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CBA’s new broker requirements ‘a barrier’

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Australian Broker | 12 Oct 2012, 07:00 AM Agree 0
A leading broker labels CBA’s impending application requirements ‘a barrier’ which could destroy approval rates
  • Philthyo | 12 Oct 2012, 09:58 AM Agree 0
    I thought part of the NCCP requirements was to verify the clients financial situation. How can you assist with credit if you don't look at ALL available financial information. I can't believe the comment that it will increase the chance of decline - wow fancy declining a loan because you discovered some undisclosed debt that blows the deal out of the water!!!
  • Broker IQ | 12 Oct 2012, 10:18 AM Agree 0
    Wouldn't all mortgage brokers do this already??? It's in their interest to be observant and diligent in this area.
    I don't get surprised anymore when brokers get upset about being asked to do an efficient job when preparing a loan application...and actually EARN their commission!
  • Melbourne MM | 12 Oct 2012, 10:20 AM Agree 0
    Couldn't agree with you more Phil. As a credit assessor it's amazing the number of times I see an inadvertantly supplied transactional bank statement or Line of Credit / Offset account throw up an undisclosed committment. I would have thought it was in the brokers own interest to ensure everything is disclosed - it's called credit prudency....and really, is it that much of an impost for a client to dig out their latest statement (usually easily accessable via on line banking)???
  • Pet3r | 12 Oct 2012, 10:21 AM Agree 0
    @ Philthyo

