Broker disclosure requirements finally came into force last weekend on 1 October – but were brokers ready, and are they compliant?
On today’s The Big Story, we speak with Vow Financial CEO Tim Brown, Choice Aggregation Services CEO Stephen Moore and Brett Abikhair from The Selector Group, to find out how they are coping with the new “onerous” disclosure impost, to be enforced by industry watchdog ASIC.
How are businesses coping with disclosure documentation? How are they managing client expectations? And why does Brett Abikhair feel that the disclosure changes mean “a lot of time, a lot of effort, and a lot of client dissatisfaction”?
Find out on Australian BrokerNewsTV, your home for industry news, opinion and analysis.
Video transcript below:
Clare Costigan, Australian Broker News TV
Clare Costigan: Hi, I am Clare Costigan and you are watching the Big Story on Australian Broker News TV.
The final deadline for NCCP disclosures to borrowers by brokers has passed. But was the industry ready? Vow Financial’s Tim Brown, says his company has successfully launched new relevant documentation and made sure their brokers were upto speed.
Tim Brown, Vow Financial
Tim Brown: We also took the brokers through our webinar which allowed them to come online, we took them through a formal presentation and then allowed them to ask questions online and we then obviously replied to the group for the questions that were answered. So the feedback was pretty good. So generally I think most people were comfortable you know as we transitioned to the first, they are ready to operate.
Clare Costigan: But will it all be smooth sailing? Stephen Moore from Choice says like with any change, there will always be a number of challenges.
Stephen Moore, Choice
Stephen Moore: The main issue is really that it is new. It’s new documentation, new processes, and in the short term that’s a bit of a distraction as well. In the longer term though, we think it’s a real positive.
Brett Abikhair, The Selector Group
Brett Abikhair: Challenges we found, not surprisingly came from clients. I think we are making their life harder by simply doing what we have been told we have to do. So we have had to manage clients’ expectations a lot harder than we had to before, which takes time and effort. We have also had to spend a lot of time and money on developing systems with very little guidance from ASIC. So basically here is the broad set of what you are meant to be doing and the rest of which you had to make up yourselves. So lot of time, lot of effort and a lot of client dissatisfaction.
Stephen Moore: We do think it is a bit onerous, the sheer number of documents required. That said the intent is right, but we would like to see a streamlining of the number of documents going forward to help make it easier for brokers.
Tim Brown: I think for licensees it’s probably a little less clear, because they have to make up their own process and systems. But that’s the road they chose, but we always offer them to come back under our license at any time and we are finding more and more brokers are moving back under our license because they actually want that guidance and uniformity, so they don’t have to worry about it.
Clare Costigan: Brett Abikhair from The Selector Group says he experienced similar regulation in the financial planning industry and he expects things to get a lot less complex.
Brett Abikhair: Back to the FP days when it all came on board we had a 100-120 page SOA, statement of advices which was a nightmare, that was bureaucratic red tape. But over time that dropped off back to 30, 40, 20 pages records of advice, it became far more client focused on the compliance side.
Clare Costigan: Stephen Moore says the overall effect on the mortgage industry will be positive, particularly in the area of client information gathering.
Stephen Moore: One of the great flow on benefits is in fact capturing rich customer data. Again not only great to reinforce the proposition that brokers provide, but if you capture that data right in a good CRM system, it is also then a very efficient way of doing business. Capture the data once, reuse it right the way through the process in all the respective documents. It also makes ongoing servicing customers very efficient plus the opportunity to identify other needs as well.
Brett Abikhair: Taken on its debut, have you thought about your life insurance, have you thought about your state planning, what about your bigger pictures, how does this tie in to your 5, 10, 15 year plan. If you are not able to at least ask those questions and direct the client to the right place, are you doing the right thing under NCCP. So it’s a very good excuse, reason to engage with clients on 5 broader range of subjects, then technically you have been able to in the past.
Tim Brown: And I don’t think with the costs associated with compliance, that you can afford to be a part time broker anymore. I think you are really lucky dealing with a fulltime broker who is well educated, well informed and truly credit advisor like [__]
Clare Costigan: Tim Brown says brokers who set up their systems well now will have no problems with NCCP going forward.
Tim Brown: Regulation is one those things that you know, we look back in 2 of 3 years time and I think we will just go, “cheez what was all the fuss about?”
Clare Costigan: For more on NCCP and other mortgage industry issues, click around the Australian Broker News Website. I am Clare Costigan, I will see you again next week with the Big Story.