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Six Forces Changing the Global Economy

We all know the global economy is changing at a rapid rate, and as business owners we need not only stay abreast of changes, but be open to them.  At a recent event I attended, Westpac Commercial Bank Head David Lindberg spoke of these changes and their implications. Afterward I felt so compelled I went on to do some more research and discovered some interesting stats I share in this article.   SERVICES AND AGRICULTURE The industries driving the Australian economy over the coming 10-20 years will be Services and Agriculture. Services Services contribute about 75% of Australia’s Gross Domestic Product (GDP*), employing about 85% of the Australian workforce. Services include such things as education and tourism, financial services, energy and mining-related services, environmental services and financial technology (Fintech). The services sector contributes more to total productivity growth in the economy than does the goods sector. How? While productivity grows more slowly in the services sector, as the services sector is so much larger than the goods sector, the services sector contributes more. An efficient services sector is critical to trade and economic growth. *(GDP– the total amount of goods and services we produce as a nation) Agriculture Australian farmers produce food for more than 80 million people per annum and with the emerging Middle Class in Asia, agriculture stands as one of Australia’s major exports. The value of Australia’s agricultural sector is tipped to peak at $63.8 billion this financial year. The total value of Australia’s farm exports is expected to reach a new record of $48.7 billion, $1 billion higher than in 2016. This growth was driven...

Instant Asset Write Off

In its Pre-Budget Submission to Treasury CAFBA outlined the need for an investment allowance to stimulate the economy and increase capital expenditure, which assists both jobs and growth. Small business plays a very important role in the economy, with over 2 million small businesses employing 4.8 million people and accounting for nearly $380 billion worth of industry value add. However as a minimum CAFBA urges the government to extend the instant asset write beyond its current expiry of June 2017, and increasing the single asset value from $20,000 to $50,000. CAFBA members have been approached by many of their clients confirming they would make use of this concession to purchase equipment for their...

Retail Banking Remuneration Review – Report Handed Down

Last month the Report into Remuneration in the retail banking sector was handed down, which contained 21 recommendations made to banks with regards to remuneration practices. CAFBA made several submissions to the Review, and met with the head of the review Mr Stephen Sedgwick AO to explain the role of the commercial finance broker. Specifically CAFBA wished to distinguish the activities of the commercial broker to that of the retail mortgage broker. As always CAFBA was concerned that there may be unintended consequences for CAFBA members when evaluating the remuneration in the retail mortgage space. We appreciated Mr Sedgwick’s engagement, and his interest and understanding of the role of the commercial broker. We are very pleased therefore that in the Report Mr Sedgwick clearly carved out the remuneration structure of the commercial finance broker in his findings. This was explicitly acknowledged in the following: 6.3 Commercial Equipment Finance Brokers The Review received submissions and representations from commercial finance brokers. They questioned whether the analysis in the Issues Paper applied to their circumstances. These Brokers act as intermediaries between banks and commercial borrowers and, in general, provide equipment finance to them. Commercial equipment finance sits outside the National Consumer Credit Protection (NCCP) regime as it is commercial in nature and is not credit provided for personal domestic purposes. 86 This type of finance is outside the scope of the Terms of Reference of this review as it is commercial in nature. In case of any doubt about their applicability, however, my recommendations should not be construed as applying to these types of arrangements. CAFBA will continue to engage with the...

Question “Will Fintech’s replace Brokers?”

As brokers we know that we play an important role in the finance market by helping people in business to access funding solutions that help their businesses grow.  We work hard in building relationships and unlike some others we are with our clients for the long term. However we do have a competitor that has been entering the SME Market.  It is “technology” that first appeared in our space around 2011 when the first players ushered in alternative financial services giving rise to the FinTech Industry. In Australia the rise of FinTech’s in a short time has been staggering. This has been driven mainly by technology and changing consumer needs. Being alternatives to traditional methods they are generally disrupters who offer consumers a different way to access products and/or services. What Uber has done to taxis is what Fintechs want to do with Financial Services. I was surprised to learn that the Australian Fintech’s Industry Association has a current membership base that now comprises well over 100 start-ups, venture capital funds, hubs and accelerators.   By sheer coincidence whilst writing this blog our company received an email from yet another new entrant! FinTech’s targeting our core client base typically provide unsecured business finance using web based applications, combined with credit scoring and behavioural history. They are seen by some as being a lot easier to use than traditional financiers. Approval of finance can be in as little as ten minutes! So in answering the question “Will Finance Brokers be replaced by Fintech’s?”  They will in my opinion remain complimentary to our services.  Whilst we have competition, as long as we...

The importance of ‘Perfecting’ PPSR Registration

The attached article is yet another example of how a simple error in lodging a PPSR Registration can lead to substantial losses, in this case for the Lender. In this example the Lender used the clients ‘Australian Business Number’ (ABN) instead of an ‘Australian Company Number’ (ACN) when lodging its interest against the client (Grantor). This was deemed as a defective registration with the court ruling (among other things) – ∙ in respect of a Corporate Grantor, a PPSR registration must include the ACN (not ABN) of the Corporate Grantor; ∙ the defect in Alleasing’s original PPSR registration made the registration ineffective because it did not enable a person searching the PPSR by ACN to find Alleasing’s registration; As a Broker we are in the position of ‘Trusted Professional’ to our clients and ‘Partner’ to our Lender panel and as such have a responsibility to make sure we understand the correct procedures when it comes to lodging registrations with the PPSR in order to protect all parties.   Andrew Crain has been a CAFBA board member for over 2 years, he is a Director of QPF Finance Group in QLD and Allied Finance WA and when not at work can be found at Suncorp Stadium supporting the QLD Reds rugby team however painful that has been of...

Women and Leadership Australia Scholarship: Jane Lorimer

I am very proud to be a member of CAFBA, an association that has had the courage to step up, having recognised the imbalances in this male dominated industry, to become an innovative leader in nurturing and supporting women. Without this sort of forward thinking the asset broking industry could easily become irrelevant in today’s society.  By supporting these scholarships CAFBA has acknowledged the need to be inclusive and to provide the tools to assist their member firms to encourage all women within their businesses to reach their full potential. To be awarded a Women in Leadership scholarship is a great honour and I am excited by the prospect of sharing skills and knowledge gained and to be able to encourage other women in the industry to achieve their own greatness!    ...