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Let my trail book go, brokers demand

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Australian Broker | 28 Mar 2013, 08:30 AM Agree 0
An industry forum is bringing together heads of major aggregators to challenge them on the transfer of trails
  • OzBoy | 28 Mar 2013, 09:06 AM Agree 0
    Never going to happen. Where is AFG or Advantage? Exactly, don't waste your time. Sad but true.
  • Adrian Buscombe | 28 Mar 2013, 09:16 AM Agree 0
    This is a great idea Stephen hope you achieve agreement with the other aggregators.

    What happened to Plan and AFG?

  • suspicious | 28 Mar 2013, 09:18 AM Agree 0
    Amazing! An attempt to assist brokers and their business. This is potentially one of the most significant issues for the industry and critical that it is pursued. Unfortunately ,from past experiences , the banks and aggregators will show their fangs and we run away back to behave as we are
  • Patrick | 28 Mar 2013, 09:38 AM Agree 0
    I attended the recent IMBF meeting and was instrumental in asking both Phil Naylor (MFAA) and Peter White (FBAA) to place this issue on the agenda. Whilst Peter seemed more responsive, both have agreed to consider a submission which I intend to provide.

    Given the situation in financial planning I have sought clarity in the relevant legislation. Both Corporations Act s916C and NCCP s66 provide restrictions on persons being Authorised Representative or Credit Representative for mulitple licensees. There is a further twist in that some brokers are ACL licensees in their own right but are still forced to deal through aggregators due to lender policy. It was not always thus.

    I have contacted ASIC and whilst they are not prepared to provide legal advice they have suggested 3 options:
    (a) contact your member of parliament
    (b) formally lodeg a question with ASIC; and
    (c) lodge a formal complaint with ASIC.

    Given the likely commercial fallout a reasonable approach may well be best for all concerned. Many aggregator aggreements provide an option for the aggregator to buy out the broker. Given this why can the broker not buy out the aggregator interest in a book. At a fair price this might be viable in many if not most cases. So what is fair, simply if the aggregator asks, say 2 times annual value of their current interest then they must at the same time be prepared to pay the broker the same multiple for the broker interest.

    If the issue becomes confrontational, it is my view that this whole practice by lenders and aggregators together is a restraint of trade and a breach of the Trade Practices Act.
  • Phil | 28 Mar 2013, 09:39 AM Agree 0
    You signed an agreement to split ongoing trail and upfront commissions with the previous aggregator, now you want to change the terms. Business lesson for you Stephen .... if it was my income (ie I was the aggregator, I wouldnt agree to this just because you no longer wanted to work with me for whatever reason) you live by the sword and you die by it. I suppose you would be happy to see your trail income cease and paid to someone else if the client simply signed a letter too, just like in financial planning? I bet your opinion will change quickly on that subject... I suspect you would like the ability to switch trail between aggregators, but not give your customer base the same option with you I bet. Maybe you would also like the opt out clause that financial planners now need to give their clients every 2 years too. Get real, service your clients and the trail will eventually move over to you as you complete top - ups, switch their products to a better rate etc. It's most likely you like part of what the Financial Planning industry can do, but certainly won't like to agree to all of it. I will stake money on it. $1000 a month? You have the ability to make that up in a small $150,000 loan app, so stop your whining and get on with it.
  • Broker Friendly | 28 Mar 2013, 09:47 AM Agree 0
    You need Lenders in the discussion. Some Lender systems couldn't handle a change in aggregator without a change to the effective date of the trail payment a few years ago. that may have changed but unless Lenders both authorise the transfer and honour the effective trail date the aggregator conversation is a waste of time.
  • BJ | 28 Mar 2013, 09:53 AM Agree 0
    It is a serious inditement on the industry and the missing aggregators named, as do many others, run a churn and burn process when attempting to recruit brokers and move the industry from tranasctional to a profession.
    It would surprise all if the ability to freely move your business was implemented. Don't hold your breath.
  • John Whitten | 28 Mar 2013, 10:02 AM Agree 0
    If this is the biggest problem we have in the finance industry, then we are all going really well. You signed an agreement, you are still getting paid. Whats the problem? I would be happier, if now that the banks margins have improved, that they at least increased commission payments back to what they were before GFC. Surely that would be better for our industry.
  • Patrick | 28 Mar 2013, 10:14 AM Agree 0
    Phil, despite this potentially also being a breach of the TPA, aggregator terms are not negotiable. When you decide to move your service relationship to another provider, there is no longer any consideration and the contract with the original aggregator is therefore no longer valid. The only service my former aggregators provide is to collect money for themselves.
  • Tony | 28 Mar 2013, 10:54 AM Agree 0
    just one question, how do we register for this historic day. definitely want to be there. Would be good to see FG and PLAN involved.
  • 1martym1 | 28 Mar 2013, 11:19 AM Agree 0
    Not guna happen. What about Aussie and Mortgage Choice etc. They own the trail not the writer. And the nab owned aggregators, I can't see them ever letting this happen.
  • Solomon Ableman | 28 Mar 2013, 11:46 AM Agree 0
    This is one of the most significant issues for the industry and it is critical that it is pursued to ensure that the often broadcasted 'do the right/responsible thing' occurs.

