Rogers Reidy, the administrators handling mortgage aggregator eChoice, have addressed fears surrounding broker commissions payments.
The Adviser broke the news on Monday (27 November) that voluntary administrators Rodgers Reidy had been appointed by secured creditor Welas, which has been supporting the aggregator for years. In July 2014, Welas acquired $29 million of the aggregator’s debt from CBA.
A statement from eChoice provided to The Adviser on Monday explained that administrators have not been appointed over any group companies with existing contracts with brokers or lenders.
However, ASIC documents clearly show that administrators were appointed to a number of entities including eChoice Limited and eChoice Services Pty Ltd, leading some industry professionals to question whether broker trail payments could be at risk.
The Adviser reached out to the administrators to seek clarification on these matters.
Rodgers Reidy confirmed that the companies that hold third-party contracts are not in administration.
“We are appointed to 14 companies in the eChoice Group,” Rodgers Reidy director Geoff Reidy told The Adviser. “We are not appointed to those companies which hold the contracts including the aggregation and trail book.
“There has been no event of default in relation to the lender contracts held by the parties to the contracts.”
Industry veteran and MoneyQuest CEO Michael Russell believes that the eChoice brand has currency. However, he explained that the appointment of administrators provides lessons for other mortgage businesses.
“Companies need to have a balanced strategy around organic and acquisitive growth,” Mr Russell told The Adviser. “With acquisitive growth, don’t overpay for the asset. All acquisitions need to be funded with a mix of debt and equity.
“Only consider making an acquisition if you’ve got the prior experience to ensure future growth flows form the asset you’re buying.”
Mr Russell praised the “calibre of finance specialists” who work under the eChoice brand.
“I truly hope the administrators can find a solution to keep the brand and its offering.”
[Related: Analysis: A closer look at the eChoice model]
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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