Simon Dehne was recently appointed as the new CEO of LoanKit to replace Kym Rampal who is taking a break from the mortgage industry. Barney McCarthy caught up with Dehne to discuss his plans for taking the aggregator forward and the issues facing mortgage brokers
Q: Are you working alongside Kym with immediate effect?
A: We’ve been doing a handover over the past few weeks, meeting key brokers, and I’m really fortunate that Kym is sticking around until February 2012, so the transition will be pretty seamless. He’ll be doing other functions around IT within the Mortgage Choice group, but it will be good for the LoanKit business that he’s around if we have any questions.
Q: What are your initial plans for LoanKit? Is the plan to eventually rival some of the larger aggregators such as AFG and PLAN or will LoanKit remain more of a boutique operation?
A: The legacy I would like to have when I eventually leave LoanKit one day would be the same as many small companies and aggregators – I want to have grown the business. LoanKit is not always on the radar for people considering moving aggregators and I want to change that. There could be a lot of consolidation, and brokers should be looking at their costs and seeing where they can reduce overheads, so I think they should be looking around at other aggregation models. LoanKit hasn’t been too successful in getting its name well-known enough in the past, so I want to increase that and let brokers know about our value proposition. To me, it’s about delivering what we say. We’ve got a really good software platform developed by Kym from the ground up from when he was a broker.
Q: Do you set membership recruitment targets or do you just take each month as it comes?
A: Ideally, we would like to be bringing 20/30 brokers on board every month, but whether that’s feasible or too low I don’t know yet. If I can at least increase the number of enquiries we have from prospective members, then our business model will speak for itself.
Q: In our recent Brokers on Aggregators survey, just 12% of respondents said they were looking to switch, but reading their responses, many brokers said they were locked into draconian agreements or that the choice wasn’t theirs.
A: Even if it is just 12% looking to move, that’s still a fair number of brokers. Some aggregators use scare tactics when brokers try to leave whereas we adopt an approach that you’re free to come and go as you please, so we have to deliver on our promises. We’ve got the full force of Mortgage Choice behind us as a parent company. We’ve got one broker at the moment who is trying to get his bond back from another aggregator and they are dragging their feet, so I’ve got the full services of our legal team to assist in helping that broker. When tested, some aggregators aren’t as tough as they make out. At the end of the day, there has to be a real reason why a broker wants to move, but if they think they can get a better deal not just in terms of price, but with service, then we’ll do all we can to help them move, and do so quickly.
Q: How successful has LoanKit’s “compliance in a box” offering been? And what percentage of your members became credit reps, and what percentage sought their own ACL?
A: Around 53% of our brokers have their own licence, 24% are credit representatives and 23% are licensed but use LoanKit for compliance. From talking to brokers in the field, many are using us for their auditing needs.
Q: Do you see fee for service becoming more common as brokers struggle to survive on current commission levels?
A: I haven’t seen much evidence of it so far. The only thing I can see that might take off is the ‘no-go fee’ where brokers take a fee upfront that is returned if the loan proceeds or held if the customer chooses not to proceed, so you are charging for the professional service you’ve offered the customer during that introductory stage. That’s something I think should be adopted. If you’re seeing lots of people and they don’t proceed through no fault of your own, you should be able to recoup some of those costs. I haven’t seen a pressing need for a brokerage fee and I would feel really uncomfortable charging a fee and taking a bank commission as it’s doubledipping.
If brokers aren’t earning enough money, I would ask them how much they are leaving on the table when their customer leaves. They may have a loan, but have they been asked about their insurance needs, their health insurance, their car finance, their leasing needs?
Q: Will mortgage brokers start becoming more like financial planners in terms of looking after their clients’ financial service needs across the board?
A: Brokers need to be careful and decide what their core business is. If you’re a one person operation and you’re trying to be a mortgage broker and a financial planner, it’s not so much a conflict as not being able to do both well. If you are a larger business, you may specifically employ a financial planner within your business to focus on that and I think that’s a good model. If you’re smaller and you’re trying to write loans and look after your customers, then it’s worth building a relationship with a local financial planner where you’ve got a referral agreement and you can have a face-to-face interaction.