    yes you definitely assess the clients current financial situation but asking them to provide statements for their 8 accounts will put clients off. You make it too hard for the clients and they won't come back.
  • Michael | 12 Oct 2012, 10:22 AM Agree 0
    I think the requirements are fine. If I was lending hundreds of thousands of dollars I would want as much information as possible. CBA are always 1 step ahead of the pack.
  • Ken Crawford | 12 Oct 2012, 10:26 AM Agree 0
    Philthyo - hear hear
  • Billy Bob Blogg | 12 Oct 2012, 10:27 AM Agree 0
    It will soon become mandatory to live with your Customer for a month prior to submitting the Loan Application, to make sure we get the FULL picture.
  • ED | 12 Oct 2012, 10:27 AM Agree 0
    Well I would be looking at personal bank statements in any event just to satisy myself that the borrower could afford the loan. But to have to submit this to the Bank is another story. Been in broking for 10 years and have used CBA once. My suggestion is just use another Lender. 2nd tier preferred. There is nothing spectacular from CBA that cannot be matched or bettered with a better service level than other Lenders.
  • Alex Choice Home Loans | 12 Oct 2012, 10:28 AM Agree 0
    Nothing new. we have been doing this for ages. Saves time discovering "surprises" of not disclosed commitments after the application is lodged.
  • PeterT | 12 Oct 2012, 10:30 AM Agree 0
    Whilst I don't disagree with the concept of what the CBA is trying to do, undisclosed debts are generally acertained via CRAA checks.
    The CBA is already probably the most paperwork intensive lender in the market. COLA is so alien to any other submission software in the market that it makes it time intensive to deal with and it doesn't integrate with other CRM platforms (forcing double data entry). Any amendments to applications must be made electronically which almost makes COLA manditory.
    On top of all this, rarely does a week go by where the CBA doesn't change a policy and ingorance of an obscure policy change can lead to reduced commissions!
    100% clawback in the first 12 months, no trail commission in the first 12 months, and a branch network that still actively trys to undermine brokers. Is it any wonder why they get a minority of my business?
  • Moonae | 12 Oct 2012, 10:31 AM Agree 0
    Banks telling me how to conduct my preliminary assessment under my responsible lending policy. Paternalistic is the least offensive response I can give to that.
  • Alex Choice Home Loans | 12 Oct 2012, 10:31 AM Agree 0
    Nothing new. We have been doing this for ages. It's in our own interest not to "get surprises" after the application had been lodged. Saves time and resources for everyone.
  • BONED | 12 Oct 2012, 10:31 AM Agree 0
    Agree with Philthyo! In addition, let's make sure we have facts straight first too before publishing 'award winning' comments: 'A transaction account(s) is the account where the customer's salary is credited and/or main transactions are conducted, i.e. direct debits are deducted'. They're not asking for 'every non-debt account'! How many Clients have 'main' transaction accounts with multiple institutes? A handful, at best?
  • Doug | 12 Oct 2012, 10:34 AM Agree 0
    CBA just seem hell bent on making it harder for NON DIAMOND brokers, as a sole trader I have no way of reaching the hurdle to achieve this status with CBA unless I want to give them the bulk of my business which defeats the purpose of offering choice to clients as such I am left to deal with the poor turnaround times that without an escalation generally see a loan wait 5 days for a decision. I have already started to see the credit officers asking for information that has no bearing on the credit worthiness of the application. CBA are making the decision to use other lenders easier by making it harder to deal with them !
  • Keith Bridges | 12 Oct 2012, 10:41 AM Agree 0
    I cannot foir the life of me see the issue here. As part of NCCP prudent lending says one should view all bank statement not just to look for undisclosed obligations but more importantly to gauge spending behaviour
  • Fabulous Phil | 12 Oct 2012, 10:42 AM Agree 0
    Why don't CBA look at their own staff as well. Recently had dealing with one of their Mobile Lending Team who was prepared to "hide" many issues to get a deal done.
  • ChrisA | 12 Oct 2012, 10:45 AM Agree 0
    I must say I was flawed by the concept and comment,that checking every day transaction accounts would increase work load and "the exercise could simply become a barrier to entry"........totally agree with Philthyo. How can you say you have done a full assessment of the client position without reviewing ALL their finances, regardless of how many accounts they have?? Not only is it a requirement of NCCP, it is a basic part of the Mortgage Broker role. I am not suprised CBA are making this a requirement & I wont be suprised when others follow. If there is nothing to hide, why is it a problem??
  • Peter | 12 Oct 2012, 10:46 AM Agree 0
    Get used to it boys and girls. Large companies love to pass on whatever they can to reduce their overheads. Particularly when they know the small, one-off operator business can ill afford to ignore it and especially when the law and compliance is on their side.
    It's easier to do that then recuperate costs via a commission cut!
    More reason to consider Fee for Service. Nothign to do with professionalism, just survival.
  • Tony | 12 Oct 2012, 10:49 AM Agree 0
    Perhap they should adopt the same policy in the branches!Seems they ahve a policy for Brokers and a fairly lackist policy for Branch lenders
  • Brisbane Borker | 12 Oct 2012, 10:53 AM Agree 0
    do not know why anyone want to deal with CBA. I been a broker now for 7 years and not one loan did i give to CBA.
  • David | 12 Oct 2012, 10:53 AM Agree 0
    Agree Philthyo. If you're doing your job as a broker you're already doing this.
  • Brokerbloke | 12 Oct 2012, 10:59 AM Agree 0
    Welcome to the age of no responsibility on the borrower they can't be trusted to tell the truth or know what they want
  • Philip Edwards | 12 Oct 2012, 10:59 AM Agree 0
    Under the requirements of NCCP, any broker would be mad not to check any clients transactional history to verify committments. CBA is on the right track here to ensure completeness of the loan application and verify its accuracy. There is ony a possibility of increaed declines if the broker hasn't cmpleted due dilligence, and if they waste CBA's time on a loan that will not pass servicbility or scrutiny, the why bitch about lower comms, when they waste the banks time, the clients time, and their own time? Using CBA is still the clients choice to make, and not looking at transactional statements is a brokers risk to take.... so I really don't see a reason for complaints here.
  • Rach | 12 Oct 2012, 11:12 AM Agree 0
    Already doing it, so no biggie. Under NCCP, I have taken it upon myself to ask for a copy of the transaction statement where their pays are deposited - Just to satisfy myself of any non disclosed direct debits etc...It's amaxing what people forget they have in terms of debts... Of course, you can't pick up everything (they could have accounts they don't even tell us about), but at least I can satisfy myself in the event of an audit that I've made reasonable queries.
  • Tony | 12 Oct 2012, 11:16 AM Agree 0
    “decreasing the experience for the customer’ and could delay approvals “and [increase] the chance of decline.”

