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APRA chairman tells lenders to keep close eye on brokers

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Australian Broker | 26 Aug 2015, 03:20 PM Agree 0
The chairman of banking regulator APRA has warned lenders to keep a close eye on third-party distribution channels
  • David | 26 Aug 2015, 03:34 PM Agree 0
    Who controls the monopolies?
  • Tony | 26 Aug 2015, 03:36 PM Agree 0
    Duh? Who approves the loans through third parties? LENDERS!
  • interesting | 26 Aug 2015, 03:37 PM Agree 0
    Fraudulent and non compliant loan rates are higher in the retail channel than in 3rd party.
  • Tony | 26 Aug 2015, 03:37 PM Agree 0
    interesting comment perhaps he should also look at lending practices by the Majors and their staff now that would be an eye opener for him
    he really needs to engage brain into gear before making outlandish comments with working out real facts to gain 15 mins of fame and make himself look like a complete fool in the job he is doing!
  • Brado | 26 Aug 2015, 03:39 PM Agree 0
    yeah right... that is just more finger pointing to distract from the real issue... In Branch Lending!!!!
  • Regional Broker | 26 Aug 2015, 03:39 PM Agree 0
    Oh dear here we go again.

    MR Byers made a comment about default rates being higher from the broker channel , there is no difference between in default rates between Bank originated loan and the third part channel , where is his proof, substance over conjecture please, this information is pre GFC days ,Mr Byers!!!.
    Really this fellow must be considered a serious embarrassment to both APRA and the Government.

    FBAA and MFAA MUST get busy and refute this nonsense.
  • Adam Smyth | 26 Aug 2015, 03:40 PM Agree 0
    APRA is a joke
  • Nic | 26 Aug 2015, 03:40 PM Agree 0
    Not those nasty brokers again...
  • Elisa | 26 Aug 2015, 03:41 PM Agree 0
    Again with these random unsubstantiated statistics, I would like to know what he is basing this on.
  • Ted Bullpit | 26 Aug 2015, 03:42 PM Agree 0
    Yer right. Broker bashing again. History tells us that the big four have great compliance issues and ethics problems which arise from the increasingly high sales targets they set their employees. CBA Financial services as a example.
    Brokers don't have such worries which is why most got out of the banks.
    need I say more.
  • KB | 26 Aug 2015, 03:44 PM Agree 0
    "Tends to have..." "Appears to be of..." Facts and figures for both channels please. Appears to be ridiculous commentary...
  • Mondo | 26 Aug 2015, 03:46 PM Agree 0
    Wow, has APRA too much spare time or are BORED....Seriously, wish I had the funds to sue them for being so careless in their assumptions. Obviously, they aren't smart enough to be brokers, cause they sure don't understand what Brokers do!
  • Mark the Townsville Broker | 26 Aug 2015, 03:48 PM Agree 0
    Where does Mr Byers get off saying that broker originator loans have a higher default rate than bank originated loans. At the roadshows I have been to of late the banks have been full of praise for the broker loans quite often being below bank loan delinquencies.

    It appears that Mr Byres has joined a long list of APRA broker bashers that have been strutting their stuff since ASIC let them off the leash.

    Quite frankly I am sick of the stuff coming out of their mouths to the point that I pay less attention to their comments than that of our politicians and that is close to zero.

  • Coast Broker | 26 Aug 2015, 03:49 PM Agree 0
    Interesting story I heard about a recent loan approved by a Home Loan Lender in the Eastern Suburbs of Sydney for the CBA. A 61 year old first home buyer buying a unit to be treated as an investment initially and then Owner Occupied when he retires was approved a 30 year loan term with interest only for 5 years and was talked into borrowing more money that he needed.
    He wanted P & I. Property being purchased is in an older over 55s unit complex. I would love to see if the CBA would allow this scenario to be approved through the third party channel. Maybe APRA needs to look at the Lenders retail lending staff first.
  • Neil | 26 Aug 2015, 03:49 PM Agree 0
    Really Mr Byers. Where is your proof of loan default rate being higher for broker-prepared applications? I have been doing this for 15 years. Current arrears rate = zero. Historical distressed clients = one. Another cheap shot from an over-paid boffin. Well done. Don't let the truth get in the way of the story, Mr Byers.
  • QEDRisk | 26 Aug 2015, 03:52 PM Agree 0
    Come on guys. I have been pretty critical of Mr Byers' last musings but you're getting worked up over nothing with these comments.

    He is saying two things - firstly that banks (not brokers) need to take care when considering a loan from a consumer they've never met; and secondly he is (cautiously this time) quoting APRA's serious amounts of data that demonstrates that loans that are introduced through the third party channel actually do have higher default rates.

    He's not saying we're all bad people or any other form of judgement. Just saying what his data proves, whether we like it or not.

