Pepper leads the way

by Otiena Ellwand07 Dec 2017
Pepper Money’s plan this year was to “make it as easy as possible for brokers to serve their customers”, a focus that clearly paid off with record-setting results for the non-bank lender. 

Pepper brought in $2.6bn of mortgages during the 2016 calendar year, a 26% increase from the year before, according to its financial results released in April.

And brokers deserve some praise: they are currently responsible for 94% of the lender’s originations, a rise of 20% year-on-year.

Pepper has come a long way since 2001, when it was a little-known start-up with a quirky name. Now its name is a fixture in the non-bank lending landscape, where it has become a leader in specialist lending in Australia and around the world, with businesses in the UK, Spain, Ireland and elsewhere.

On 27 October Pepper’s support of the third party channel was recognised at the Australian Mortgage Awards where it won the Non-Bank of the Year trophy against eight other nominees.

“Winning awards like these takes passion, commitment and persistence from everyone. It is an award that each and every employee at Pepper Money has contributed to and can be proud of,” says Pepper Money’s country CEO for Australia, Mario Rehayem.

“We’ve worked hard to build a reputation as a company that challenges the accepted and provides brokers with flexible and innovative lending solutions.”
 

“We believe what sets us apart is our overarching mission – to help people succeed. This mission underpins our customer service, strategic direction and company values” Mario Rehayem, Pepper Money

What did Pepper achieve in 2017?
With its attention set on making business smoother and simpler for brokers and their customers this past year, Pepper released its Customer Conversion Toolkit, boosted its professional development training, and launched a mainstream advertising campaign to raise awareness of its products directly with consumers.

The Customer Conversion Toolkit, which it introduced this year, is a set of tools that simplifies the process of determining whether a client is eligible for a specialist loan, and helps the broker position a specialist loan with a client, particularly those who are uncertain about using these types of products.

Part of that toolkit is the Pepper Product Selector, which provides customers with an indicative offer in less than two minutes. It has been embraced by the broker community, Rehayem says. More than 1,000 brokers are using the tool since it was launched in June, and many of them are now writing non-conforming loans as a result.

Pepper is also heavily invested in educating and supporting brokers’ professional development through a number of initiatives. Its national Insights Roadshow specialist lending masterclass attracted a record attendance of 1,500 brokers across five states, up 50% from last year. It added six new online learning modules to its Better Business Hub, which each come with CPD points upon completion. The concise videos available on the hub website are designed to drive business improvement and assist brokers in better understanding their self-employed clients. Pepper also backs the growth of the third party channel by providing online and face-to-face education programs to new-to-industry brokers, including supporting the MFAA’s New Entrant Program.
 

What does Pepper have in store for brokers in 2018?
While Pepper achieved much in 2017, “we aren’t going to rest on our laurels in 2018”, Rehayem says.

“In fact, we are already planning a bigger and better Pepper Money offering for brokers next year. We’ll also act on implementing the feedback we’ve received from brokers around the kind of products and services they want to see from us.”

Pepper’s goal is to continue lifting its overall market share by responding quickly to new trends and providing brokers and their customers with the solutions they need on a daily basis, he says.

If the takeover bid by global investment firm KKR Credit Advisors proceeds, Rehayem says it’s fair to say that brokers “will see even more from Pepper Money in 2018”.

“Pepper, with the support of KKR, will look to provide brokers with some exciting new products and initiatives that help people succeed,” he says. “What won’t change is the same high level of service Pepper Money has provided to brokers over the course of the last 16 years.”

One of the changes in the market that isn’t going away, however, is the shifting regulatory environment. Rehayem says the focus for 2018 will be on how quickly brokers and lenders can respond and adapt to these evolving market conditions.

“The advice I’m giving is as relevant in 2018 as when I first gave it – Know Your Customer is critical. The scrutiny around record-keeping and the quality of interview notes brokers keep on their customers is only going to intensify,” he says.
 

Brokers have a duty of care to their customers, and they need to protect themselves, so Rehayem urges them to be diligent in the questions they ask and accurate in how they document customers’ living expenses to better understand the volatility of their incomes.

“A broker should be asking these questions regardless of whether the lender is requesting this information or not. Consider getting a recording device for all of your customer interactions,” he suggests. “In addition to this advice, brokers should ensure they partner with a lender that can respond to changing market conditions promptly.”

Pepper has positioned itself as a flexible and transparent alternative for those shut out of funding by traditional lenders, and has leveraged customers’ dissatisfaction with the banks.

“We believe what sets us apart is our overarching mission – to help people succeed. This mission underpins our customer service, strategic direction and company values. In daily interactions with customers and business partners this translates into an enthusiastic desire to find win-win solutions, a flexible approach and honest communication,” Rehayem says.