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MFAA Prosper : Mortgage and Finance Brief 06
view is that the responsible lending process has added an average of 30 minutes to each customer interview. If that is the impact for a very experienced broker, how are less knowledgeable brokers managing? Multiply that effect over one week and potentially four or five interviews are lost. Given that level of impact, why complicate the process any more than is absolutely necessary? What effect do you think NCCP will have on the broking sector? A very positive overall one. It must lift standards, give consumers a greater level of confidence in brokers and should result in those brokers who cannot, or who are not prepared to meet the standards, leaving the industry. The aims and objectives are perfectly reasonable and the end result will be that using a broker is a safe prospect. Mortgage broking in Australia is yet to reach the levels of penetration that were predicted earlier this decade. What can be done to change that? When I joined Mortgage Choice in 1999, remembering that broking was in its infancy in those days, I recall the popular view was that within the next ten years the market would resemble that seen in the UK and US and up to 70% of mortgage loans would be written through brokers. That hasn’t happened for a variety of reasons, and certainly the reduction in competition among lenders since the GFC has been a major one. There’s a general public perception that only the major banks are lending and there’s few alternatives, so asking “What’s the use of going to a broker?” is a reasonable question. The creation of the Credit Licensing regime should be seen as a significant opportunity, as it places brokers on the same regulatory level as financial planners and the like. Brokers will have a greater level of public credibility, given that the Federal Government has effectively endorsed what brokers do. What do you think the industry itself can do to increase awareness and use of brokers? It’s an educative process and the industry needs to be more prominent in the education of the public, in relation to what brokers do and why it makes good sense to use them. When financial planners became licensed, there was a national industry-funded campaign to lift the profile of its members. This sort of approach is now appropriate for our industry. Individual groups, like Mortgage Choice, obviously advertise their own services extensively, but, in my view, there needs to be a more fundamental approach. The message of why it is to the consumer’s advantage to use a broker is not articulated clearly enough. The fact that we are a fragmented sector does not help; the sooner all brokers are represented by one united professional body, the greater the benefit will be for us all. That way, resources can be more effectively combined and used. Until that happens, broking will not achieve the market penetration that it should. You were recently made a Fellow of the MFAA. How does that feel? I’m very honoured. To be one of only 21 Fellows, to be in that level of elite company, is very humbling, given the quality of people who have been previously so recognised. It is nice to be acknowledged for what I’ve accomplished, particularly for my involvement in the MFAA. I have served on the NSW Brokers’ Committee for the past seven years, was previously on the NSW State Council and National Brokers’ Committee and was founding Chair of the NSW CMC/AMC Committee. I encourage all MFAA members to become active within the organisation and the industry in general. There is often no shortage of critical views, but few are prepared to give up some time to effect change or help achieve common goals. I’m a great believer that if you’re not part of the solution, you’re part of the problem. What’s your biggest industry issue? The service levels provided by lenders could, and should be, so much better, to everyone’s benefit. I’m constantly amazed by the acceptance, and indeed celebration, by lenders, particularly the major banks, of customer satisfaction ratings of around 70%. That means that three of every 10 customers are not happy with their experience. A multibillion dollar business and roughly every third customer is dissatisfied, and that’s deemed acceptable! That approach defies all business management logic. And until one or more decide that sort of performance is not acceptable, there’s no real incentive for the majors to significantly invest in improvements. As brokers are totally reliant upon the lenders, the constant aggravation caused by lenders who under-resource in service delivery is a perennial cause of frustration. Often the broker cops the brunt of customer anger and disappointment, when the broker is not the cause. I see this almost daily in managing complaints. What can be done? I accept that effective cost-management is a relevant focus for any business and additional investment in service delivery improvements is an operating cost. But there is so much clear evidence across all industries that those which make service delivery a prime focus actually increase profits and market share as a result of that investment. It’s a simple formula: any lender that provides reliable, accessible, mistake-free outcomes will increase their volumes and profitability. Why make business difficult for your customers? Invest meaningfully now and reap rewards later. What do you like most about the mortgage industry? I love the fact that what we’re essentially doing is helping people to improve their lives. We help give them the chance to buy real estate, increase their wealth, start or grow their business, give their kids a better start to their futures – basically making life more enjoyable. We are really about letting people fulfil their dreams and I think we sometimes lose sight of that. There’s the old adage about the traveller who walks past a field and sees some workers. He asks the first, “What are you doing?” He replies, “I’m digging a ditch.” The traveller asks the second worker the same question and is told, “I’m stacking bricks.” A third worker is asked what he is doing and states, “I’m building a castle.” The first two workers were focused on the little tasks, the third saw the bigger picture and that’s what we have to keep in mind. The big picture is a very powerful motivator. Obviously we all want to write business and do that profitably, but fundamentally we help make dreams and hopes a reality. That’s very gratifying. “ We’re enabling people to fulfil their dreams, we’re giving them the means to change their lives. Sometimes we lose sight of that.” Inter view Mor tgage & Finance brief | 25
Mortgage and Finance Brief 05
Mortgage and Finance Brief 07