conducting extensive market research, we arrived at the decision to brand our own home loan products independently of Mortgage Choice,” he commented. “Mortgage Choice has stood as an iconic Aussie brand for many years, but it is a mortgage broker, not a lender. We didn’t want to do anything to tarnish that iconic status. Hence we’ve gone down the path of a third party brand.”

Moreover, Russell stated that the launch of Bluegum Home Loans will not affect the company’s commission structure. “Bluegum won’t be an advantage product for the lender at all,” Russell says.

cont. from cover >>The decision to join BEAT, of

which non-bank lender Liberty Financial is a major shareholder, came as a result of a personal desire for a “new challenge”, O’Donnell said, along with a continued passion for the broking market and competition. “I’ve been with Choice for almost five years, and it’s been a very good innings and a good time, and I’ve obviously been very fortunate to enjoy some really good growth, and we’ve built a very fine business with the Choice members.”

However, he said the time is right to seek a “bigger challenge”, now that the market is at what he calls an “inflection point”. “I have a big belief in the broker market, and I’ve been quite vocal over the years about competition and the non-banks,” he said.

“I certainly think as we go into next year, with the new legislation taking full effect, and beyond that once the market stabilises there is going to be a resurgence of competition and I want to be part

of that.” O’Donnell said the dominance of the four major banks was systematic of this inflection point. “There is just less choice for customers at the moment,” he explained.

“When you end up creating an almost oligopoly scenario, you do tend to do what you want to do. And it’s just not healthy to have that scenario in the Australian market.”

O’Donnell said while BEAT is not a big business, it was a “very attractive business – and therein lies the magic”. With 30 shopfronts, he said its structure as an association rather than a franchise made it attractive, as brokers have a financial stake in its success. He said Liberty was keen to invest in its growth over the next few years.

Reflecting on his time at Choice, O’Donnell denied NAB’s decision to acquire Challenger Mortgage Management (now Advantedge) had anything to do with his departure after five years. “The NAB acquisition was good for the industry – there is no doubt about

it,” O’Donnell said. “It was an excellent move for the industry, because it almost secured brokers at a time when there was a lot of uncertainty; people tend to forget that already.”

Looking forward, O’Donnell said he expected a challenge.

“The market out there is very

competitive. And in terms of global concerns and locally with cost of funding issues and legislation coming in and so on, the market is not what it used to be.

“So you have to be smart about how you go about things – I’m under no illusions there,” he said.

Moore makes CEO choice

Advantedge Financial Solutions general manager Stephen Moore has been named Choice Aggregation Services’ new CEO, following Brendan O’Donnell’s departure to BEAT.

Moore has been responsible for developing a number of new initiatives at Advantedge, including a market-leading buy/sell facility for broker trail books, and the creation of a new risk product currently being rolled out through PLAN, Choice and FAST brokers.

Advantedge general manager of distribution Steve Weston said Moore’s background in distribution in financial planning would ensure his smooth transition over to Choice. O’Donnell vouched for Moore, saying that although he is still building experience in the broker market, he couldn’t have hoped for a better replacement.

Weston said Advantedge would look to recruit a replacement for Moore, though he emphasised the appointment will not be rushed, as the role was “just so critical” for the continued development of the Advantedge business.


http://www.leads.financialservicesonline.com.au

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Comment

OPINION

It is critical

that a mortgage broker has a clear business plan in place

Getting back to basics... a concept that may sound foreign to mortgage brokers at present. Why? Well, with all the noise in the market around interest rates, exit fees, changes in commission, NCCP legislation and licensing, your average mortgage broker may be feeling like they don’t know where to turn – there’s a new demand placed on them and their businesses around every corner.

A number of brokers are resisting change. The industry we are operating in is rapidly changing, which is exerting new pressures on brokers – and almost dictating the level of engagement they have with their now more-cautious and educated clients.

In an environment such as this, it’s the brokers who are clear about the value they deliver to their clients, who become the most relevant and obvious choice for consumers. Brokers need to focus themselves on distilling this value proposition and articulating this to their business client base.

In many respects, the backbone of a mortgage broker’s value proposition is an inherent distrust of the major banks. The revered catch-cry of “we’ll save you” is timeless, particularly in recent months. I like to draw reference to the typical ‘Aussie BBQ’ example.

If five brokers were asked the following questions:• What is it that you do?• Why should I use you rather than a bank?• What is the difference between an average broker and a

great one?

…it would come as no surprise to hear a vast mix of responses. If brokers are to ride the current wave of disruption, the enormous value they provide must be central to everything they do – and they must market themselves.

The recent interest rate rises have understandably shifted the borrower’s attention to the price of their mortgage. Brokers who focus solely on transactional relationships are more and more likely to become commoditised, and could fast render themselves irrelevant.

I am not putting forward the idea of getting back to basics as a suggestion that brokers just offer their clients a mortgage. The ‘basics’ I refer to is the belief that clients are

GET BACK TO BASICS AND REVEAL YOUR TRUE VALUEBrokers who are clear on the value they provide to their clients will thrive in the current environment, argues Darren Smith, but those who aren’t may be left behind

pivotal to the success of a business. Understanding your client’s needs and then delivering on these needs sounds simple enough, but the mark is often missed.

Mortgage brokers are uniquely positioned to offer a broad range of products and services; they just need to be selective about getting the mix and the balance correct.

