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A Professional Industry needs professional – let’s start the conversation

A Professional Industry needs professional – let’s start the conversation

When I started my business some 20 years ago, I was often embarrassed to call myself a broker.  When I left my job to become a broker, the looks of disappointment amongst my colleagues was very evident.  Why was a promising banker leaving a credible profession to become a broker?  Some even had the decency to ask me directly.  Slowly but surely, the credibility of myself as a professional commercial finance broker, as well as the credibility of the craft itself improved.  Commercial mortgage broking is becoming legitimate. The attention and importance we now obtain from the banks and lenders is encouraging and the type of new broker we now attract is increasing in sophistication.   I revel at how far we have come as an industry.  But, I’m daunted by how much further we have to go to becoming a profession.  A recognised, educated and qualified profession whose value is widely understood and whose services are just as required as accountants and solicitors.  In the journey to professionalise, we will have only a few opportunities to take major leaps forward in this pursuit, and these opportunities need to be identified and exploited.  We currently have such an opportunity!  An opportunity to demonstrate to the lenders that duly qualified commercial finance brokers are an efficient and effective model for them.  That we are a friend and not a foe.  An opportunity to demonstrate to our clients that we are a cost effective and efficient vehicle to access vital capital for their business.  That we have a deep understanding of their industry, their constraints, their pressures and because we have...
CAFBA comments on the final Royal Commission report released today

CAFBA comments on the final Royal Commission report released today

CAFBA welcomes the release of Commissioner Hayne’s final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. CAFBA acknowledges the work of Commissioner Hayne and his colleagues for the depth of their investigations and for their understanding of the intricate nature of various aspects of the financial services system. We are naturally pleased that there is no finding of market failure in the commercial broker channel which CAFBA represents. We are very pleased that the Royal Commission has recommended that the National Consumer Credit Protection Act (NCCP Act) should not extend to small business lending and that the Point of Sale Exemption of NCCP should be removed. CAFBA has strongly advocated for these changes to government and regulators for many years as well as directly to the Royal Commissioner and we welcome the Government’s support of these recommendations.    CAFBA will now examine the document in detail to ensure that remedies proposed for consumer borrowers do not impact on our ability to deliver workable outcomes for business borrowers. More analysis needs to be done on the recommended changes to mortgage broker remuneration in the consumer home loan space, to ensure competition with banks is not diminished, or rural consumers are potentially denied access to competitive home loan products. CAFBA President David Gandolfo said today: “CAFBA members are career professionals who are interested in the best possible outcomes for their business customers, and they don’t want their customers to be impacted by new regulations and remedies that are intended for an entirely different area of the financial services sector.”   Regulators, bankers and policy makers need to be careful...
The Perfect Storm

The Perfect Storm

2019 is posed to be a very challenging credit market with numerous negative headwinds combining to create the “perfect storm”. Some of these elements include: The Banking Royal Commission and resultant tightening of credit policies by banks ahead of the commission’s findings/directive, with particular focus on verifying expenses and adherence to HEM. Falling house prices coming off record highs, predominately in Sydney and Melbourne, but also across the broader Australian housing market. Tightening of government policy for some overseas investment markets (e.g. China). The completion of a high number of residential apartments which are due to come onto the market in 2019, particularly in Sydney & Melbourne. Publicity around the Opal Apartment saga, highlighting poor construction practices that have occurred in the boom market, potentially causing an increase in caution and concern for potential buyers and in turn placing further down pressure on prices. The upcoming 2019 Federal Election and concerns about a possible federal labor government cracking down on negative gearing and capital gains tax concessions. Borrowers with interest-only mortgages worth around $300 billion are bracing for a credit crunch as their fixed terms, taken at the height of the east coast property boom, begin to expire. It is estimated that based on the nations $1.7 trillion mortgage loan book, close to 900,000 loans, or 1 in 6 mortgages  will be under review and either extended with existing lenders, switched to higher principal and interest repayments, or transferred to a new lender. The above will inevitably increase the number of people placing their properties on the market with holiday homes and investment properties the first off the cap....

SMART BoxTM – Making It Easy to Compare the Cost of Small Business Loans

If you try to compare business loans from several lenders, it’s not always clear what your client will pay in interest and fees. This is because loan information is presented in different ways, so there hasn’t been a standardised way to compare business loans – until now. What is SMART Box? Smart Box (Straightforward Metrics Around Rate and Total Cost) is a tool to compare small business loans using several standardised metrics. How does the SMART BoxTM work? The SMART BoxTM is a one-page disclosure document with two parts. The top of the page includes the basic elements of the loan, including the Loan Amount, Disbursement Amount, Total Repayment Amount, the expected Loan Term, and Repayment Frequency. The rest of the document shows six common loan pricing metrics: Total Cost of Credit, Average Monthly Payment, Total Interest Payment (TIP), Annual Percentage Rate (APR), Cents on the Dollar, and Factor Rate. It also shows whether new fees apply or if there’s a reduction in the Total Payment Amount if the loan is paid off early. You can find an example of the SMART BoxTM document here, including a breakdown of each section. Why SMART BoxTM? In early 2018, the Australian Small Business and Family Enterprise Ombudsman’s Office reported on transparency and disclosure in the fintech sector. It found that 47% of fintechs believed SME lending needed to be more transparent. As a result, the Australian Finance Industry Association (AFIA) developed the Online Small Business Lenders Code Of Lending Practice. In June 2018, six leading small business lending fintechs, including Moula, signed the Code. They agreed to meet small business legal...

Connective Asset Finance – Moving finance broking into the modern era.

According to recent research* many established and traditional finance broking businesses are struggling to compete with younger, tech savvy players with a more agile approach. But now one of our leading aggregators has created a solution - one that delivers a painless transition in a rapidly changing commercial and business finance broking industry. Head of Connective Asset Finance, Brent Starrenburg claims that joining an aggregator (like Connective) should offer brokers a lot more these days. Whilst access to a larger panel of lenders is certainly important, it’s compliance support, process efficiency and cost-effective technology that commercial and business finance brokers really need and want. “We’ve created a business-focused operations system that’s extremely user-friendly and easily adapts to suit any broking business model” says Brent. “Mercury is a built-for-purpose IT platform for brokers that we develop in-house. It’s proven to significantly increase the number of customers a broker can service efficiently, which also greatly expands their potential for profit. Not only that, it’s specifically designed to help brokers overcome a wide variety of challenges.” The biggest challenge is change. Recent research conducted by Connective Asset Finance to identify these challenges revealed four key trends currently effecting the industry and set to drive big changes over the next few years. These included: ·   An inevitable transition toward the use of technology and automation ·         An increasing focus on compliance and industry regulation ·         Changes to how credit is assessed by lending institutions ·         An increasing demand for industry-wide education and training standards. “Joining Connective Asset Finance gives brokers a solution to all of these challenges” says Brent. “Mercury has a...