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Compliance costs ‘should be on us’, says aggregator

by James Mitchell6 minute read

The CEO of a boutique aggregator has confirmed that the group will not be passing on compliance costs to its members.

Outsource Financial chief executive Tanya Sale told The Adviser that while the company’s compliance team has almost tripled in recent months in response to increased scrutiny, she believes that aggregators should shoulder the financial burden.

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“We believe a lot of that should be on us as the aggregator. It is our responsibility to have the systems and processes in place and to find the relevant software to assist not only us as an aggregator but our members,” Ms Sale said.

“We have had to put our hand in our pocket. Our compliance division has virtually tripled. But our model can sustain this because we don’t have a flat-fee model. It’s percentage-based, and that percentage has always included compliance. We won’t be passing that through to our members. Flat-fee models are not sustainable in this landscape.”

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Ms Sale’s comments come as the industry faces increased scrutiny following the ASIC remuneration review, the Sedgwick report, the Productivity Commission and the royal commission.

One major aggregator told The Adviser that up until last year, an average of four broker files would be audited each month. This has grown significantly to around 40 files a month.

Ms Sale explained that Outsource Financial has already ramped up its broker monitoring and changed its systems to raise red flags. For example, by increasing data components, the group is able to quickly see if a broker is writing a high volume of investor or interest-only loans.

The CEO said: “The big thing for us is the data that we are receiving from lenders. All of this is starting to be introduced now. The industry has really pulled together on this. I know the lenders are being hammered at the moment, but it is so important going forward that we work with our lender partners on this. Previously, we haven’t been able to get the deep data, but that is changing now.”

Last month, Vow Financial revealed that it is ramping up its compliance processes by monitoring granular data of loan applications to identify poor behaviour and manage potential risks within its ranks.

What do you think the most important offering from an aggregator is? How valuable is your aggregator to you? Are you thinking of changing aggregator? 

The Adviser's Aggregator Sentiment Survey is now open.

We want to hear the areas your aggregator is thriving in and the areas in which they are falling behind. This survey is a pivotal insight into this important industry issue and we want to hear your views on what makes a great aggregator.

The survey is open to all active brokers, whether your business is big or small, and only takes a few minutes to complete.

As a thank you, those who complete the survey will also be in the running for winning a case of Bollinger, so make sure you take the survey now!

[Related: Opinion: Will brokers pay the price for increased scrutiny?]

Compliance costs ‘should be on us’, says aggregator
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James Mitchell

James Mitchell

AUTHOR

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

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