Australian Broker forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Majors to limit aggregation partners

Notify me of new replies via email
Australian Broker | 09 Dec 2008, 09:00 AM Agree 0
Major banks will encourage consolidation in 2009 by limiting their relationships to top aggregators, Deloitte has predicted.

  • phil | 10 Dec 2008, 01:28 PM Agree 0
    How about aggregators limiting the majors. Lets support those that support us. We must be the only stupid sales group that sells a direct competitors product. The larger their market share the lower or relevance
  • Broker | 10 Dec 2008, 01:59 PM Agree 0
    Yes with 90% market share , there is no doubt they will continue to screw brokers whilst continuing to say they fully support the broker market, until they have driven the majority of brokers out of business that is.....
  • Leisa Reeves | 10 Dec 2008, 02:19 PM Agree 0
    No wonder, given the fact they have cut our comm's, their market share increases, plus the rumours of more commison cuts....I think, non banks need our support, given most are paying the best comms, turnaround times and service...
  • Matt J. | 10 Dec 2008, 02:29 PM Agree 0
    Banks continue to screw the broker. Even if they have chosen a more personable and boutique aggregator like I have. Aggregating through the largest aggregators is not what my business and I am about! Why can't the banks realise that to be 'committed to the broker market' their focus needs to encompass all things relating to the market!

    I'm not changing aggregator - just my option of where I send my deals. This is ridiculous.
  • Baz | 10 Dec 2008, 02:30 PM Agree 0
    It may be a dream However:

    Would'n it be great if the Banks (due their only offering their own products) were forsed only to offer loans to the general public via a broker, who was able to properly and without bias, facilitate the client with the product that best suited their needs.

    It would mean that the Broker is actually recognised for the role they play and the banks are recognised as being in the industry for the opportunity to make as much money as possible. The winner would be the client.

    Let's be realistic. As the numbers of funders reduce over the next 12 months who is going to ensure the banks stay competitive. Winner the Banks Clients WILL loose.

    I would suggest the best placed for that role are in fact the brokers?

    Anyway. Being relatively powerless to make any changes to the big 4, Brokers are looking at present at following very close behind the nonbanks (From where the power for change came) in a mass exit from the financial markets. It would be apparent that THEN; the broker would indeed be recognised as an impoortant part of the process.

  • Matt | 10 Dec 2008, 02:32 PM Agree 0
    This story is the reverse of the reality. The two biggest lenders in Australia have come out with quality reward models not volume related. The bottom line is the bottom line. The Banks that have measured their expense lines know that bigger is not better when it comes to effeiceincy and profit. Qulaity is key and big aggregators simply don't cut it in that area. Banks or lenders that concentrate on volume as the key driver for Aggregators will end up with the rubbish deals and as always that will blow up there back office. This results in all the qualtiy player moving elsewhere and they will be stuck with the crap. At least they will get alot of it though. Banks beware.
  • M | 10 Dec 2008, 02:39 PM Agree 0
    Its simple then, boycott the big 4. Look after yourself and write with nonbank lenders that will ensure your trails are paid. Time that we as brokers educated the public I think.
  • Allan | 10 Dec 2008, 02:44 PM Agree 0
    I have been broking for 4 years and have never done a deal with NAB, CBA or ANZ. To this day I have done 2 loans with Westpac because my client wanted to go there. I have approx. 150 of the happiest clients in the business as I show them the benefits of fees and interest rates of the loans that they have taken out. Stuff the big 4 banks and I hope they bleed to death over the coming months. They will never get a loan application off me, ever.
  • Josh | 10 Dec 2008, 02:45 PM Agree 0
    It would be great to be able to send all our deals to the non-bank lenders, but the unfortunate truth is big banks like CBA etc have the capacity to do deals for clients that others can't. Casual and probabationary period clients and clients in their jobs for short periods of time, many first home buyers fall into this catagory and with the increased funds from the Government are keen to get into their first home. Not all of them should get a loan but many deserve a look at and its only the big banks that are willing to give them a go. We miss the days of 100% ING etc deals with the easy going friendly assessors that actually listened. These days it seems like if a deal doesnt fit exactly into their box most lenders say 'take a hike'

    Id like to see some of the non bank lenders (and i dont mean Rams, we all know that will soon be just Westpac) creating some Niche's for themselves and making it easier to use them. No one wants to send their deals to the big banks, but it seems to be getting hard not to.
  • Peter | 10 Dec 2008, 04:05 PM Agree 0
    Without the Banks, Brokers have nothing except for small lenders who will struggle to survive the current credit squeeze...

    Banks will have no need to provide distribution via small Brokers and Aggregators, especially when there is a move back to the Banks for security, service and no need for a middle man..

