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The introduction of tighter serviceability measures has surprised most brokers who have always exercised due diligence when assessing a client’s income and expenses, according to NSW-based Aussie brokers.
Speaking on The Adviser’s Elite Broker podcast, Aussie Neutral Bay brokers Alex Kardasis and Domenic Andreone said that the introduction of tighter serviceability policies from lenders has complicated the broker-client relationship.
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“With the banks, the policy was always trying to work out genuine savings. Can the client afford the loan? Have they shown a pattern of being able to repay the loan? That’s always been there,” Mr Kardasis said.
“Now it seems to be that there’s a lot more paperwork that goes into trying to actually prove that that is the case, where, like I said, we’ve always had that discussion. It was very easy to do. Work out the income, [work out if] they’re paying rent, [work out if] they’re also saving a little bit, and you can take that back to the lender.”
He continued: “That’s always been the case for us. We’ve always done it. I think every decent broker has always done that. It’s a little bit of a surprise for [us].”
Mr Kardasis said that the heightened serviceability requirements can be “patronising to clients”.
“You’ve got all different types of clients, right? It’s not just newbies; you’ve got seasoned investors, and you’ve got to ask, ‘Can you afford this loan? Show that you can afford this loan’.”
Mr Andreone added: “If you’re talking to a seasoned investor, or someone who’s got lots of equity in their property, and they’ve had a mortgage for 20 years, to ask them for bank statements to prove their living expenses [can be] really intrusive [and] can come across as a little bit condescending and patronising.”
Client education
Further, Mr Andreone noted the importance of educating clients as part of the customer service offering to help clients better understand the broker proposition.
“I think the big thing for us is the education piece. I think, if you ask most people on the street, ‘What does a broker do for you?’, I think the first thing they’ll say is, ‘They get me the best rate’, and for us that’s just the tip of the iceberg. That’s just the smallest part of what we do,” Mr Andreone said.
To hear more from Mr Kardasis and Mr Andreone, tune into The Adviser’s Elite Broker podcast.
[Related: Why technology will never replace one-on-one client communication]
