Hypocrisy in loan application requirements has broker fuming

Sydney-based broker Andrew Kelly says he's afraid of what will happen should 'one-payslip' loans become the norm



Sydney-based broker Andrew Kelly can smell hypocrisy rotting on his loan applications – and he’s just about had enough.

“The thing I love about this job,” he says, “is that I can problem solve and I can fill the void that the banks have left, which is the ability for clients to talk to people that really know what they’re talking about.”

Kelly acknowledges that this is a somewhat back-handed attack on lenders, but he’s understandably concerned about the direction in which an industry he’s dealt with for 32 years is headed.

The vast majority of brokers, he argues are very well-versed in what they do.

“There is a very small percentage that don’t do what they should do and the large group are being penalised…And somewhere along the line, someone has got to stand up and say ‘enough is enough’. We’ve really got to go back to what this thing came in for in the first place. The NCCP was originally introduced to get a lot of those people out of the industry.”

They succeeded, he says, but at what cost?

#pb# “They’ve used a sledgehammer to kill an ant and right now we are so over-regulated with the amount of paperwork we have to wade through – and the hypocrisy is that the lenders don’t have to do it. So we get slashed, but the actual branch managers? They’re not held to account. We are.”

Kelly says he can ‘put his hand on’ four brokers who, along with himself, have a combined history of 120 years in banking. Yet, he argues, these experienced brokers are being ‘absolutely crucified’ by a ‘ridiculous’ on-going paper war.  

“At some point they’ve got to have some sort of meeting of the minds to say ‘look, we’ve gone overboard. We’ve done the wrong thing. Let’s attack those products that really need it like the low-docs, the non-conforming, that type of thing.”

Lenders are exacerbating the problem, he says.

“They’re reducing the amount of requirements that you need to get a loan through. I’m consistent with what I ask for, which is full tax returns, payslips, bank statements - the whole box of dice. I’ve always asked for the same things regardless of the lenders. But some of the lenders, just to make themselves better in the eyes of the brokers, are reducing the amount of requirements – and they can do that because they’re not under NCCP.”

But brokers are under NCCP, notes Kelly, and this is where he starts to get worried.

#pb# “I’ve got an issue that I think could come to a head, that if the banks continue to reduce the amount of paper that they require and we’ve got lenders that don’t have to comply, if something goes wrong, who cops it?”

“I think the information that we ask for and what we’ve been asked for in the past is not rigorous, it’s not over-the-top. We’re being asked for consistent information which allows them to properly assess if the client can have the loan. But if these lenders continue on the path of ‘we want to make ourselves look great, so let’s only get one pay slip’ - and I’m not kidding, there is a lender out there, a major lender, that’s doing a one-payslip loan. How do you get a loan on one payslip? It’s just silly. And that person has to comply with NCCP. One payslip does not allow you enough information to justify whether a person can afford a loan or not.”

Furthermore, Kelly believes, the MFAA has let brokers down.

“I believe they’ve rolled over on what has been a ridiculous policy coming through from the federal government and I believe that we need a strong body to stand up and say: Let’s re-look at this, because right now, it’s just over-the-top.”

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