    Are you kidding ?? im sure if you explain to the customer why this needs to be done - ie ensuring they are no getting a loan they can't afford - there will be no drama's. I guess for some brokers it's still "what the banks don't know...." attitude.
  • Casey | 12 Oct 2012, 11:17 AM Agree 0
    The new requirement seems sound within the new legislation. My only concern with this approach is whether the brokers metrics measures become effected now or in the future due to customer non-disclosure.

    The reality is, I am regularly seeing new clients with more traditional budgeting skills. Their banking can be very modular, meaning a complete separation of banking accounts and sometimes institutions, for various aspects of their day to day banking.

    I recently met a new client who had 7 separate transaction accounts with 3 banks for different bill types - loans, utilities, insurance, savings, kids trust funds, etc. They may have disclosed one or two non-CBA accounts and failed to mention a third non-CBA account they hold. Checking through the statements doesn't reveal anything to me but one of their CBA accounts shows a regular linkage to a third non-CBA transaction account. PING! I failed to obtain or disclose an account statement.

    So my concern is whether this policy is treated on a best endeavours basis or whether this becomes another metrics measure.

    Secondary to this, in the same scenario the file gets a delay in processing, chasing up statements that you have already made best endeavours to obtain. The client doesn't think to provide it simply because it's a kids trust/savings account or something similar. But their file is side lined due to client non-disclosure.

    Overall I think the concept is good, but I have yet to see if the practical implementation has been thought through. My main concern is those clients who hold CBA accounts where regular transactions out to non-CBA accounts get held up for what potentially could turn into and over zealous process. The legislation requires reasonable inquiry, not full audit.

    Hopefully this doesn't turn out to be the later.
  • Jason Bridgett | 12 Oct 2012, 11:25 AM Agree 0
    The NCCP requires you to take reasonable steps to verify the consumers situation, not just income, and ASIC state that multiple sources of verification are best practice. Without a bank statement I am unsure how you would take reasonable steps to verify their liabilities. In my opinion this move goes a long way in making sure brokers are better protecting themselves.
  • Maria Rigoni | 12 Oct 2012, 11:38 AM Agree 0
    The NCCP requirement is for the broker to assess whether the credit contract will be unsuitable for the consumer if the contract is entered or the credit limit is increased in the assessment period.

    To do this the broker is expected to make reasonable inquiries about the consumer's requirements and objectives in relation to the credit contract and the consumer's financial situation and then take reasonable steps to verify the consumer's financial situation.

    So a question to be answered is; Is it reasonable for a broker to examine every piece of financial documentation in such a way to prove in absolute terms that a potential borrower is telling the truth.Is the next step swearing on the holy book?

    Potential borrowers have a right to be slighted as they are being assumed to be irresponsible dishonest people who have no ability to assess if they can afford to make repayments on a loan they take out.
  • Will - Perth | 12 Oct 2012, 11:44 AM Agree 0
    A good broker checks bank statements anyway as required under NCCP provisions so why CBA is making a big issue of this I don't understand. They are simpy stating the obvious. I don't deal with CBA anymore so not familiar with their procedures.he
  • Stephen Dinte | 12 Oct 2012, 11:46 AM Agree 0
    Like the majority of respondents, our office has been checking client's transactional bank statements for many years now to minimise the risk that there are undisclosed liabilities. CBA has implemented this because they, like all lenders, would be fed up with the minority of sub-standard loan writers who are too incompetent to have realised that this is part of their NCCP responsibilities.
  • David | 12 Oct 2012, 12:02 PM Agree 0
    To the nay sayers: I can only suggest you re read the NCCP, and concentrate you attention on Responsible Lending Conduct. HINT : focus on Chapter 3 Section 4. Once you have, try to understand what your obligations are. Key words include "......the licensee must make inquiries and verifications about the customer's situation" I can't for the life of me see how anyone can VERIFY without EVIDENCE to whit : Bank Statements. For those who think checking bank statements is to onerous on them, or demeaning to the customer - Perhaps you are in the wrong business.
  • Brad - QLD | 12 Oct 2012, 12:40 PM Agree 0
    I do not have a problem with the 'request' as i do this anyway as part of my process. It is far easier to pick up something and address with client before spending three-four hours placing and submitting an application. Then having the 'missed item' detected by the lender. The delays can be quiet long to have satisfied and then resubmitted for assessment again. Costly for ALL parties...
  • 1martym1 | 12 Oct 2012, 01:13 PM Agree 0
    I think most of you are a bit OTT. CBA tried this before and it didnt work. Reasonable enquiries and scaleable is what the NCCP says. More please on the relative risk of the deal and the character of the borrower less on box ticking I say!