    The Big Brands and Big Aggregators will be the only ones standing when this is all over...
  • Tony | 10 Dec 2008, 04:27 PM Agree 0
    I read with interest some of the comments who talk about what is good for the broker etc. Should we as an industry be looking instead at what is good for all concerned - the lenders - the clients - and us the brokers.

    I have heard lenders talk about approval rates of 1 in 5 applications. This means that there is a large amount of crap being submitted out there. Either the brokers who have such bad conversion rates don't know what they are doing, or don't qualify the client properly to the lender in the first instance.

    No wonder the lenders see the broker channel as not profitable.

    Isn't it time that as an industry, we take responsibility for ourselves and as a whole look at the quality we submit.

    If we turn this around to where all lenders have a 1 in 5 declinal rate instead of approval rate, they may then see us as a profitable channel and start giving us the logistics we deserve.

    When it comes to commissions, I believe that this should be the last thing looked at. The clients well being should be the first, and if all brokers took that attitude, it may also increase the quality of the loans submitted.

    It is easy to blame everyone else but yourself, but as an industry, it is time we became more professional and show that we are a profitable channel for any lender, and then, and only then, we will have a leg to stand on with what we want from the lenders.

  • Broker | 10 Dec 2008, 04:53 PM Agree 0
    Any broker or organisation that had a strike rate that poor, should stop wasting their own time , the lenders time and find a more suitable profession.

    In fact they should have their accreditation cancelled, as these wood-ducks are making the professional brokers job a lot harder than it needs to be, by submittingwhat is obviously trash.
  • dd | 10 Dec 2008, 05:01 PM Agree 0
    I couldn't agree more with "Broker". gotta be kidding! If I am going to convert 1 in 5, I will give the game away. I look at a 100% strike rate, otherwise I simply tell the client I cannot help & stop wasting his/her time & mine with an application & supporting docs. Put simply, the Bank's will find out channel non profitable with a 20% strike rate; that is they still need Processing Units & Credit Managers to view all applications.....Who do you think pays for it. So I suggest you become more professional with your clients & take applications which you genuinly know will proceed to "APPROVAL".
  • Michael | 10 Dec 2008, 05:07 PM Agree 0
    Peter if you think that the Banks will allow the"big aggregators" to survive if they get rid of the smaller lenders and aggregators, your wrong. Why would they let a small number of big aggragtor survive who will then have power to force the Banks to make decisions. Competetion is the only way to ensure your survival as a broker and fair pricing for the consumer.
  • Robert Kaya | 10 Dec 2008, 06:46 PM Agree 0

    As an experienced broker, I shouldn't be inclined to panic as the market is vast and extensive..
  • david nunn | 10 Dec 2008, 11:28 PM Agree 0
    While the banks can pick and choose who they do business with, they have obligations not to restrict fair trade practices. Regardless, Ive got a business model that takes advantage of the mortgage broking market while it is viable (or still exists!) and keeps me in business if that income stream dries up. If you can't control something, don't depend on it!
  • Broker | 11 Dec 2008, 12:20 AM Agree 0
    Now the big 4 can now stomp around with their chests puffed out,and screw anyone they choose to, whenever they feel like it,which appears quite often of late, and it appears they haven't finished as yet.

    As a broker that has been screwed my these arseholes to the tune of 30-35%% , our entire business model has changed overnight, but sadly my living expenses haven't and can't drop by 30%!.

    I am totally pissed with their whole approach to the broker market. I'm so sick of hearing about the "cost of funding" when there appears to be no transperacy behind the actual costs of this funding, other than more record profits...

    It's easy to say don't use them , and support non-bank lenders,( I try to) but I also feel obligated to place my clients in the most cost effective loan to suit their requirements.

    Ad soon as a non lender introduces a great product ( a basic varible product would do it) that has a great rate , with no fixed percentage exit fees,and reasonable set-up costs, they will surely become the most successful non bank lender in the market.

    The question remains which one is going to step up and when???.

    Until then the big bad 4 will continue to make the broker market as unattractive as possible, until they drive as many brokers as possible out of business.
  • THE BANKER! | 11 Dec 2008, 01:36 AM Agree 0
    We love & support brokers, we really do!

    Read on and I will show you how we do it!

    1. Cut your income by 35%, due to our new cliche the"cost of funds", whilst we continue to post record profits!. Then talk about cutting it further (how’s 60% sound to you?) until you find another job, and leave us alone!

    2. Understaff our call centers, so we ensure you wait 20 minutes to follow up on our typically poor service, whilst you listen to our "we value your time" dribble!

    3. Under staff our credit areas so you wait 5-10 or maybe even 15 days for a response, and god help you if we request anything else, as it will take us another 3-4 days to digest that simple information!

    4. Play pass the parcel with your files on a daily basis, so we have no idea about the progress of your files, even after you have repeated your self 5 times to 8 different staff!