I urge brokers to drive greater efficiencies within their businesses. Making a solid commitment to the specialist nature of the service they provide helps brokers position themselves as a more desirable option for clients who are being targeted, if not bombarded, by the larger institutions.

Brokers often talk about their efforts to develop trust with their clients, so it only stands to reason that their clients have an expectation a broker will do the right thing by them. It’s certainly not possible for a broker to achieve this by hoping that a lender will arrange the insurance on a loan provided – nor does it make sense to the broker’s bottom line or client retention strategy.

Let’s not forget, many brokers have built a business on word-of-mouth referrals and picking up opportunities where others simply could not service their client’s needs. The deeper the penetration the more likely a client is to remain loyal, keeping their experience front of mind with a heightened propensity to refer friends and family on.

Clients are looking for brokers to help them navigate the noise and uncertainty that surrounds buying a home. The perplexed borrower can liken a good mortgage broker to a professional tour guide – they trust that you know the backstreets, speak the local language and will keep them out of harm’s way.

I find it ironic when a broker stumbles over recognising the value of cross-sell. Given the origins of the industry, it surprises me when some brokers are happy to hand their client base over to the banks when it comes to services like providing life insurance.

Insurance or mortgage protection is a ‘basic’, not a nice-to-have. Clients who take the initiative of consulting a mortgage broker are aware of the magnitude of the debt they are considering. Making them aware of the risk linked to this debt simply fulfils a broker’s duty to their client.

Of all the models available, a simplified and direct approach has considerable advantages. There’s no hard-sell that potentially alienates clients. A broker takes responsibility for providing the facts, leaving the client to evaluate their options while maintaining full control of the relationship.

Within the spectrum of motivation towards change, we begin to notice the early adopters. Those who implemented the offer of mortgage protection as core to their value proposition are maintaining a relatively healthy business pipeline and have stable client referrals.

Regulation has brought the late majority to our frontline and we have built strategies for working with this group. It’s the brokers who fall into the laggard category who are being left behind – or forced to make the tough decision of leaving the industry altogether.

Getting back to the basics of my point, it is critical that a mortgage broker has a clear business plan in place supported by a strong value proposition. Brokers need to be committed to ensuring their clients understand, value and utilise the services that they provide.

This will not only keep them afloat in the present, it will better align their remuneration or support their expected fee structure, in the event that the next corner the industry turns is heading towards the fee-for-service model.

Darren Smith is head of sales and distribution at ALI Group


One year onWhat a difference a year makes … or not. AB reflects on the punditry, breaking news and influential trends that made headlines in the magazine 12 months ago

Issue: Australian Broker issue 6.24

Headline:‘Wonderland’ will operate next year (cover story)

What we reported: It may still only have the project name of ‘Wonderland’, but providing “all relevant conditions precedent and approvals are met”, the Macquarie Bank-backed aggregator will kick off early next year. As Australian Broker went to press, the three aggregators known for months to be in discussions with Macquarie Bank to form a new joint venture – The Mortgage Professionals (TMP), National Brokers Group (NBG) and The Brokerage (TB) – revealed in a prepared statement they had signed an agreement in principle to merge. An insider close to the deal told AB a moniker had been picked out and, unlike its project name, would not be one to raise eyebrows.

What has happened since?‘Wonderland’ was finally unveiled in February under the name Vow Financial. The merged entity debuted representing more than 900 brokers and with a combined loan book of around $16bn, making it one of the five largest aggregators in Australia. Macquarie Bank holds a minority stake of less than 20% in the aggregator body. Zulman has announced he will be leaving the company next year, and will be replaced by former head of Macquarie Bank’s third party mortgage distribution operations, Tim Brown.

Headline: Firstfolio acquisitions take loan book to $18bn (page 4)

What we reported: There are no such things as mergers – only takeovers, according to Firstfolio’s chief executive Mark Forsyth. His comments follow the successful completion of Firstfolio’s negotiations to acquire three separate mortgage businesses that will see Firstfolio increase its loan book to $18bn. The ASX-listed mortgage and financial services group has acquired First Chartered Capital’s (FCC) $3.5bn loan book, wholesale mortgage manager, Loan Services Australia’s $2bn mortgage managed loan book and boutique mortgage manager, Xplore Capital’s $400m managed mortgage book.

What has happened since?Forsyth has continued doing deals in the industry, while working to integrate FCC, Loan Services Australia and Xplore Capital. “LSA was obviously the largest and easiest to integrate, because it’s Sydney-based,” Forsyth said. “Xplore ended up being more problematic, because it’s an unlisted public company. With FCC, we’ve split the business into two parts. Some FCC franchise holders have been rebranded as eChoice.”In September, Firstfolio also acquired Club Financial, and then bought Apple Home Loans in June. Asked if the company is considering more acquisitions, Forsyth replied: “Always. Deals come up at a rate of about one a month. There comes a point where either we can’t do any more deals, or the deal funnel is a bit full.”

Headline: Auction website aiming for 2,500 brokers (page 14)

What we reported: A new website where lenders bid on non-conforming mortgage applications from brokers has set itself a goal of registering between 1,500 and 2,500 brokers by June 2010. Ezy Capital managing director Matthew Watts said its initial target was to have between 300 and 500 brokers by the end of 2009. The website has signed up seven lenders, but due to “private contractual agreements” and lenders only ever known by a screen name, Watts said he could not disclose who they were. “What I can say is we are currently in discussions with several non-bank lenders as well as some private investment groups and mortgage trusts that have shown an interest in being part of Ezy Capital,” he said.

