Regulatory pressure pushes aggregator’s external audits

by Miklos Bolza14 Feb 2017
Increased pressure from the Australian Prudential Regulation Authority (APRA) has meant that banks are increasingly putting the onus on aggregators to ensure all brokers are compliant in their roles.

“There is far more supervision and regular monitoring of the process now than what there has been in the past,” Clive Kirkpatrick, the newly appointed general manager for lending at Vow Financial, told Australian Broker.

One major reason behind this was the growing dominance of the broker channel when it comes to loan writing for the banks, he said.

“Brokers are now the dominant distribution channel for most banks. I’m assuming that APRA’s on the banks’ backs and if your dominant channel is also external then they’ve got to be comfortable that those people are doing their roles properly.”

Because of this, Vow Financial had chosen to expand its audit program – which normally covered those under the Vow licence – and extend it to those who had an external Australian Credit Licence (ACL) or those who were working under someone else’s.

By using 22 groups of ‘pinnacle brokers’ as an advisory board, Kirkpatrick said that the aggregator received positive feedback with regards to greater support for ACL holders through a more thorough supervisory and monitoring process.

“The bigger broker groups understand the pressure all of us are under around the regulators and lenders. They’re looking for deeper risk supervision and monitoring of not only our Australian credit representatives (ACRs) but also our ACLs,” he said.

With all the current changes in the financial industry, Vow was merely trying to keep up with the stricter regulatory environment, he added.

“We took the first step to say we want to move in concert with the current environment but at the same stage we are trying to minimise the costs for brokers who are running their own small businesses.”

After sending out a note detailing the external audit process – which involved either a remote desktop audit or a face-to-face audit – Kirkpatrick said that Vow Financial had reviewed the original details.

“I released a note to the ACLs on Friday that we’ve reviewed the costings. If they already use an external audit provider as part of their licence, they can send us a copy of that audit and we’ll ensure it is along the lines of what was required.”

Although the initial charges of $499 for the remote audit and $1,499 for the face-to-face audit remained the same, the audits are not compulsory and are merely an “offer to help,” he said.

“If the external guys can provide an audit that is satisfactory in quality, we will accept that and there is no need to go through any other process.”

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