A greater understanding of the implications of the credit legislation is changing broker attitudes to licensing.
Prior to a series of national road shows hosted by Advantedge educating brokers on the Australian Credit Licence (ACL) and Authorised Credit Representative options, the bulk of PLAN, Choice and FAST brokers indicated they favoured the ACL option.
However a survey conducted after the events revealed a significant swing, with more than 50 per cent of members indicating they’ll operate as a credit representative.
According to Advantedge general manager of distribution Steve Weston, a clear understanding of the impact new compliance will have on mortgage brokers’ businesses has influenced the shift to the credit representative option.
“Broker confidence about being an authorised credit representative has doubled, and so has their understanding about the various models on offer,” Mr Weston told The Adviser.
Mr Weston also warned brokers that it is not the burden of compliance alone that should be considered.
“There are three main drivers of business value: profitability, demand from prospective buyers and risk and compliance,” he said.
Mr Weston said that when it comes to selling a broking business in the future, there will be considerable focus on the level of compliance that has been applied, and this will have a significant impact on the appeal of the operation.
“While some groups will have the scale and size to manage their own compliance, for others it will make better business sense to leverage off the resources of their aggregation group or brokerage,” said Mr Weston.
“In addition to the time and effort saved by brokers opting to become an authorised credit representative, being an authorised representative adds commercial value to a broker’s business because it helps assure the business is more transparent and it easier for a future sale,” he said.
Brokers will pay $139 plus GST a month to operate as a representative under Advantedge.
Mr Weston stressed that Advantedge supports both licensing options.
“We’ll support our members in which ever decision they make. We are however in a very strong position to deliver a significant level of support those who work under the group’s authorised representative model,” he said.
“The investment we have put into our compliance model is considerable. The new era of licensing will be a significant driver for the industry and we believe that it will help brokers capture a greater market share”.
“It is therefore essential that brokers understand all the implications and cost involved with licensing and make the decisions that are right for their business.
Brokers are required under law to make a licensing choice by 31 December 2010.
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