    5. Print loan documents from our "automated systems" that take another 3-4 days to automate!

    6. Certify your returned loan documents within another 3-4 days. Hey although it must take 30 minutes max to do this, it’s a big, big job you know!

    7. Introduce extremely frustrating online submission platforms that are designed by rocket scientists, with the intention of giving you a severe headache, test your patience, logic and common sense until you want to throw your PC under the nearest tram! .Hey but thanks for inputting our work for us, that’s what we pay you 35% less for!. After all, it's faster for you than a manual submission isn't it?. Oh sorry we thought it would be!

    8. Over staff our client retention area, so we can kill your unconditionally approved deals whenever possible that are ready to be refinanced elsewhere, and never mind the double standards of our polices, we at the branches and the retention area can do whatever we like, when it comes to fees, rates or any other policy that suites us, even though we told you it was not possible when you requested exactly the same thing!

    9. When we send you communication, please remember we are protected species that don't have email addresses, direct phone numbers or any other form of effective contact options. We love to hide behind 13 numbers and go missing in action, especially when timelines are tight!

    10. Our Relationship Managers only look after 400 plus brokers each!. That should ensure timely and efficient service to our much valued brokers!

    11. If you have managed to make it this far, and actually settled the loan, congratulations to you, we will get around to paying you in about 5-6 weeks time, as that’s great for your business cash flow!

    12. Ah, claw back another fantastic initiative by us, aren’t we just so creative?. After all the blood sweat and tears that you have put in to the loan , we will take your commission (ideally all of it) back, if due to no fault of yours , your clients circumstances change,as you should've known that when you lodged the application shouldn't you?. This is our favourite way of demonstrating our ongoing loyalty to you , our valued business partners!
  • Veritas | 11 Dec 2008, 08:55 AM Agree 0
    Broker, congratulations on your 11/12 posting where you say "It's easy to say don't use them , and support non-bank lenders,( I try to) but I also feel obligated to place my clients in the most cost effective loan to suit their requirements." This comment recognises the fundamental value proposition that brokers offer to their clients - i.e. their independence and ability to offer impartial assistance in getting the best home loan for the client.

    Comments such as "How about aggregators limiting the majors. Lets support those that support us." and "Its simple then, boycott the big 4. Look after yourself and write with nonbank lenders that will ensure your trails are paid.", demonstrate one of the fundamental problems with the broker industry (which has been reinforced via survey results over the years) which is that some (most?) rokers are more concerned with maximising their commissions rather than serving their clients' best interests. Don't you think it is hypocritical to criticise the banks for profit maximisation while at the same time beating your chest about directing your business elsewhere to maximise YOUR profits?

    I know from deep experience that the broker channel has been, for many years, unprofitable for most lending products and most lenders. The only way for brokers to remain relevent is if they offer the lender a distribution channel which costs no more than their own internal distribution channels (branches, call centre, internet, mobile lenders etc.).

    Three things the broker industry must do in the future to remain relevant:

    1. Genuinely act in the best interests of the client, regardless of the commission rate being earned and who is offering it.
    2. Cut out the fraudulent conduct, falsification of documentation etc. that forces lenders to spend time and effort validating what you submit.
    3. Submit deals which are complete, properly documented, and which satisfy the lender's product and credit criteria.
    4. Make sure that you have sold the client the right loan to meet their needs - a large proportion of borrowers switch loan products within the first year because the product they were sold was not properly explained to them.

    Brokers need to face up to the fact that the world has changed this year, and lenders will not be chasing outright volume - they want quality ahead of volume.

    And by the way, why is is that with the demise of the non-ADI lenders, the banks' market share has increased while the market share of the other ADIs (building societies and credit unions) has not increased to anywhere near the same extent? If the big 4 banks are really that bad, then why are brokers not moving all of their business to these alternative ADI lenders who offer the same (often better) products rates and service?

  • Bruce Finch | 11 Dec 2008, 09:35 AM Agree 0
    If the Banks no longer see any value in brokers, then close the aggregation channel completely. Competition will emerge and will always rule!
  • World of Brokering! | 15 Dec 2008, 11:04 AM Agree 0
    In regards to change and payments to brokers. I have been in brokering for 14 years. I have always known the Australian payment system would change. It's a wonder it's taking this long to come through. in 1996 you did not get paid a trail in UK, USA and Canada. Only an upfront. I can not work out why Australian Banks have taken this long to make the hair cuts. An Australian Broker was paid 50% more than an overseas Broker WHY??? ,,,,, However when the cedit crisis is over you will see the upfronts remain & trail system totaly decrease. Brokers will remain in the system as the non banks will recover again. With cheap money again available in 2010 Banks will need delivery of this cash to the market,that will mean brokers will be the Banks best friend again,,,, that you can bank on !
Post a reply