By Ryan Johnson
Sydney-based mortgage management company FinSecure has announced it will expand to the west coast of Australia on the back of its unique offering picking up steam.
The move westwards came as the industry increasingly requires brokers to extend their services and go off panel, with aggregators and lenders becoming more stringent.
“Our growth is a strategic move to deepen our commitment to high-level support, empowering brokers to excel in servicing their clients,” said Matt Fernihough (pictured above left), executive officer at FinSecure.
In 2010, the mortgage industry changed as the National Consumer Credit Protection Act came into effect.
Mortgage brokers were required to operate under a credit licence as a credit representative. This gave rise to aggregators, which required brokers to operate under a credit licence.
As time went on, regulatory and compliance obligations increased for both brokers and aggregators.
Just as lenders evaluate clients’ risk profiles to determine their eligibility for specific products, aggregators also establish their own risk criteria.
On occasion, these restrictions can sometimes go beyond what the lenders require, according to FinSecure founder Kristy Alam (pictured above right).
“Even if a lender, such as Pepper Money or CBA, doesn't ask for bank statements or salary credits, the aggregator may still require three months of bank statements,” Alanm said. “The aggregator's own risk criteria, which may differ from the lender’s, could prevent the broker from processing the loan through their platform.”
“As a result, even if a broker has access to the most suitable product for the customer, the customer may not be able to provide the required information.”
Clients can get rejected for various reasons, especially for self-employed borrowers.
For example, the borrower may need to submit their Business Activity Statement (BAS) but hasn't updated it recently. Their bank statements might also be impacted by pending contracts, or their tax portal information could be outdated.
The COVID-19 pandemic has had a significant negative impact on the businesses of many self-employed people. As a result, their business earnings for the past two financial years do not accurately reflect their true earning potential.
Therefore, when assessing the financial situation of self-employed people, Alam said it was important to consider their pre-COVID earnings rather than solely relying on their previous two years.
“This may require thinking outside the box and using alternative methods to assess their financial situation and getting that scenario across the line.”
To recap, most brokers operate under their aggregator’s Australian Credit Licence (ACL) as a credit representative.
In doing so, the broker must adhere to the licence holder’s additional documentation requirements and if their client doesn’t meet the criteria, the broker may have to look at other options.
This is where FinSecure steps in.
“FinSecure is seeing a high increase of broker business where the broker is not able to write the loan under their relevant ACL and therefore refer the deal off panel,” Alam said.
“When the broker determines FinSecure is a suitable lender, they prepare and forward an application and FinSecure take over from there to support the broker and the client.”
Essentially, the broker refers the client off panel to FinSecure and the client is processed through its lending managers under its ACL.
Alam said the broker was not doing anything wrong because they were not operating under their aggregator’s credit licence and the broker was financially remunerated for the referral.
“It’s imperative that the broker act in the client’s best interest and be across the various lending options which may very well be an off-panel solution.”
Alam stressed that this scenario won’t take the vast majority of business away from aggregators with most catering to a wide range of borrowers.
“However, for those that do slip through, it’s important that brokers provide the best possible solutions, regardless of whether they are on the panel or not,” Alam said.
By empowering each participant – from brokers to borrowers – Fernihough said FinSecure's approach de-risked the mortgage process and ensured financial benefits for all parties involved.
He explained, “our expansion is driven by our aim to optimise the entire mortgage processing ecosystem, ensuring top-tier service delivery and financial efficacy”.
In alignment with this expansion, FinSecure is rolling out a series of state-based hubs throughout 2024.
These hubs are designed to bolster the network of brokers and borrowers, ensuring localised and tailored support.
“This initiative underscores FinSecure's commitment to delivering personalised, efficient service across different regions,” said Fernihough.