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Cannon to brokers: 'Stiff' clients at your own risk

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Australian Broker | 15 Nov 2012, 06:00 AM Agree 0
Brokers and aggregators have been lambasted for placing the bottom line ahead of client interest, risking ASIC intervention and further regulation
  • Clint Waters | 15 Nov 2012, 10:15 AM Agree 0
    Fair point but our white label product (PLAN Lending) is often a brilliant product offering price wise (no controls on margin are available on our suite of products which I think is a good thing).

    Because it lacks some bells and whistles (like offset) its still not our number one lender/product but I see it as a win-win scenario for clients not needing certain features.

    Our Credit Proposal document discloses our earned fee as well of course.

    Brokers loading rates for bottom line gain is not a good thing IMO.
  • Shawn French | 15 Nov 2012, 10:24 AM Agree 0
    If a broker puts their interest ahead of that of the clients then they should be penalised, not the industry. I don't know of any brokers who would not put the clients interest first and foremost in every dealing. You would n't be in business for long or have a client base if you didn't look after your clients all the time every time.
  • Brisbroker | 15 Nov 2012, 10:32 AM Agree 0
    Can someone please explain why Australian Broker thinks that we hang on every word that comes out of this blokes mouth. Any chance of getting an impartial opinion from someone who isn't just pushing their own barrow?
  • ozboy | 15 Nov 2012, 10:38 AM Agree 0
    “Competition is good for consumers and it’s good for the economy – but competition that damages consumers by having a trusted advisor sell them something that isn’t right of the them is bad competition.”

    And this is why we are a nanny state. When does the consumer take some responsibility for their decision. You cannot protect everyone from themselves and we need to stop thinking we can and educate people to give them better tools to make better decisions.
  • Country Broker | 15 Nov 2012, 10:51 AM Agree 0
    Oh here we go again, what happens if the white label product is "not unsuitable" and is competative on rate and terms / conditions and costs ?

    If I am a broker who has proof I have run comparisons on say 3 suitable products one of which is a white label product from my Aggregator/ Broker group and it is clearly the most suitable , where is the problem??

    If I am recommending that product without comparisons , then I believe that would be an issue and I may have to declare a conflict of interest ,

    The problem here is the commentators have never been in a face to face broking suitation and are offering commentary yes they are relevant but are too narrow.
  • EJN | 15 Nov 2012, 10:59 AM Agree 0
    Stiff the clients with a rate reduction...why are they being stiffed? The average clients are generally chasing the rate. If that's what the client wants and the product is NOT UNSUITABLE which is what the guidelines state as a key criteria, then what's the problem? I haven't had a client choose a white labelled product yet but it has many times fallen into the options presented as it has been deemed as not unsuitable. If the white labelled product attracts the interest of the applicants and the rate is hot, again, what's the problem. The product sells itself.
  • Moonae | 15 Nov 2012, 11:05 AM Agree 0
    Call it white label - Aussie home loans was essentially "white label" and look what that did for competition in the 1990's. Banks themselves operate on a cost of funds plus margin principle - why is white label today anything different. If an organisation can put a product out there at the right price and attract a client to take that deal when put up against whatever else is in the marketplace, thats competition. If the Banks cant handle that then the industry is on track in shaking things up. If ASIC can't handle that then unfortunately the sabre rattlers aren't serious about letting competition prevail. NCCP has enough provisions to deal with misuse of white label pricing. It's just another product.
  • 1martym1 | 15 Nov 2012, 01:44 PM Agree 0
    What about a lender direct where they dont give as big a discount to one client as they do to another? Aren't brokers and lenders covered under the same rules? I cant see any difference. This is exactly why the lenders pushed ASIC so hard for the not unsuitable clause ie so they could price as they saw fit and werenmt compelled to give their best price every time. One rule for them one for us again?
  • Papery | 15 Nov 2012, 03:01 PM Agree 0
    The product may be 'not unsuitable' & be the sharpest pricing on the day of application. The sting comes later when that same product is no longer as competitive as the tradtional lenders option because our white labelled friends have shaved back delivery rate margin to recover their margins. Seems to me most white label products are no better than an undisclosed honeymoon rate.
  • Manly Dragon | 16 Nov 2012, 12:27 AM Agree 0
    is he saying every broker/aggregator or just the ones associated with firstmac?I normally don`t read this sort of rubbish comment as I totally disagree.

    I do agree with 1martym1. I have just received an enquiry for a client looking to borrow $1m who went direct to Westpac. the branch manager offered her 0.70% off SVR when we are openly offered a much larger discount via our channnel. Maybe the branch is being driven by its profit targets but seems that this is ok. she wants to stay with Westpac who we know offers the lowest up front & I will assist with this even though I would get more income if I was to take her elsewhere including a refi of her existing facilities. what do you think of that Kim? I am not in the minority & believe most brokers would do the same.
  • PeterT | 16 Nov 2012, 12:24 PM Agree 0
    Isn't it a bit hypocritical for the chief of FirstMac to be saying anything negative about white label?

    I've never been interested in whitelabel products that allow brokers to price it themselves, but the simple solution is to simply factor in a 0.6% upfront and 0.15% trail. Those commission levels hardly imply a conflict of interest.
  • Mark S | 16 Nov 2012, 02:10 PM Agree 0
    I think Kim has a valid point. There are brokers out there who if they have the opportunity to set their trail margin or upfront amount, they will increase the interest rate to the client so they get much higher upfront and trail. Most brokers wouldn't do this, most are honourable and honest and look after their clients interests as much as they look after their own interests. However, there are still some rogue brokers out there fleecing clients with cash 'service fees' which they charge the client upfront and regardless of whether they get the client an approval or not. There are also brokers out there clearly still creating income documents for clients when a client cannot supply payslips or letters of employment. As a mortgage manager we have seen discharging clients who we could not possibly complete a refinance for as they do not have enough income, are unemployed etc, yet those same clients manage to get a loan approval organsied by a rogue and dodgy broker. Kims underlying message (although limited to pricing issues) if I read it correctly, is be greedy at your peril. Greedy brokers will hurt our industry and can potentially hurt white labelling.
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