The general manager of a major bank has revealed that it will be putting in “additional effort” to train new brokers and help “grow the industry with professional people”.
Speaking to The Adviser, NAB’s general manager, Steve Kane, noted that CBA had recently changed its accreditation requirements for new brokers and that he doesn’t believe that banks should “restrict new entrants to the industry”.
Mr Kane said: “We think that the accreditation process needs to be robust and needs to reflect the right people coming into the industry, but I don’t think we need to restrict new entrants to the industry… we recognise that new entrants are the lifeblood of the continuing growth in the industry, so we think that there is always a place for new entrants coming into the market.”
He continued: “NAB’s accreditation process is robust and we really want the right brokers; those brokers that are qualified to be giving advice to customers in the marketplace.
“We won’t be changing our accreditation standards from where they are today, but we will be streamlining and putting additional effort in around training in relation to new brokers in particular, and supporting aggregators and broking firms in that regard.
“So, our standards will stay the same, but we will improve the process to ensure that we add value in the process of accreditation and improve the education in working with the aggregators in development programs, recruitment programs, and PD days or conferences.”
The NAB general manager added: “We believe there is an opportunity to continue to grow the industry with professional people coming into the marketplace and with the opportunity for them to work with other brokers within their aggregator, within the firm they join, and then additional support from all of the lenders.
“I think it is very important that we see the aggregators now recognising that education, training and the development of the brokers is vital.”
Industry has relied on HEM “way, way too much”
When asked what new brokers need training on specifically, Mr Kane said that a lot of the focus was around “understanding the legislative environment, what is NCCP, what is responsible lending... and recording the actual expenses rather than purely relying on a benchmark”.
According to the general manager, a large part of the industry, and regulators’, focus will be on “actual expenses” this year.
He explained: “Positive credit reporting will mean that everyone is more aware of the customer’s financial positions, and I think it is incumbent on brokers to make sure that they do record actual expenses so that there is transparency when a customer applies for a loan. Some of those expenses may be discretionary, but the notes and explanations that go with them around that calculated serviceability are very important as well.”
He added: “The industry has probably relied on the HEM benchmark, as an example, way, way too much in terms of real investigation of the capability of the customer to repay the loan. [They should] really detail all the expenses of that customer and explain how they are going to service that [loan]. That is very important and that is where the regulator is focusing as well. [So], we are going to see that not only from the adherence under NCCP and responsible lending via ASIC, but also [with] APRA focusing on what banks are doing and what lenders are doing… to ensure that they have evidence that a customer can repay their debt.
“So, it’s very important for the industry and very important for the future growth of the broker channel that we ensure we get on the front foot with this.”
Mr Kane recommended that the brokers “ascertain, to the best of their ability, what the real expenses of the borrower or customer are” by ensuring that bank statements “match up” to what a customer has said.
Several banks have reportedly agreed to bring out guides to help brokers with this process, and to highlight that any unusual expenditure behaviours (whether above or below normal benchmarks) need to be verified and justified in applications.
Mr Kane concluded: “A lot of brokers are doing a very good thing on behalf of their customers. And, at the end of the day, our mantra really has always been to improve the customer outcome, which is what this is all about.”