CEO of asset finance brokerage stratton.com.au, Rob Chaloner, says although his company is open to working with brokers on a referral basis, he believes mortgage brokers should generally “stick to their skill set” rather than try to diversify.
“I think novated car leasing is complicated because you need a whole lot of things to support maintenance, the monitoring of drivers, the loan, the rebates and fuel usage and servicing, so it’s a reasonably big piece of administration you need behind you. There’s no reason why brokers can’t sell loans to a third party – for example, they can sell our loans and receive a commission – but we handle the administration,” Chaloner told The Adviser.
“Diversification is not a bad thing… but I think some mortgage brokers potentially try and stretch themselves a little bit too thin and they might be better off deferring diversifying by referring to people who are really experts in their field. For example, we offer mortgages to our clients, but we know that we’re never going to be a big mortgage broker, we’re not an expert in that field… If we wanted to expand, we’d join forces with a bigger one to ensure that the expertise is there.”
Mr Chaloner acknowledged that he had never been good at “being a jack of all trades”, but said “Does that mean nobody else can be? I don’t know, it’s a hard one.”
“To be an excellent mortgage broker, you need to really be on your game, know your customer, know your products. To be an excellent vehicle finance broker or novated lease consultant or commercial finance broker, the same thing applies.
“There are probably very few people working across all of those areas. Because they are all quite complex fields. To do automotive, to do commercial equipment really, really well, you don’t have the headspace to do mortgages really, really well. There’s a small percentage in every industry that can do all these things and are absolute geniuses, but not everyone is a genius,” Mr Chaloner said,
“We have lots of referrers and a lot of those are mortgage brokers. We’re happy to expand that panel. We would like to be the people that handle the process though, because that’s our expertise. In the same way, I wouldn’t refer a car loan for a mortgage broker to do, because people, including brokers, should stick to their skillset,” he concluded.
More transparency for the novated leasing market
Mr Chaloner was speaking to The Adviser after launching a new product initiative to provide “much-needed transparency” to the novated leasing market.
The asset finance brokerage said that because industry operators are under no legal obligation to disclose items such as interest rates and the true cost of vehicles in novated leasing products, they can be “utterly deceiving” as there is “a complete lack of transparency”.
Mr Chaloner said he believes that, because the end user of a novated lease is a consumer, and not a company, “the end user should dictate protections and receive full disclosure and transparency like that [in] a consumer loan”.
As such, the brokerage is now offering full disclosure of all components such as vehicle price and interest rates within its novated leasing products “to ensure customers receive the same level of disclosure as they would be entitled to under the National Consumer Credit Protection Act”.
Mr Chaloner said stratton.com.au will be passing on 100 per cent of the vehicle discounts from the packaging provider and will charge a “fully transparent service fee of 1 per cent of the vehicle price”. Therefore, a $40,000 car will ensure a $400 fee.
“Consumers often don’t know how much they have borrowed. Yet, it is justified by a novated packaging company because it is deemed a pre-tax salary benefit. In truth, the novated packaging provider is the one who sees the true benefit, not the novated driver,” he said.
“Regardless of the fact the sector is unregulated, we don’t want to see major companies continuing to take advantage of consumers and pocket the cost and tax savings that should be passed on to them.
“We want to make leasing fair to consumers who are the end users.”