What has happened since?In the year since its launch, Ezy Capital has moved towards attaining its goals. “From March 2010 until now, we’ve got more than 350 broker groups encompassing more than 1,500 brokers and referral partners. We’ve now got 22 non-bank and private mortgage lenders such as FirstMac, MKM Capital, Provident Capital, Think Tank, Collins Securities and Resicom,” Watts said. “Broker feedback has been great as they can enter all the details of the loan request and have a response within 24 hours. It saves the broker from having to shop a deal around, or use an aggregator which may not have lenders that cover the whole spectrum of the marketplace.”

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

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Achieving your profit potentialBroker practices need to operate far smarter these days, and as Trigon Financial’s Bernie Kelly explains, a key step is to define what you are worth – and achieve it

Name a business leader you admire. Why?Richard Branson because he seems to have such a rich and interesting life.

What main goal/s got you to where you are?When we started Smartline our vision was not to be the biggest. It was all about building a group based on quality, where we would deliver great outcomes for clients and where we would base our success on the success of our brokers. That’s been our true north and it’s a completely different mindset to aggregation.

Is success due to talent, hard work, or luck? The successful brokers we see all have a level of personal drive, get up and go and a real passion for what they do. They’re all hard workers and great with their clients. To me success is about doing really well but also having a life.

What character trait has helped you the most in business?I’m pretty strongwilled (stubborn) and can be pretty focused. Over time I’ve learnt to trust my gut feeling.

What is the key to great business relationships?Trust, which has got to be earned (and keep being earned) and also respect. We’re fortunate to have great relationships with our franchise owners but it’s not something that we take for granted. We’re also really proud of the friendships that exist between our franchise owners and the way they support and help each other.

What’s the first thing to look at when growing a business?Probably yourself as normally you’ve got to make it happen. With mortgage broking it’s generally not some sexy killer marketing idea but a daily focus on doing the small things, like calling people. It’s easy to fill the day with emails and other stuff but to grow a business takes real discipline.

What’s the best piece of advice you’ve ever received?Whatever it was I probably wouldn’t have understood it. I think most things you’ve got to work out yourself and then it sinks in.

What trend are you currently watching?It’s really positive watching mortgage brokers evolve to advisors, broaden their income base and take more charge of their destiny. It’s been a dark few years with commission cuts and the GFC and it’s great to see much more optimism now.

What is your next big ambition?Smartline is currently rolling out risk insurance for our franchise owners. So far, so good; it’s showing promising signs and we hope that it will fundamentally change the business and client proposition for the better.

EXECUTIVE COUNSEL

As managing director of Smartline, Chris Acret has been central to the success of the mortgage franchise. AB finds it is passion for the industry – as well as a personal stubborn streak – that has contributed to his success

Chris Acret

Mao Tse-Tung said “the guerrilla fighter must move with the fluidity of water and the ease of the blowing wind”.

While we are not guerrilla fighters in this industry, we need to navigate obstructions and operate with flexibility like never before.

Each of us needs to accept that whether we are a single broker practice, or a multiple broker practice with a well-diversified income stream, we need to operate far smarter today than we did in years past. Altered economic conditions include a rapidly changing lending landscape, fluctuating brokerage levels, consumerism and stricter standards of compliance. All these factors have a direct and quite tangible impact on the bottom line.

I am often asked how I’ve managed to increase broker turnover and improve profits. The answer is almost too simple and my answer usually starts with “we did the following”:1. We increased revenue2. We reduced expenses 3. We did a combination of bothIs the answer as simple as this? Well, of course not. Like most things in life, if it were that simple, then everyone would be doing it, but as we know they are not. As with all things in business, there is no one silver bullet. These questions need greater examination.

Understanding your potentialTo improve profits, you need to start making strategic decisions and have a

clear idea of the full potential of your practice. It is not really about preparing the next year’s budget and certainly not about drawing up a complex strategic plan. It is about asking and truthfully answering; ‘What do I want from my business? ’, and then working towards developing a blueprint for achieving that full potential – the who, what, when, where and how.

Valuing yourselfMost small businesses give their attention to reducing expenses when profit is falling. In general terms, to concentrate on this aspect is misplaced because you often end up counting the paper clips you are using. Curiously, your major expense will not be found in your P&L expenses – it will be with YOU, the business owner.

What do I mean? I mean that your time (by far your biggest expense) is not being properly (or profitably) spent or directed. Calculate your own hourly rate – which is often a sobering undertaking. If you are doing work/tasks which do not pay your business your ‘hourly rate’, then you have become an expense to your business.

If your hourly rate includes writing the submission or handling any part of the administration process then you are not recovering your professional hourly rate by doing that work, and your profitability will likely be far less than those brokers who outsource these functions.

The question you must ask is a simple one. Does the function add value to your business? Is it core to your business? If the answer is ‘no’, then generally you


associated liability with this revenue stream.

A number of my broker clients have made a seamless transition into the financial planning arena, more often than not by forming professional strategic alliances, sharing brokerage, trail and, most importantly, client equity. Not surprisingly, and with the right strategy, the initial capital expense is often funded by the strategic alliance partner. This can only be achieved if this offering provides long-term value to all and grows the capital value of the business.

