Opinion - Grass Roots, Elite Business Writers Special

JUSTIN DOOBOV, Intelligent Finance

WENDY HIGGINS, Mortgage Choice

MOSHE MOSES, Niche Lending Pty Ltd

FRANK TADDEO, Finance National

WHAT IMPACT DO YOU EXPECT LICENSING WILL HAVE ON YOUR BUSINESS IN THE COMING YEAR?

WENDY HIGGINS

The biggest impact on my business is that each loan application will take longer to pull together, and we will have to make sure all t’s are crossed and i’s dotted with the most recent process updates. I expect to see more people walking through our doors as licensing improves the industry’s reputation.

JEREMY FISHER

I always check my business’ compliance and I’m quick to respond with any necessary changes to meet – and hopefully exceed – licensing standards, so I don’t expect that much will change in the day-to-day operations of 1st Street.

JUSTIN DOOBOV

I think [licensing] will create a burden of overregulation and extra paperwork. Overregulation will only increase the cost of processing lender loan applications, a cost that banks will ultimately pass back onto customers. You’ll find most brokers already adhere to a moral code of responsible lending and, in fact, we turn away more clients than we take on.

FRANK TADDEO

I think [licensing will have] a considerable impact, focusing more on operations and managing audit and reporting issues than on credit itself.

MOSHE MOSES

I think licensing will have a beneficial impact on business over the year ahead, particularly on the aggregation side.

WHAT HAVE BEEN THE BIGGEST CHANGES MADE TO YOUR BUSINESS IN THE LAST 12 MONTHS? HOW DID THEY IMPACT YOUR BOTTOM LINE?

MOSHE MOSES

We’ve focused on streamlining our operations to prepare for the new compliance requirements. We’ve also looked at improving our end-to-end service, particularly in loan application submissions, advice, service and approvals. We’re trying to deal with applications in a timelier manner, as well as taking a dedicated approach to a full service offering.

JEREMY FISHER

The physical expansion of the business has been a major change, bringing with it the need for more formalised business documentation to ensure consistently excellent service, diligent recommendations and full compliance across all offices and states. Overall, this should positively impact the bottom line in both the short- and long-terms.

JUSTIN DOOBOV

While we’ve made changes, including to software and cross-sell product range, our service offering has essentially remained the same. We’ve focused on doing what we’ve done in the past and simply improving that service.

FRANK TADDEO

Over the past 12 months, we’ve got all direct staff appropriate qualifications and registrations. We moved to charging the client for service, we cut costs where possible, and we formed stronger alliances with fewer credit providers.

WENDY HIGGINS

The biggest change I have made is diversifying into life insurance, income protection insurance, leasing and commercial finance. The insurance business has added approximately $50,000 annually to my bottom line. I’ve also employed another full-time loan consultant. This has negatively impacted my bottom line but with our indexed commissions increasing, the overall profitability of my business has been maintained.

WHICH AREA OF YOUR BUSINESS WOULD YOU EXPECT TO SEE THE MOST GROWTH IN 2011?

MOSHE MOSES

The residential market is expected to pick up due to the number of pre-approvals being received. I think we’ll see more activity in commercial finance as there is competition in the market. Currently, the banks are offering different things in this sector. Insurance through cross-sell will continue to drive mortgage businesses.

JEREMY FISHER

I have noticed growth in residential loans recently, and I expect this will continue in 2011. I have found that many of our clients like to be well-insured and I have added risk insurance to our service this year, which has been well-received. I also expect this to grow in 2011.

JUSTIN DOOBOV

I think there’ll be opportunities in the residential and commercial markets in the high-dollar range. We’ll see more investors, both Australian and from overseas, and they’ll be looking for a better return on their money through property investment.

FRANK TADDEO

I believe all [areas] will suffer to some extent, both while the economy stabilises and consumers regain some positive views. I believe all areas mentioned will have business to be written; however, [growth] will be based more on investment and advice and not a straight out application.

