Vow Financial is ramping up its compliance processes by monitoring granular data of loan applications to identify poor behaviour and manage potential risks within its ranks.
The Yellow Brick Road-owned group has been examining data from lenders as well as its own finance team in an effort to flag potential issues ahead of time.
“We get data from our shadow-shopping work, we get data from our audit work, we get data from our finance team. Now we will be receiving additional data from the lenders,” YBR chief risk officer Sean Preece told The Adviser.
“It all goes into effectively building a profile on an individual broker. The supervision and monitoring is about risk management. There are people who are more likely to present risk and profiling those people by using that data enables us to focus our efforts and attention on those people who potentially present the most risk to us,” the CRO explained.
The data being collected covers different facets of the mortgage application and is used to identify, among other trends, those brokers using HEM or less to calculate client living expenses, as well as certain characteristics of applicants, such as those living with their parents and not paying rent.
“There might be reasons for some anomalies, but typically when you see consistency in alarms, it usually presents as a reason for us to make further inquiries,” Mr Preece said.
“That then focuses our efforts on those people to identify whether it is consistent with bad performance or bad behaviour, and then we take action.”
The aggregator has previously relied on loan data provided by lenders “after the event”, at drawdown or arrears. But the group is now confident that by capturing data at the application stage, it can tackle any potential risks earlier.
“The data we are getting is on applications,” Vow general manager Clive Kirkpatrick said.
“In the past, we have been relying on either after drawdown or at arrears. That happens after the event. Whereas the data we are getting now is at application. It is earlier on in the funnel where we can actually start to spot core behaviours.
“In reality, it is a very small percentage of people in the industry who are doing the wrong thing and committing frauds and misrepresentations. Some broker[s] may have flaws in their audit process around education or process gaps, but they are solvable.”
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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