This will of course be a decision made on a practice-by-practice basis. Do not just assume that it is easy and without risk to your business, and it is clearly not appropriate for all broking practices.

Fun and profitsOur business environment is changing. Now more than ever, we must grow our professional status as well-qualified and focused consumer advocates. Mortgage broking should be all about fun and profit and if you’re not making profits it is not much fun. Start defining your profit potential today… then Monday may truly be a new day.

Bernie Kelly is the director of new mortgage broker Trigon Financial, and is a consultant with experience in increasing mortgage broker profitability

What is your greatest business achievement?Building the business from nothing, crammed in a 3 x 2 sqm bedroom, to having a thriving business.

What’s the key to getting business through the door?Communication with customers and referrers. I also find that being an impatient obsessive compulsive also works wonders in this industry. I definitely have experience that says customers appreciate the small things, especially being kept in the loop regarding their home loan. Knowing that a valuation is back or letting the client know ahead of time about a delay is paramount.

What goal/s have got you to where you are?My main goals when I started out were to: make more money than I could in my old bank job; build a passive income stream (trail); and not go broke.

Who has helped you the most, and how?Three people have been instrumental in my success: My wife – letting me work ridiculous hours at times and supporting my decisions; Joshua Ransom (my operations manager) and Art Vandelay – an inspirational man and role model.

What character trait do you most value in yourself?My work ethic. I have been able to make a decent living from mortgage broking from hard work, not being a genius or even a brilliant mortgage broker. I simply work hard to achieve what my client needs and I work hard to deliver it in an efficient manner.

How do you stand out from the crowd/competition?By caring about the things that most don’t. We don’t do anything amazingly different at our office, but we are amazingly consistent! We have a very systemised approach to our daily routine. This ensures clients and referrers are in the loop at all times and that our clients’ loans are on track and are making the necessary progress.

What do you tell yourself when the going gets tough?Happiness is only three vodkas away.

What is one thing you want to improve in your business?Income diversity. I would like to have increased revenue streams from financial planning and conveyancing.

What piece of advice would you give an ambitious broker?Give constant communication to clients and referrers. Be honest, put in the time at work and success will follow.

What’s your next greatest ambition?To surpass $500m in settlements and to build a more diverse business. I would also like to do more with property developing in the future.

MY WAY

PFS Financial Services’ Daniel O’Brien has built a thriving mortgage broking business from the ground up, thanks to his work ethic and commitment to communication. AB asks him for his insights and finds income diversity is his next step

Daniel O’Brien

need to look at whether it should be done elsewhere, or handled in a different way.

Valuing your staffReducing other expenses can start with staffing levels and activities. What do your support staff really do? Do they add value to your business? Can what they do be done in another, more effective and profitable way? This all leads to the question; do you need to carry the existing number of support staff? You can utilise staff more effectively on income-generating activities, such as farming and updating your database and generating marketing activities.

As much as 80% of all problems and delays in a business process – such as broker loan administration – are caused by 20% of the activity in that process. What will you do with that freed-up time? You can focus on increasing revenue.

Opening up revenue streamsYou can extend your service offering from mortgage finance to vehicle, personal, business and equipment finance. But before you do, you need to ask yourself if you have the required skillset – and I’m not talking about just product training. It must add value to your business: do not be fooled that any extra revenue is good: it must be profitable.

A profitable exampleMany broking practices, while having access to a full range of finance solutions and services, continue to explore only one or two revenue streams. By way of example, a three-man brokerage with a significant client base invested in updating that client base by gathering a significant amount of data. They now write increasing volumes of vehicle and personal finance. This has also extended to specialist equipment finance.

The result of this is improved profits and they have attracted the services of a specialist fleet finance broker. This has been achieved at a time when we downsized support staff and removed a non-performing salaried loan writer. So here we have achieved a combination of reduced expenses plus increased revenue which equals more profit.

Insurance and financial planningIncome diversification in the area of risk insurance and financial planning may appear attractive. However, this revenue stream comes with inherent liability which may not be fully appreciated at the outset. Risk insurance and financial planning can be a natural fit, but ask yourself if your practice is appropriately positioned to take full advantage and can manage potential liability.

I would argue that having a professional referral relationship either in-house or external in certain cases may well be superior to carrying the compliance and staffing on-cost and

Getting value from strategic partners

If you go down the path of setting up relationships with partners – or indeed any growth strategy and particularly one involving strategic partners, it is critical that you:• Ensure all parties have defined

business and profit objectives, profit distribution agreements and dispute processes so that if the relationship does not work as well as expected you can extricate yourself.

• Conduct due diligence and properly document the deal. Strategic due diligence may sound daunting but it may not need to be. Client issues, the competitive environment, compliance and regulatory issues are all part of a proper process.

Remember you are zeroing in on initiatives to drive profit and grow your business bottom-line and, importantly, capital value.

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Market talkwww.brokernews.com.au

Western Australia and Queensland (profiled last issue) may occupy opposite sides of the country, but their economic and property tales echo each other in several ways.

Both states have benefited from the resources boom – Queensland from coal and gas, Western Australia from iron ore – and both have suffered through the GFC and uncertainty over the federal government’s mining tax. Both have capital city property markets that saw incredible boom times, but of late have been residing in the doldrums. Both are also now staring down the barrel of a new resources boom – and an accompanying resurgence in their property markets.

