Brokers no longer have the freedom they once had to use the lender of their choice and it's taking a toll on the wider industry. We speak to Mark Haron of Connective and Barrie Gaubert of Iden Group for their thoughts on why the environment is more restrictive and what impact it's having on the smaller players.
Video transcript below:
Donna Sawyer, Australian Broker TV
Donna Sawyer: In a post NCCP world brokers no longer have the freedom they once had to use the lender of their choice and the ripple effect is impacting the industry in more ways than one. Barrie Gaubert of Iden Group says the boutique lenders being selected to an aggregator panel means the all important difference between being able to do business or not.
Barrie Gaubert, Iden Group
Barrie Gaubert: If we are not in the panel we can’t deal. If you’ve got a aggregator panel who has a whole bunch of credit reps and you are not on their panel, you can’t deal with those credit reps. We are knocked back one just yesterday for that same reason, so it’s an important thing.
Mark Haron, Connective
Mark Haron: There is a lot of cost in turn incurred in having a lender on the panel, with keeping their information uptodate on the systems, on your websites and feeding information out and also just you know an aggregator spends a lot of money building up a network of brokers to utilise and then for a small lender to come in and get access to quite a large distribution model, it requires a lot of I guess structure to have in place.
Barrie Gaubert: From our point of view, to be on the aggregator panels is very important. And fortunately we are and some new smaller boutique aggregators are recently taking us on and that’s fantastic. But you have to be on the panel. The ACO holds the control and key and that means you got to be on the panel.
Donna Sawyer: Mark Haron says even though Connective has a flexible approach to brokers who want to go off panel, credit representatives are more restricted to comply with regulations.
Mark Haron: Connective allows brokers full flexibility to go off panel and use lenders directly. Our agreements with the companies that use our services is not exclusive. That being said, if there are credit representatives with Connective, then they are required to use our panel of lenders. However they can use outside lenders and we do allow from time to time, but we have some guidelines as to how they need to provide us details of the particular builds. Obviously us as a licensee, we are responsible for those transactions that are happening with lenders off the panel, so we need to get a little bit more detail on that.
Donna Sawyer: Barrie Gaubert of Iden Group concedes the systems works, but it favours the big players.
Barrie Gaubert: It puts a cap on our capacity to grow the business, because I mean you go to any aggregator, they will have the top 5 or 6 or 7 banks on there automatically. Would they have the top 5 or 6 non-bank lenders automatically? NO is the answer. So you are capped in your capacity to grow your business. That said even if you are on the panel, you have got homework to do, it doesn’t give you a license to print money. You really have got, I mean we are not a manager that has 50 BDMs around the country, as much as I’d love to have that sort of staff and resourcing to back it up. So we are not competing in the same territory with the big 4 banks. Being on a panel is the beginning of the process. You have got homework to do. It just means you have opened the door, now you have got to provide the service that goes with it.
Donna Sawyer: This is Donna Sawyer reporting for Australian Broker TV.