    Calm down and get back to work :)
  • Bob the Broker | 26 Aug 2015, 03:55 PM Agree 0
    He needs to get his facts right. Broker loans have a less default rate than the banks.
    If APRA was fair dinkum they should look at the loans done through the car yards & also Gerry Harvey's interest free loans. I would love to see the feedback from that investigation. To get a loan through those entities all as you have to do is firstly be alive & then be able to press hard & sign on the dotted line. No need to provide proof of income or do a budget to show capacity.
  • dennis martin | 26 Aug 2015, 03:57 PM Agree 0
    if APRA are concerned about the investment market getting bigger well that is because first home buyers can't buy houses, why don't they look at eliminating Stamp Duty for all first home buyers wether they buy new or existing houses that way the need for investment properties should begin to ease, anyway whether a bank has 10% of its book as investment or 15% it should not matter as the banks still do the same checking for investment as they do for owner occupied so lets just get more first home buyers into the market and stop all the fuss about investment properties who are recently customers using the equity in their owner occupied properties for their retirement super, the clamp down if required should be on the investor who manipulates the market by just buying houses to rent out as a business they are the ones who need scrutinising as they buy all the cheap homes so first home buyers miss out
  • Oscar Hvala | 26 Aug 2015, 03:59 PM Agree 0
    Yes, I would imagine that there would be some brokers out there that would do anything to get their commissions paid. As we have seen so far, ASIC has caught many brokers that will submit fruadulent applications. But on the same token, both I and subsequent clients have had to deal with branch staff that are as "sharp as a bowling ball" and would not be able to assist a client in the correct manner. Or for that matter, also pull off some incorrect or "shifty deals" to increase their KPIs. Finger pointing is in both directions (not just One Direction sir !).
  • Julie | 26 Aug 2015, 04:01 PM Agree 0
    I have worked in both areas, and the pressure that banks put on branch staff to achieve targets causes staff to do things out of the normal, both areas have people that do the wrong thing, but brokers don't have the target pressure that the branches have and 99% of brokers do the right thing.
  • Rocket Scientist | 26 Aug 2015, 04:01 PM Agree 0
    Yep he's annoying... I bet Wayne Byres builds speed bumps in his spare time!
  • Scott | 26 Aug 2015, 04:02 PM Agree 0
    Surprising comments from the chairman when CBA say their default rate by third party is lower than proprietary channel. APRA should look at lending practices in the branch networks of some majors and would find that brokers do a lot more due diligence & compliance on borrowers than branch networks do!
  • Peter | 26 Aug 2015, 04:03 PM Agree 0
    Brokers issue a warning. Be aware of Wayne Byers. A constant threat to third party operations. From the old school of proprietary lenders. Anything not written in a branch may be suspect. Tendency to make anecdotal statements on matters he appears to know little about. Unfortunately appears to have great influence on the 4 majors who willingly kowtow to his utterances. Poses a real and positive threat to brokers everywhere - his life mission is to destroy them.
  • Gerald Smith-Jones-Brown | 26 Aug 2015, 04:03 PM Agree 0
    Here we go again, nasty Brokers.
  • Peter | 26 Aug 2015, 04:04 PM Agree 0
    Brokers issue a warning. Be aware of Wayne Byers. A constant threat to third party operations. From the old school of proprietary lenders. Anything not written in a branch may be suspect. Tendency to make anecdotal statements on matters he appears to know little about. Unfortunately appears to have great influence on the 4 majors who willingly kowtow to his utterances. Poses a real and positive threat to brokers everywhere - his life mission is to destroy them.
  • Robert | 26 Aug 2015, 04:04 PM Agree 0
    I dispute the fact that default rates are higher from broker referred deals. The investigation completed by brokers prior to lodgement and subsequently signed off and checked by the lender seems to be significantly higher than loans completed in house. To get a preapproval from one of the majors you merely provide a privacy act form and minimal information. We have to jump through hoops to get the same outcome ( not to mention all the NCCP paperwork we do but the banks don't). Maybe this gentleman needs to work in broker land to see exactly what we do!!!!
  • Paul | 26 Aug 2015, 04:07 PM Agree 0
    APRA's impost on the lenders at the same time as they had to raise capital requirements demonstrates how far out of their depth they are in this field. There should be an enquiry into the partiality of the remarks of the public servants. As an outside observer my reaction would be one of a regulator branding the borker channel as rogues.
  • GC | 26 Aug 2015, 04:08 PM Agree 0
    Can somebody please explain why the witch-hunt against the broking industry? These people in APRA & ASIC have clearly demonstrated over the last few weeks that they have absolutely no idea of how brokers do their work, how we interact with our clients and how its actually in our best interests to do the right thing for our clients.

    The fact that we now write the majority of finance in this country is testament to the fact we do it properly, legally and MUCH better than the banks. This point can be proven as the banks are now actively chasing Brokers to work for them directly as the banks realise their current lending managers are idiots, liars, lazy, belligerent, disingenuous, etc..