It’s about time, too. Perth saw its worst quarter for capital growth in years over the winter, with RP Data reporting median values falling by 5% in the September quarter. The picture was even worse for units, with median value down by 6.8% over the same period. Figures from the Real Estate Institute of Western Australia were just as pessimistic, with the industry body reporting that the median house price fell from $500,000 to $480,000 in the same period.

The number of properties on the market was up by 7% compared to the June quarter – with a further 7% increase by October – and nearly 70% of sellers were prepared to drop their asking price by 6% to find a buyer.

“Of course, this varies across the suburbs,” says REIWA president Alan Bourke. “In areas such as Butler, Clarkson and Quinns Rocks, only about half of the sellers were dropping prices and when they did it was by around 5.5%. By contrast, in the western suburbs such as Nedlands,

State update: Western AustraliaPerth saw its

worst quarter for capital growth in years over the winter

Dalkeith and Cottesloe, 84% of sellers were dropping prices by around 8%. Clearly, there is more downwards price pressure at the premium end of the market.”

In fact, REIWA data revealed that the biggest proportion of sales were in the $450,000–500,000 market segment, which measured 16% of total sales for the quarter. Sluggish population growth has also impacted the rental market, with vacancy rates hovering around 3.4%

So, what about the recovery? Consulting firm Access Economics’ latest ‘Business Outlook’ report reckons that mining – along with construction – will “turbocharge the national recovery”. “Both are in the right place at the right time, with mining investment and output scrambling to catch up to a still galloping China and an India pregnant with potential mineral and energy demand,” it adds.

For Western Australia in particular, it argues that “resource boom Mark II will be even bigger than Mark I (2006 to 2008) for Western Australia”.

BIS Shrapnel senior project manager Angie Zigomanis agrees. “New projects are already getting into gear: the Gorgon offshore gas project has already started up, and we’re beginning to see an increase in investment by the resources industry.”

This new impetus will mean a significant upturn in the Perth market in 2011, says Zigomanis, with further growth in 2012 and 2013 as projects reach peak employment level. He emphasises that this will be “high-single-digit growth rather than double-digit growth”, however, and suggests that the runaway mining resurgence will bring its own problems.

“We’re projecting that 2012–13 will be similar to 2006–07, when you had skills shortages and inflationary pressures become more acute. That will result in the RBA being more aggressive with rate rises – our forecast is for the standard variable mortgage rate to pass 9% sometime in 2013 – and that will hit both prices and activity.”

Could ‘resources boom Mark II’ be the answer to Western Australia’s ailing property markets?

http://www.residex.com.au


Caught on camera

Westpac recently launched its Mortgage Broker Women’s Luncheon Series. At this first of a series of networking and knowledge-sharing events designed to assist female brokers grow their businesses, 20 brokers were invited to hear from keynote speaker Denise Aldous on business leadership and overcoming challenges 1

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IMAGE 1: Paul Bakker (Westpac) and Fiona Brown (Connective)

IMAGE 2: Andrea Tassis and Tanya Sale (Outsource Financial)

IMAGE 3: Thi Bhatnagr (Westpac), Andrea Tassis (Outsource Financial) and Shallu Kundra (FAST)

IMAGE 4: Front row: Craig Dunning (Westpac), Lily Ng (Injoy Finance), Canna Cao (ACA Mortgages) and Cathy Guo (ADDSUM). Back row: Michael Piper (Westpac) and Katherine Dermanis (PLAN)

IMAGE 5: Keynote speaker Denise Aldous with Max Schuster (Westpac) and Jeannette Rowland (Choice Aggregation Services)

IMAGE 6: Lucia Guanco (LG Home Loans), Deb Neale (Westpac) and Ling Chan (Perfect Mortgages)

IMAGE 7: Debbie Neale (Westpac) and Kim Wright (Smartline)

IMAGE 8: Katherine Dermanis and Liz Zaki (PLAN) with Michael Piper (Westpac)

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Peoplewww.brokernews.com.au

Industry stalwart Warren O’Rourke from QBE LMI recently rolled up his sleeves – along with almost 100 other volunteers – to help build a home for a refugee family in Sydney’s west. Australian Broker asked him why getting his hands dirty was worth the effort

Q&A

Q What was the Bidwill Blitz Build?

Over a two week period in October, almost 100 QBE LMI employees volunteered to roll up their sleeves and help build a home for the Akout family, as part of Habitat for Humanity’s third annual Bidwill Blitz Build. Bidwill is located in Sydney’s west in the electorate of Mt Druitt. On Day One all we have is a concrete slab to work with and we literally build from the ground up. Importantly, there is a site supervisor as well as qualified plumbers, carpenters, painters etc, to supervise the work teams and ensure quality is maintained.

Q Why did you get involved?I have been involved

with a number of community organisations for a major part of my working life. When I joined QBE LMI 15 months ago I assumed responsibility for the day-to-day management of the relationship

with Habitat for Humanity and I immediately liked the model and what it stood for. I volunteered to be part of the build team because I wanted to see for myself what volunteering in a Habitat context was like. I have since participated in my second team build and I continue to find it very rewarding.

Q What did you do on the day? This year’s project was to

build a house in 10 days, so your tasks are influenced by the progress of the house. My day was in the second week of the build. The house was just short of ‘lock up’ so the two QBE LMI teams were allocated to landscaping and painting. I was puttying, sanding, gap filling and painting.