  • IF - Qld | 12 Oct 2012, 01:22 PM Agree 0
    Wow! A lot of comments. It is part of our our requirements to verify if there are any other commitments. I certainly wouldn't use this as an excuse not to offer CBA to my clients. I have plenty of other reasons for that: poor service to brokers and broker clients, and the obvious channel conflict, delayed trails, and clawbacks just to name a few.
  • Melbbroker | 12 Oct 2012, 01:47 PM Agree 0
    As stated in previous comments, I wonder if the branch has same requirmenets. They have approved a lot of loans in the past that I would not go near. Come to think of it they're branch operates a bit like BOQ. Approve anything!!
  • CBA-lender | 12 Oct 2012, 10:23 PM Agree 0
    Agree with Phil etc. Also my first thought was "they are not required to do this already?" The banks own lenders have been doing this for years, and it's a serious compliance breach not to. The several comments to the contrary are illinformed and idiotic. Let's stick to the facts.
  • Positive Broker | 13 Oct 2012, 12:58 PM Agree 0
    They key here is "reasonable enquiries". getting the bank statement is fine but what if they go to the post office and pay a credit card in cash? How do you check that without stalking the customer. As for CBA they have been removed from my panel because they are just painful to deal with.
  • paul | 13 Oct 2012, 03:15 PM Agree 0
    the lenders i deal with have asked for this for a long time - some small and one large. not a issue - cba ahead i doubt it most of the lenders (good ones) have been asking for this for at leat 2-3 years the better ones even longer. ALL account to might i add. do not need CBA do not use them but maybe they can now provide answers instead of excuses.
  • D'Arcy - Qld | 15 Oct 2012, 10:43 AM Agree 0
    Has he been asleep since July 2010? We've been doing as they suggest since then (less a few months). On the other side of the coin though borrowers are now not allwoed to decide FOR THEMSELVES if they can borrow. It is totally out of their hands. A little over zealous govt initiatives as a result of the GFC and "absolutely stupid" lending practices in the USA
  • PeterT | 15 Oct 2012, 11:39 AM Agree 0
    There's certainly a dilligence aspect for the brokers to complete this, but I've got some concerns.
    What happens if a borrower is putting money into a kids savings account? Will the CBA look at this as a liability or will they require a stat dec or letter from the borrower? I can see scenarios where this could blow out into a paperwork nightmare.
    And are they putting this requirement to the branches as well?
  • Kevymac | 16 Oct 2012, 09:35 AM Agree 0
    CBA is a piece of work. I once sent a client to the CBA branch because I couldnt satisfy the criteria. Branch wrote the deal in an hour.....double standards
  • ozboy | 17 Oct 2012, 09:24 AM Agree 0
    All semantics. Bottom line you need to be sure that the client can afford the loan, if you need to raid the children's bank account to get servicability then you run the risk of ASIC raiding you. Do what you want but take ownership of what you do. Just remember if it hits the fan where do you think your trail will end up....not in your pocket!! Oh by the way who cares what a bank wants you control your future and don't winge or say I am a scapegoat, everyone else did it, the lenders helped me etc you did it, it was your decision therefore it's yours you own it.
  • Alwyn Beardmore | 17 Oct 2012, 04:16 PM Agree 0
    19 years as a mortgage broker and I've done only a handful of loans through CBA - they were originally against brokers and they've never really got behind brokers. They haven't got the best loan products and I use them only for the occasions when I can't find another lender prepared to do a particular loan.
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