Trail book buyer requires brokers to provide ongoing service

Speaking of the decision, Trail Homes head Nick Young said: “We want to make it clear that even through you might be selling your trail book, your ongoing obligation to service clients remains.

“If a broker is exiting the industry, we also now insist that a new broker is appointed to look after the exiting broker’s clients’ ongoing financial needs. These measures have been implemented to formalise borrower support as well as foster growth and sustain legacy within the broking community.”

Mr Young added that he believed it was “critical to create environments that promote good customer outcomes while supporting the broking industry”, which he said would not be possible should clients be “bundled into a trail book sale, which consequently severs client relationships and the broker’s ability to continue to write new loans or refinance old loans”.

“It’s a much healthier ecosystem for all involved if the broker’s bloodline remains intact, and untouched,” Mr Young said.

For whole trail book sales, the agreement stipulates that a broker must arrange for another mortgage broker to service their borrowers in consultation with Trail Homes and their aggregator before exiting the industry and/or ceasing to trade.

Should a new broker be introduced, Trail Homes will also encourage a revenue sharing model between the incoming and exiting broker during the handover period to help “streamline” the succession plan process and provide the “opportunity for the new broker to be mentored and the exiting broker to be invested (and rewarded)”.

For partial trail book sales, the new agreement structure reinforces the expectation for the broker to service the borrower in a manner consistent with good practice, and as required by the aggregator.

Mr Young said: “The intent of this addition is significant, as it encourages brokers to actively think about and seek advice on coordinating well-structured succession plans as part of their exit strategy.

“This approach has a number of immediate and longer-term benefits: it invests in the industry by fostering the growth and development of the beneficiary broker, and thus creates an optimal environment for clients to continue to be nurtured while, fiscally and ethically, supporting the exiting broker.

“Furthermore, we strongly believe that it’s the responsibility of financial services providers to actively support brokers by helping to preserve client relationships and aid retention.”

He concluded: “Our hope is that the updated assignment agreement will help prompt discussion about best practice measures, business growth, and reinforce that we’re all on the same page in preserving customers’ best interests.”

[Related: Succession Planning 101]