Q How did your team enjoy the experience?

Depending on where team members live, some were out on the road by 5.30am. I was one of

those. We all arrived by 6.30am, yet everyone was willing and enthusiastic from the start. After breakfast there was an OH&S session and then people were broken up into work teams. Each team comprises of eight people. There was a sense of anticipation among the group, many of whom hadn’t been on a build before. The mood was great all day and there was an immense sense of pride in what was achieved. There was a sandwich lunch to complete the day and a presentation of a photo montage of the teams’ activities.

Q Did you manage to meet the family?

Rebecca Akout and her family of five children came from war-torn Sudan in search of a better life and stability. They recently became Australian citizens. Each recipient family is required to ‘donate’ 500 hours of sweat equity and by Rebecca being there each day she was wiping off some of those hours. She was onsite early to help cook breakfast, on the end of a broom cleaning up after us and generally assisting wherever possible. She was the last to leave in the afternoon. Rebecca impressed as being very genuine, appreciative and excited.

QWhat did you take away from the day?

I do have new skills. It is interesting what you learn from a master painter on site, such as the correct way to use a roller and how to dip your brush into a paint pot to avoid drips (of the paint variety!) Last year I was allocated cleaning duty and I learnt the right way to clean windows, splash backs and so on.When you had finished your allocated job you would step back and realise the difference you were making – which is very humbling indeed.

Q Should the mortgage industry be doing more

to help struggling families who don’t necessarily qualify for finance?The mortgage industry is about facilitating home ownership – and Habitat for Humanity provides us with an alternate way to help families in need who would otherwise not qualify for a traditional loan. It is a humbling and rewarding experience to be able to help those less fortunate. I believe there is an opportunity for the mortgage industry and Australians generally to be involved with Habitat. As an example, the Australian Securitisation Industry is looking to raise sufficient funds (approximately $100,000) to build a Habitat home in March 2011. This will mean that each sponsor will have build days allocated to them which is a great team-building exercise but more importantly, another deserving family is housed.

Q Will you be back again next year?

Most definitely. It is a great experience and the buzz you get from helping others can’t really be described. But it is evidenced in the faces of the families and the volunteers.

QBE LMI’s risk and operations team at the Habitat for Humanity Bidwell Blitz Build

Warren O’Rourke


Caught on camera

Non-bank lender Liberty Financial entertained brokers at a series of road shows in November – the active word being ‘show’. Host John Mohnacheff led brokers through ‘Family Feud’-themed evenings that all went off with a bang

PHOTO 1: Chris Acret (Smartline), David Coleman (RESIMAC) and Jayson Billings (Smartline)

PHOTO 2: Percy Allan (Former senior financial adviser to the Premier and Treasurer, 1981–85, and Secretary of the NSW Treasury, 1985–94)

PHOTO 3: Heidi Armstrong (State Custodians), Nathan Hindmarsh (RESIMAC Brand Ambassador), and David Westerman (State Custodians)

PHOTO 4: Ian Forbes (AFM) with Allan Savins (RESIMAC)

PHOTO 5: Marc Hutchinson and Richard Markowski (Coface Australia) with Frank Knez (RESIMAC)

PHOTO 6: Carey Wingate and David Coleman (RESIMAC), Robert Projeski (AMO), and Scott Smith (RESIMAC)

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RESIMAC celebrated its 25th birthday in style at the NSW Art Gallery in Sydney in November, with guests of the non-bank lender including brand ambassador Nathan Hindmarsh and other key industry supporters

LIBERTY FINANCIAL

RESIMAC

PHOTO 1: Trevor Whitby (Centrepoint Finance), John Mohnacheff (Liberty Financial) and runner-up Debra Benn (Outsource Financial)

PHOTO 2: Tracey Lea Gilbert (Diversifi), Charles Chan, Jean Ballios, and Maureen Callander (Keyinvest Lending Services) with Melissa Cann (Diversifi)

PHOTO 3: Steve Shaw (Newstart Mortgage Company), Phil Cooper (Mortgage Choice), Shane Smith (Newstart Auto Company) and Danny Bourke (iWealth)

PHOTO 4: Sam Walker, Andrew Jackson and Damien Harrison (Aussie Home Loans)

PHOTO 5: Joe Martinovic (Aussie Car Loans), Jason Cleary (Ask 4 Finance) and Peter Cleary (Capitalcorp)

PHOTO 6: Andy Levstek, Gary Bieser and Eva Colabaran (Mortgage Choice)

PHOTO 7: Katie Stabile, Vicki Mitchell-Taylor and Alan Taylor (Aussie), Samantha Bright (Liberty Financial) with Natalie Cook and Malcolm Makkinga (Aussie)

PHOTO 8: Heather Rieka (Park Avenue Financial Services) and Alan Walker (AFG)

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Featurewww.brokernews.com.au

HAVE YOUR SAY – VISIT THE BROKER NEWS FORUM

• Meetheretobrushshoulderswiththebestbrokersintheindustry

• Gotadifficultdeal?Findoutthebestsolutionbypostingyourquestionshere

• Discussbreakingnews,long-termtrendsandindustryhappenings

www.brokernews.com.au | The place where the industry comes to meet

FOR ALL THE INFORMATION YOU NEED DAILY

What was the last book you read?It’s actually been a while since I picked up a book to read. However, Ben Cousins: My Life Story is one I’m eager to get my hands on. If you did not live in Australia, where would you live and why?I’m lucky to live where I live here in Fremantle, however, living in Southern Italy, Sicily, has appeal. Plenty of history, good food, good wine, great views, beaches close by and relaxed lifestyle. If you could sit down to lunch with anyone you like, who would it be?Probably Al Pacino; an amazing actor – especially liked his role as Tony Montana in Scarface!