    The Forum needs to include the other major Aggregators, such Mortgage-Choice and John Symond from AUSSIE, as well as the MFAA and the big4 banks.
  • Mark Hewitt AFG | 28 Mar 2013, 12:09 PM Agree 0
    We were not invited to participate Adrian, OzBoy & Tony. Unfortunatley I suspect this is because hearing the truth may debunk the myth that is full trail transportability. Broker Friendly is on the money with his or her comment.
  • Scott Beattie | 28 Mar 2013, 12:10 PM Agree 0
    It's simple - if the aggregator is in favour of a clawback (ie a client changes lenders because they are not happy with the service, better offer etc etc), then there is no reason why they shouldn't be in favour of a broker switching aggregators and moving trail as it would usually be a similar reason (or better offer, service etc)

    To make it easy, lenders should only issue 1 ID number which goes with you from aggregator to aggregator - where trail goes to is where the broker is currently aggregating through

    In short, it is very unlikely that this will happen as the likes of those with big trail books with handcuff agreements will never agree.

    Scott Beattie
    Cube Central
  • Stephen Dinte | 28 Mar 2013, 12:41 PM Agree 0
    Many thanks to everyone who has posted a comment. Let me add to the original story.
    This question was raised at the last Forum meeting with both Phil Naylor and Peter White. Since that meeting, Peter White has started a discussion on LinkedIn around this topic.
    A final resolution will not be found at the upcoming Forum meeting, however it was felt that a dialogue has to have a begining if change is to be made in the future. From a logistical perspective it was not possible to have the leaders of every aggregation business attend, however it was felt that the invited attendees represent a fair cross section.
    Registration can be made via
    I acknowledge that this change needs to necessarily include the right of a client to switch broker if their original broker fails to adequatly service the client, however I have more fear of losing a client to the bank I placed the client with, rather than to another broker. As it is now, if a client changes broker, that new broker will likely have to churn the loan to begin getting trail. Imagine if it was as simple as having the client sign an authority to the lender requesting that the lender register the new broker as their "credit advisor" as is the case in the FP world.
    If readers are truely interested in this topic, either for or against, come along on the 26th and hear what is said. You would be most welcome.
  • Value Deficit | 28 Mar 2013, 02:12 PM Agree 0
    Broker leaves Aggregator 1 and goes to Aggregator 2. S/he retains contact details with all customers and looks after those customers in future. Does anyone know exactly what value a lenders get by continuing to pay Aggregator 1 in these circumstances? Me neither
  • NP | 28 Mar 2013, 04:33 PM Agree 0
    From Mark Hewitt's comment, AFG's opposition to trail transportability rests on the idea that lenders systems would currently be unable to authorise the transfer and honour the effective trail date. Baloney!!! If the lenders had the will, they would easily resolve this internally. I've had no trouble switching clients with Bank A to a different aggregator whilst the client remains with Bank A. AFG's opposition has more to do with threatening brokers who dare to leave and forcing them to stay.
  • DM | 02 Apr 2013, 09:02 PM Agree 0
    Why don't we hear from someone who has left connective where they already allow trail portability and lets see what happens... can someone speak up that has tried so we can find out where the real stumbling blocks are.
  • Charlie | 07 Sep 2015, 09:41 AM Agree 0
    The trail belongs to the broker, not the aggregator. the aggregator is a gatekeeper and some of the lenders feel very safe with the gatekeeper; someone has to be blamed if something goes wrong, so the blame can go up the chain from lender to aggregator to the broker; the broker is most likely left to hold the bag, if something ever goes wrong that is why we need all these unnecessary insurance policies.

    The truth is that as someone already posted, it's a trade restriction and anti-competitive for the industry. NCCP and all its rules have more to do with keeping ASIC people in their jobs, rather than actually helping the consumers. These government regulations are nothing more than to treat ordinary Australians as morons who cannot read and understand the English language in a contract, because these regulations have been written with so many open-end interpretations that even many lawyers cannot explain to their clients. Keep things simple, and everyone will have less stress. The trail book belongs to the broker who actually did the works. Again, as already said by someone else, why can't each broker gets one ID number from the regulator and the commissions (upfront and trail) just follow that ID number? Don't know about other brokers, but I cannot remember every single ID number from every lender of mine. What is wrong with using my ABN or Tax File Number as my ID number with all the lender?
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