    The prime reason for our success is because the staff in the banks are untrained, dont care and are utterly & completely incompetent. The banks know it and the general public know it. Its the lending staff in the banks that should be investigated but APRA and ASIC dont have the guts to really take on the banks. Its much easier for these clowns to have the general public think that ASIC and APRA are looking after them by attacking the broking industry.

    APRA & ASIC - if you have any real proof that the broking industry is acting contrary to NCCP rules or any laws then state your case and prove it NOW. Your comments are libellous and need to be proven.

    Where are the MFAA & FBAA in all of this? What the hell are you people being paid for?
  • John Nelson | 26 Aug 2015, 04:18 PM Agree 0
    I tend to agree with him and I am a broker myself. I have had 5 occasions this year alone where I could not help clients due to servicing.

    On each occasion the client found a broker willing to lie about number of dependents, credit card limits and monthly repayments on personal debt to get the deal across the line.

    Lets face it, it's easy to do and get away with and there are plenty and I mean PLENTY of brokers willing to "massage the deal" to get it through.
  • sigh.... | 26 Aug 2015, 04:26 PM Agree 0
    CBA say the opposite; just had it confirmed from NAB that its the opposite.....but no doubt this is also an overseas statistic - seems to be the where APRA has its strings pulled from.
  • Poh Chin | 26 Aug 2015, 04:28 PM Agree 0
    What a joker we have as our regulator?? That is why this country cannot move forward if we have public servant of this quality.
  • Broker Chris | 26 Aug 2015, 04:31 PM Agree 0
    If I have a deal that doesn't stack up financially I refere them to their local bank where more often than not it is written. If I was APRA I would look internally at the banks.
  • Rocket Scientist | 26 Aug 2015, 04:37 PM Agree 0
    Yep he's annoying... I bet Wayne Byres builds speed bumps in his spare time!
  • Mark | 26 Aug 2015, 04:40 PM Agree 0
    Can Australian Broker have the APRA Chairman disclose the actual default statistics for Lender v Third Party that he is basing his comments on. I have also heard from Lenders that their Third Party default percentages for loans introduces are better than the Branch channel.
  • Scott | 26 Aug 2015, 04:42 PM Agree 0
    Come and have a look at my loan book, not one loan in default and over 11 years as a broker.
  • Perth Broker | 26 Aug 2015, 04:46 PM Agree 0
    Firstly QED Risk these utterances from Mr Byres are what our customers the consumers read and it does have an impact on them.

    The obviously overpaid boffin has absolutely no idea what the brokers do and what compliances they are obliged to abide by. Try taking your byle out on the Branch lenders Mr byres - you might just be surprised at some of their practices. Do not forget that a majority of brokers have forgotten a lot more than most retail lending staff even know.
  • Jake | 26 Aug 2015, 04:55 PM Agree 0
    It's quite simple really. Brokers have always been the soft target and are also probably the envy of the likes of Wayne Byres. They dont have the balls to tackle the real issues so they must be seen to doing something to justify their cushy jobs.
  • Broker | 26 Aug 2015, 05:11 PM Agree 0
    Ok APRA and ASIC , we have all now had more than enough of your continued fanciful bulls&%t, it's time to start providing the FACTUAL EVIDENCE to support your idiotic commentary of late.

    MFAA and the FBAA need to take a collective stance to this garbage too.
  • Aaron | 26 Aug 2015, 07:50 PM Agree 0
    Always putting confidence in the new entrants brokers...
  • Ben | 26 Aug 2015, 08:37 PM Agree 0
    Of course they will have a higher default rate because non-conforming lenders do not have a branch network and are 95% via the broker channel. My guess is that the default rate would be higher most likely as they are higher risk lenders. So it is a nonsense comment that has no relevance. They would need to do a comparison only via the majors as to what default rate there is through brokers or branch lenders.
  • CP | 27 Aug 2015, 09:16 AM Agree 0
    To Bob the Broker & Interesting...having worked in a Big 4 in a credit risk oversight function, the default rate on broker loans is significantly higher than those written via a bank staff member. Securitisation of broker loans has also proven more difficult in the past too. I think everyone needs to play their role properly and don't get stressed out about these sorts of comments...chill people, do the right thing and you'll have nothing to worry about.
  • Robert Blackham | 03 Sep 2015, 11:40 AM Agree 0
    Pointless to say that high risk loans come through the "broker channel" as a whole. Would be more useful for Mr Byres to ask the banks for a profile of default rates by individual broker. Certainly the banks have that information. Then look at the loan books to see how these defaults happen. If it was sloppy work on the broker's part then by all means take action on it, but there are some high risk occupations and localities that no policy can alter. There will be types of customer that can't be excluded without accusations of unfair discrimination of some kind. There will be places where brokers go that bank branches don't exist. That's life.
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