OFF THE CUFF

Frank ParatoreGeneral managerBALLAST

What was the first job you ever had?Many years ago – crayfishing with my father during the uni summer break.

What do you do to unwind?I don’t mind sitting down and enjoying a nice glass of shiraz or sipping an aged single malt scotch.

What’s the most extravagant gift you ever bought yourself?Probably the favourite of all cars that I’ve owned. Back in 2004, I bought a brand new HSV Senator Signature series.

What CD is currently playing in your car stereo?I’ve always been a fan of AC/DC: went to their recent Perth concert, and they performed amazingly well – so I suppose it’s no wonder I’m currently listening to Back in Black !

If you could give anyone starting out in business one piece of advice, what would it be?As clichéd as it sounds, I’m a firm believer of Warren Buffett’s ‘Be fearful when others are greedy and be greedy when others are fearful’! Also, I believe it’s vitally important to have a proper business plan in place.

If I was not working in the mortgage industry, I would like to be...?Involved in property development. Property and real estate has always been a strong interest of mine.

Where was the last place you went on holiday?My wife and I recently went down south to Busselton/Margaret River for five days. We sampled some very nice wines and enjoyed some fine dining... very relaxing! Early next year the whole extended family is off to Phuket to celebrate my sister-in-law’s 40th birthday.

Brokers rev up in support of cancer charityProperty Secrets director Paul Giezekamp is one broker that turned out for Deposit Power’s recent ‘Colin Bruce Ultimate Corporate Challenge’, to raise money for cancer research.

Donating over $2,000 to the cause, Giezekamp also managed to beat the pack on the mortgage and finance industry go-kart race

day, to come out on top as one of the winning team.

Around 160 guests attended the event, which was held at Eastern Creek Karts in Sydney. Twenty-four teams were assembled from 130 people participating in the go-kart race, with $29,000 raised for cancer charity Chris O’Brien Lifehouse at RPA Hospital.

Keith Levy, national manager of Deposit Power who hosted the day, said the event had been held in honour of revered former colleague Colin Bruce. “Colin worked with us at Deposit Power for over 10 years,” he said.

“Sadly, he passed away last November, after a 14-month battle with brain cancer.”

For Deposit Power photos, see opposite page

Both Shannons Car Insurance and Key Media (publisher of Australian Broker) sponsored the day, which finished with a charity auction of sporting memorabilia and a raffle.

http://www.brokernews.com.au


Caught on camera

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IMAGE 1: Revving up for the race

IMAGE 2: Waiting for their turn

IMAGE 3: Chris Slater from AFG prepares

IMAGE 4: Watch the chicanes!

IMAGE 5: The Astute Financial team

IMAGE 6: The winning team: Paul Giezekamp (Property Secrets), Clint Hawthorne (PLAN Australia), Julian Wills (Centrepoint Finance) with Tony Weir and Sam Zammit (PLAN Australia)

IMAGE 7: Ed Howitt from Deposit Power

IMAGE 8: Paul Ferguson, Domenic Andreone, Alex Kardasis, Matt Hemmons, Anthony Flynn and Lindsey Rogers from Aussie Home Loans

IMAGE 9: Competitors celebrate at the Deposit Power go-kart meet

IMAGE 10: Paul Giezekamp (Property Secrets)

IMAGE 11: Gleni Jackson, Matt Claffey, Mark Conradsen, David Taylor and Elizabeth McGarry (Deposit Power)

Deposit Power recently hosted 160 guests from the mortgage, real estate and finance industries at a competitive day of go-kart racing in Sydney. The gathering raised $29,000 for cancer charity Chris O’Brien Lifehouse at RPA HospitalPhotography by Simon Kerslake

30 www.brokernews.com.au

Insider Got any juicy gossip, or a funny story that you’d like to share with Insider? Drop us a line at [email protected]

fault – perhaps even a double fault – as his circa 200kmph serve came hurtling over the tennis net, often trouncing their best efforts to return it. However, though Mark Philippoussis’ opponents were often left dazed and embarrassed by ace after ace, they likely never thought to wish upon him that other kind of fault – a mortgage default. But unfortunately, that is just what has transpired.

Insider was sad to read that the once great Australian tennis hopeful had fallen afoul of Perpetual Trustee Company, which has applied to the Federal Magistrates Court in Sydney to allow it to formally serve – sorry, give – to his lawyer or representative, a bankruptcy notice. According to reports in the SMH, he borrowed about $1.2m from General Motors Acceptance Corporation (GMAC) in February 2008 to buy a Port Phillip Bay townhouse, a loan which was later on-sold to Pepper Homeloans. Pepper chief operating officer David Holmes told the SMH Perpetual was pursuing Philippoussis because the home had sold for $835,000 in November 2009 – less than the amount owed to the lender – though Pepper’s involvement ceased after the sale. Previously, Philippoussis had been sued by Perpetual in the Victorian Supreme Court over a claim for $1.3m, where it was alleged he had defaulted less than a year after taking out the loan. Insider hopes the once-great star’s return of this serve is as good as his potential once was.

