Login
ISCOVER
Promoted by Pepper Money
The year 2020 has been a tough one for everyone, but particularly for borrowers who might have found themselves going through a life event and potentially missing a financial commitment. It’s these people that are often finding themselves being left out in the cold, as the banks tighten up their risk appetites and reduce their appetite to lend to these people. But help is at hand, if you know where to look. In this feature, partnered by Pepper Money, we outline why there is an increasing need for brokers to be across specialist loans – and how to be a bastion of support to borrowers when they need it most.
This year, brokers have been busier than ever helping customers understand their financial situation and working to reduce the impacts of the pandemic on their financial position. Across the country, the whole finance industry came together to quickly support borrowers in these unprecedented times.
Brokers worked around the clock to update their clients on the moves made by the lenders – including the rare decision by lenders to allow many borrowers to defer their loan repayments for several months – as the country galvanised to protect the economy from the fallout caused by the coronavirus pandemic and the restrictions put in place to control it in Australia.
As Aussie Liverpool broker Evelyn Burton tells The Adviser: “We decided very quickly that we wanted to try and reach out to as many clients as we could to give them the comfort to know that we’re still here to support the clients where they needed it. That was [done by] contacting them via the phone, emails – we even put some Facebook posts – anything on digital media to make sure that they knew that we’re all going through this, but we’re going through it together, and we’re here to support you and business as usual as much as we could.”
Similarly, Christopher Borg, founder and director of Borg Financial, told the Elite Broker podcast that anxiety levels amid his client base had increased significantly given the uncertain economic future. This has particularly been the case for those whose employment is in jeopardy, he said.
“There was a lot more panic in my customers in terms of, essentially, what’s going to happen in the future,” he told The Adviser earlier this year.
“At the end of the day, this is a temporary situation that we’re in, but it has affected our whole global community.”
Indeed, this year the role of mortgage brokers has evolved to not only help customers navigate through this difficult period financially, but emotionally, too.
Many borrowers found themselves overwhelmed at the state of events unfolding and brokers were having to have heart-wrenching conversations with their customers around their changed circumstances and walking them through their options.
The ability to communicate with a borrower in a compassionate, sympathetic and constructive manner during a hard life event is something that alternative lender Pepper Money has been providing broker training on for some time.
Aaron Milburn, Pepper Money GM of mortgages and commercial lending, said: “When you get into specialist lending, these are often customers that have endured a life event. For example, a couple whose bills got a bit out of control when the wife became ill and the husband took time off to look after her. They want to get back on track again because the wife is much better and everything is back to normal, but they can’t because they fell behind on payments during a super difficult six months – despite never having missed a beat for the previous 10 years.
“These are the sort of real life customers who come to us, and we can help them get back to where they were,” he explains.
While Mr Milburn said that the lender has not seen particular growth in the number of specialist customers enduring a life event off the back of COVID-19 (which he put down to the fact that the whole lending industry had been supporting customers through hardship assistance enabling customers to go onto a payment holiday or alternative payments to help them keep their commitments without a blemish going against their credit file), he said that what was particularly notable this year was that more brokers are actively looking to help these customers.
“I think there was a bit of a myth maybe 18 months, two years ago that these customers were difficult, or not good quality, or hard to deal with. The reality is that that’s just simply not the case and it’s surprisingly common,” he told The Adviser.
“If you line 20 of your friends and family up at a family barbecue, I guarantee you, there’ll be one or two in there that is a specialist customer. So, I think brokers are thinking about that; if it was their friend or family that needed help, they would absolutely give it to them. They would want to help. So, they’re far more open these days about spending time on specialist customers.”
While specialist loans do not necessarily require brokers to undertake any additional training or education, Mr Milburn says that Pepper does offer brokers help around the conversation that can be had with these customers, given that it often involves speaking to borrowers at a particularly hard time in their lives – when they may need additional emotional support.
He says: “What we’ve focused on is the empathetic way that you need to deal with a specialist customer. It’s a really different conversation to what it would be with a prime customer.
“It’s a hugely emotional time for that person who has had the courage to recognise and accept that they are in some strife and need help. At that time, they’re quite vulnerable. They’re fairly raw. They’re out there, they’ve put all the cards on the table.
“If the response is not handled well, with empathy and with real understanding of what we’re trying to do to help that customer, then it can take them three to five years to get the courage to come back,” Mr Milburn says.
“And by that stage, the market’s moved, or their financial position is even more compounded in the negative, and it’s just not a good outcome for anybody.”
To assist, Pepper offers a lot of education around emotional intelligence (whether through its BDMs or educational tools including video content libraries etc), such as the phrasing that could be used when interacting with a specialist customer and the questions to ask, in the hopes of helping brokers “do it right the first time”, Mr Milburn outlines.
He added that as Pepper has more than one credit policy (it covers prime, near-prime and specialist solutions), it is also becoming increasingly popular with brokers due to the opportunities that are available to that customer.
“When a broker puts a deal to Pepper, our team is able to look at all of the facets of that deal individually and then we place the customer in the best product for their credit journey – whether that is prime, near-prime or specialist,” he said.
“That’s a benefit because the broker doesn’t have to do all the work all over again – they have three opportunities to help that customer. And so, we’re seeing a groundswell of brokers coming to Pepper for the first time, because not only do they get three opportunities to help their customer, they get 24-hour turnaround, and they get first-class customer service.”
Mr Milburn said he believed that the specialist loan sector will continue to gain traction in the broker space into 2021.
“It’s a growing market,” he said. “The world is changing. But what’s not changing is bank policy. And so, as the world continues to change on how people earn income, and how they structure loans and how they work, and their environment, the more customers will need a near-prime or specialist solution, because we are not seeing bank credit policy move in line with the changing environment that
we live in.”
The GM of mortgages and commercial lending advised brokers to keep up their strong relationships with their clients into 2021 and to “reach out to them and stay in contact”.
“Specialist clients need to know that they are not alone, that there is support out there for them. And brokers are the channel of choice for them to find it.”
JOIN THE DISCUSSION