Mortgage Choice defends credit rep value
By
Ben Abbott
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14/07/2010 6:01:00 AM
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7
comments
Brokers who choose to take on credit representative status under new regulation will have as valuable a business as an Australian Credit License (ACL) holder, according to Mortgage Choice.
Chief executive Michael Russell has come out in defence of the credit representative licening model, following claims that businesses with an ACL will be inherently more valuable.
"How can a business owner who is 100% compliant with the NCCP have a more valuable business than another who is also 100% compliant, simply because he or she operates under their own ACL rather than that of a third party?," Russell asked Australian Broker.
"The only answer is that this conclusion is incorrect," he said.
Russell said that provided brokers are licensed with a credible and reputable ACL holder, it will make no difference if they possess one themselves or are a credit representative operating under that holder.
"Licensing provides all of us with a ticket to the game and is not a unique selling proposition that is earnings accretive," Russell said. "The fundamentals for increasing the inherent value of a business will not change with licensing."
Connective principals Mark Haron and Glenn Lees said last week that ACL holders would be better off than credit representatives, due to the value of their businesses when it came time to sell.
Steve Kane, managing director of aggregator FAST, which offers a dual model of licensing, said "there is no intrinsic value to own a license - it doesn't increase your value".
All Mortgage Choice franchise owners and their staff will be credit representatives, and make use of an in-house compliance and corporate standards team in adhering to the regulations.
Meanwhile, LoanKit brokers will have a choice between the ACL or credit rep path, with an added option of applying for an ACL, but having Mortgage Choice take care of the compliance for them.
Broking businesses aggregating with Connnective will be applying for an ACL.
Latest Comments
Total:
7
comment(s)
Tony on
14 Jul 2010 10:52 AM
Brokers are better off to have own licence. It is your business not the aggregators.
giocattolo03 on
14 Jul 2010 11:12 AM
May be no more value but you will control your own business not an aggreggator. What happens post licencing when the dust settles and aggreggators start dictating commission splits and terms unacceptable to the broker citing the line your reprisentitave status is under their control so you follow their rules.
Frank ( Ballast ) on
14 Jul 2010 11:16 AM
Interesting comments and view points .....
My thoughts ..... Bottom line , systems / processes and where risk lies will determine true value of business !
Pragmatic Broker on
14 Jul 2010 11:17 AM
The choice is to have your own license, or be a branch office of your aggregator. I know which way I''m going.
Glenn Rodricks on
14 Jul 2010 11:43 AM
The value of a Franchise Business model, when it comes time to sell, is itself a disadvantage (from my experience) and the second disadvantage for the Franchisee is that he does not have his own licence. This is now a double disadvantage.
Part of a business plan is the value of your business when and if the owner/s want or need to sell. Having a Credit Licence will definitely plan a role in the end price of the business among many other factors. At least it does to me, if I had to purchase a Mortgage broking business.
Having spent over a decade in this industry and having built a business from the ground up, I personally would hate to go back under a restrictive arrangement i.e. a Credit rep. where my independence is lost to a large extent.
What the professional brokers need to consider is the independence of their business and how much effort compliance will involve.
If a professional broker is to be compliant as a credit licence holder, he still has to be as compliant as a credit rep, the difference is only the initial applications that have to be completed with ASIC. We do have a major body called the MFAA who are there to assist us and guide us thru this period of transition.
There are a few different software providers with systems to help brokers to comply easily, brokers should check them out, such as Loanworks and ABS Advanced Broker Systems available online at www.totall.com.au where a professional can create an account and use the system at anytime.
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Peter T on
14 Jul 2010 12:45 PM
Being an authorized rep hands over a lot of control of your business to someone else. If they don''t like what you''re doing, they can pull the authorization at any time they please, and suddenly you don''t have a business for 3-6 months. Despite this, if you''re with a franchise like Mortgage Choice or similar, you already don''t have any real control over your business, so it''s probably a moot point.
Voice in the wilderness on
14 Jul 2010 05:21 PM
If you can purchase a licence off the shelf at any time then where is this "value" that the cut price aggregators talk about.
Perhaps these groups are spinning/distracting their members away from the real reason they don''t want to be the license holder. They don''t trust their own members.
If you think that a license = value then compare the average sale price within a franchise (2 to 3 times). Try getting that at Connective.