Farewell Farrell

Insider promises this is the last article that will touch on UK mortgage broker

and former marine Christopher Farrell, and his attempt to become the latest star on The Apprentice – the reason being, he’s been officially fired. Apparently, though Farrell was considered by Lord Alan

Well, it’s that time of year again. Insider is currently sifting

through the mountain of Christmas party and drink invitations that have piled up in recent weeks, wondering if there’ll be a night in December free for putting up his own Christmas tree and decorations. Having bucked the worst of the GFC, it seems the local mortgage industry still has deep wallets.

But not all will be partaking in the lavish delights of profit-fuelled festivities this year – according to reports in The Sydney Morning Herald, CBA was forced to cancel Christmas. Well, for its Human Resources and Group Services division that is. It appears that after “false details” were broadcast about a reportedly extravagant masquerade-themed fundraising event for the team on a Sydney radio station, the bank had to postpone its plans due to fear of a public backlash. You see, the party plans followed closely after the bank’s 0.45% interest rate rise. Oh, and the stir caused by chief executive Sir Ralph Norris’ $16m pay packet.

A spokesperson from the bank told the SMH: “As this broadcast’s false claims may be misinterpreted, particularly in the current climate which has seen an increased focus on the bank, regrettably, the decision was made to postpone the event.”

Last year, the paper reported that the bank was lambasted for holding an end-of-financial-year party for 800 of its staff – naturally, complete with champagne and caviar – only three days after lifting interest rates, a move Wayne Swan had described as “selfish”.

Well, Insider for one feels sorry for CBA’s HR team, who will have to go unmasked this year, thanks to public opinion – the Grinch that stole Christmas. However, the party has only been postponed, thankfully – CBA plans to hold something in the New Year.

De…fault!

At one time, his tennis opponents no doubt crossed their fingers

hoping his serve would be a

Bah humbug!

Sugar (the host) to be a nice person who worked hard – aren’t all brokers? – he lacked the “spark of entrepreneurial genius” that would make for a successful Apprentice. Well, we are quite aware of that now, Alan. With the show having been filmed between September and December in 2009, Farrell has since been arrested, and is waiting to find out if he will be charged with fraud, following allegations relating to making a false representation via cheque or card.

Insider wishes him well, but would suggest that before giving the industry a bad name, going back for an apprenticeship (in broking) might not be a bad idea at all.

What a year!

As 2010 draws to a close, Insider is left slightly bewildered that the

rush of a whole year’s work has gone by, even though last year’s Christmas seems like yesterday. What happened to those New Year’s Resolutions? Well, there’s always 2011 – approaching imminently. And if the rumours are true, 2011 is likely to be a big one for Australian Broker, which has long brought to you the industry’s best news and analysis – along with tolerating Insider! It looks as if Australian Broker’s website – www.brokernews.com.au – will be getting a revamp, and a rebrand, to better reflect the cross-over between the print magazine and the web service, and to deliver its premium content in a pleasing and digestible format.

Insider has managed to sneak a look at the plans, and the mix of news, video, analysis, forums and polls, special reports, features and market content has left him full of much excitement for the New Year’s potential. Merry Christmas from Insider and the AB team – we’ll be back with some more breaking news (and of course, industry gossip) – in January 2011.

CBA can’t be accused of being “selfish” this Christmas

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Serviceswww.brokernews.com.au

Homeloans Ltd 1300 787 866 www.homeloans.com.au page 21 Liberty Financial 13 11 80 www.liberty.com.au page 3 MKM Capital 1300 762 151 www.mkmcapital.com.au page 2 Provident Capital 1800 668 008 www.providentcapital.com.au [email protected] page 4 Westpacwww.introducer.westpac.net.au page 7 MORTGAGE MANAGER / NON-BANK National Finance Club 1300 327 600 www.nationalfinanceclub.com.au [email protected] page 6

www.residex.com.au

The House Price Information People

To advertise in Australian Broker, Call Simon Kerslake on

+61 2 8437 4786

OTHER SERVICES Financial Services Onlinewww.leads.financialservicesonline.com.au page 19 Residex1300 139 775www.residex.com.aupage 24 Trailerhomes0417 392 132page 26 Veda Advantage1300 921 621www.vedaadvantage.com [email protected] page 11 SHORT TERM LENDERMango Media 02 9555 7073 www.mangomedia.com.au page 1

NCF Financial Services Pty Ltd 1300 550 707www.ncf1.com.aupage 8

AGGREGATOR / WHOLESALE BROKERChoice Aggregation1300 135 389www.choiceaggregationservices.com.au page 15 Mortgage House133 [email protected] 16 & 17 PLAN Australia1300 78 78 [email protected] page 5 COMMERCIALBanksia Financial Group 1800 333 114 www.banksiagroup.com.au page 9 FRANCHISEWealth Today 08 9207 1433 www.wealthtoday.com.au page 13 LENDERCitibank Mortgages 1300 651 059 www.mortgagebroker.citibank.com.au page 32

http://www.worldvision.com.au/SEESolutions

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

australian broker magazine issue 7.24

Documents

market brokers

branded brokers

growing market share

market traction

increased market share

broker market share

growth of model page

branded businesses