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Comment of the Week: Brokers remain fiercely independent

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Australian Broker | 21 Jul 2014, 09:09 AM Agree 0
The interim report of the Financial System Inquiry last week re-ignited debate about broker independence and bank ownership of third-party distribution channels
  • Denise Brailey BFCSA (Inc) | 21 Jul 2014, 11:15 AM Agree 0
    At long last these discussions are on the table. Colin Neave (C'wealth Ombudsman) wrote policy 2001 - 2009 to say Broker is Agent of the Bank because the bank never speaks with the Borrower. Other criteria included in the document. Whether aggregator in the middle or not, and deviously written agreements in between, Neave stated these agreements do not alter the fact the banks will still be made liable for any loss. Neave was head at FOS at the time. See Bulletin # 32 from ABOS. To fix the uncertainty all brokers have to do to protect themselves is to hand a copy of the Loan Application Form to the bank customer at the point of signing - all 11 pages plus the copy of the service calculator. Then internal lending staff cannot alter your document after you have written the information on the paper and sent in for processing direct to the bank.
    Secondly, ignore those lenders who instructed Brokers via (direct)email to "shred the original 12 days after settlement." We reported that fact to main stream media and went to print in 2010 via the Australian. Brokers should never shred the original - protect yourselves by giving the document back to the customer. Internal staffers used "gallons of white out" as stated by UK Police in evidence and the same has happened here in Oz. Broker originals prove that point....the internal copy has been altered. Thanks to all those decent industry people who assisted us with our investigations. The Brokers we speak to are astounded and very helpful.
  • marty | 21 Jul 2014, 12:51 PM Agree 0
    Denise this is where I lose patience with you. There is no neat original 12 pages to keep! The vast majority of brokers don't use hand written applications anymore. We take a generic application (not lender specific) and often in electronic format only. The data is then entered into the apply online system along with our product and security details. The clients sign the chosen lenders disclosure and privacy pages along with ours ...and that's it. No paper based application.
  • Denise Brailey BFCSA (Inc) | 21 Jul 2014, 01:26 PM Agree 0
    Not everyone is doing paperwork the way you described. However, it would then be easy to use online one - fill out for custoemr so not hand-written - electronic version. You then have to surely print out the completed version (say 8 pages?) and then ask customer to sign. Why not press the print button twice and leave consumer with a copy? What's wrong with that? Pretty basic really. If it eliminates fraud - that's an excellent second copy remedy. I always appreciate the comments.
  • marty | 21 Jul 2014, 01:52 PM Agree 0
    @ Denise. No the majority of brokers do it this way.

    Also you say "You then have to surely print out the completed version (say 8 pages?) and then ask customer to sign"....No we don't have to and we don't do this. You misunderstand how a finance application is put together these days. The applyonline bit(completed application) is usually done at the very last once all the data, supporting documents and signed paperwork has been collected i.e. after the client has signed the banks forms. At the end of the day the broker collects the info required to make an application then makes enquiries as to their validity (via supporting documents and maybe the odd Google search / phone call) then submits to the lender.

    The days of filling in a form and signing it are well and truly in the past circa pre 2007. Was perhaps a better system but the banks outsourced their data entry to us years ago.
  • Ed Ridge | 21 Jul 2014, 02:47 PM Agree 0
    We supply all our clients with a copy of the application they sign, bound and in a folder. We then image these files along with all other supporting documents. All lender/client/solicitor/conveyancor correspondence and phone calls are imaged (phone calls in mp4 format) and file is kept on premises, offsite backup and cloud storage.

    Anything less leaves you open. We are not perfect and listening to your own conversation with a client can be interesting to say the least but we tell the truth and do what we say we will.

    All in all pretty easy to do and very effective when a client comes back to you with their version of events when it's completely different to reality....oh works with BDM's as well. ;-)

    Hope for the best plan for the worst.
  • Denise Brailey BFCSA (Inc) | 21 Jul 2014, 05:51 PM Agree 0
    It appears that there are now various ways of paper processing in lending yet surely the initial Loan Application has to be signed by the customer. Are you saying loans are approved now with no signature required? That broker is permitted to fill in the boxes and send a form in and a loan is approved? I find it hard to fathom but if that is the "new system" its appalling. We have unaffordable loans dated 2013 that show signatures on Loan Apps are still in play as a vital requirement.
    No signatures necessary? Can someone verify that is the case?

  • @ Denise | 22 Jul 2014, 09:29 AM Agree 0
    For the amount of criticism you heap against Brokers & Lenders, I would have expected you to have a very comprehensive understanding of how things are done, but its obvious you have no idea at how our industry & regulation has evolved over the last 5 years.
    You need to stick to what you do best...supporting the Nanny-state & dealing with the bleeding hearts who asked for a loan after having made poor decisions & are now looking for anyone to blame but themselves for the mess they find themselves in.

    Yes, like @
    Marty I too have lost patience with you.
  • Denise Brailey BFCSA (Inc) | 22 Jul 2014, 02:22 PM Agree 0
    ED imaging of documents and copies ot clients seem to be a very good idea indeed. I wish all partcipants in finance and banking industry would do the same. Sadly they do not. I swear some have systems as in World War II typewriters! Point is there is no excuse to not give a copy of the application at the point of signing. Such a simple remedy would stop bank internals altering broker signed documents and protect the borrowers.
  • Denise Brailey BFCSA (Inc) | 22 Jul 2014, 02:35 PM Agree 0
    Ah yes Marty. Methinks you protest too much. I criticise the bankers who approve imprudent loans. I thought that was obvious. The reason I am called in as a respected witness from time to time is integrity of person and by way of information gathered from real client files. We are amassing the largest external data files available. We did not assist in taking Brokers to court but lenders to court. Lenders lost. We do not control or create the products in the market place - banks do. Are you a Banker or an Aggregator Marty? If the industry is cleaned up I could retire. The CEO's of four major banks and ASIC told Senate in 2012 "no systemic issues." My evidence simply raised issues of concern re lenders. Its ASIC wrongly going after Brokers. Now ASIC has back flipped in in 2014 admitted "systemic." ASIC is part of the problem, not the solution. Royal Commission calls by Senators is into the Banks (not brokers) - one in particular is a good start. Senators understand the real issues. Read the transcripts Marty, you will soon get the drift.
  • Marty | 22 Jul 2014, 03:54 PM Agree 0
    I'm a broker and I get tired of your ignorant ranting when from an insiders point of view I can so clearly see you are wrong / have no clue how the mortgage world works. There is no great conspiracy and many of your victims are complicit.
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