WENDY HIGGINS

Insurance will continue to grow as more and more clients realise the need to protect their income and assets. Residential loans may fall as the new NCCP legislation comes into full effect – less low docs, etc – and commercial finance may increase, but this will depend on the lenders.

AUSTRALIAN CREDIT LICENCE (ACL) HOLDER OR AUTHORISED CREDIT REPRESENTATIVE?

MOSHE MOSES

We have obtained our own ACL through our aggregation arm, Niche Professional Services.

JEREMY FISHER

I have a very strong relationship with my aggregator, NMB, so I opted for credit rep under their licence.

JUSTIN DOOBOV

I intend to hold my own licence in due course, but due to other commitments I’ve not had adequate time to complete the documents. I have opted to become an authorised credit representative and will consider making a transition to ACL later on.

FRANK TADDEO

We have opted to obtain our own credit licence. This is mainly because we do not aggregate and we already have our own AFS [Australian Financial Services] Licence. We need to accredit other office employees who may talk about finance but not actually complete any proposal or give advice.

WENDY HIGGINS

As franchisees of Mortgage Choice, we have all been appointed ACLs. Most of the systems and processes were already in place and any adjustments needed have been simple and pain-free.

WHAT WERE YOUR BIGGEST CHALLENGES IN 2010?

MOSHE MOSES

Keeping up with policy changes by the banks. Another challenge has been managing incoming compliance obligations and putting systems in place to deal with these regulatory changes.

JEREMY FISHER

This year, 1st Street opened six new offices along the eastern seaboard. Managing those physical developments, along with being there for my new team of brokers over great distances, has been challenging. Rising interest rates in 2010 also seemed to affect some clients’ desire to borrow.

JUSTIN DOOBOV

Dealing with the tightening of credit criteria by some lenders. You may have clients with zero dollars in arrears, and previously banks took more of a commercial approach to lending. However, banks are now getting bogged down in compliance and this impacts the loan approval process. Lenders are limiting the number and types of guarantors that can be given, or even the ability to have guarantors with some loans.

FRANK TADDEO

The biggest challenge has been managing client relationships with the continual changes in the broker space, with credit tightening, incorrect documentation and the banks’ arrogance. Other challenges included interest rate movements and dealing with government monetary policies to manage inflation.

WENDY HIGGINS

My biggest challenge has been to keep up with the all the changes in lending policies, loan to value ratios and so on.

WHAT ARE THE BIGGEST CHALLENGES THE BROKING INDUSTRY OVERALL FACES IN 2011?

MOSHE MOSES

Licensing and the NCCP will surely be major challenges. Currently, the legislation appears to favour lenders while placing undue pressure on mortgage brokers. [Meeting] obligations regarding loan suitability and affordability fall onto brokers’ shoulders. I think the liability needs to be shared with lenders. It will be interesting to see how this all unfolds over the next 12 months.

JEREMY FISHER

As the majority of clients want to borrow through the major banks, brokers need to be aware this trend can give the major banks significant power, which isn’t healthy for competition. Ensuring their businesses are fully compliant with the new licensing requirements, as well as with frequently developing rules and regulations, will also be a challenge for many brokers.

JUSTIN DOOBOV

The government’s message urging consumers to shop around for the cheapest rate will be a challenge for mortgage brokers in providing sound and wholesome mortgage advice in 2011. While the government’s new consumer credit protection campaign is encouraging consumers to look for the best and cheapest rate, this is only one aspect of the right mortgage. Others include the loan structure, as well as having offset and redraw capabilities.

FRANK TADDEO

The biggest challenges ahead include stability and competition, moving from product-driven to advice-driven service; revenue reliance on advice; and client management. I think if you’re not in the industry for the right reasons and long term, then get out. Financiers also need to monitor poor or inappropriate performers and have them removed.

WENDY HIGGINS

The biggest challenge in 2011 will be toeing the line with NCCP licensing and making customers understand the changes as it will affect their ability to borrow more than ever before. The paperwork looks onerous but necessary given the legislative changes. I will take advantage of the consolidation now occurring – ie: part time players leaving the market, freeing up customers.