How to Become a Mortgage Broker

Transcription

1 How to Become a Mortgage Broker How to Become a Mortgage Broker - Getting Started 1. Undertake the Education o Certificate IV in Finance & Mortgage Broking (Minimum Requirement) o Diploma of Finance & Mortgage Broking Management 2. Gain an ACL (Australian Credit License) through ASIC ( Access the NFI ACL Kit walk through guide (click here) Access the NFI - ACL Kit order form (click here) 3. Join a Professional Association o MFAA Membership Criteria o FBAA Membership Criteria 4. Obtain Lender Accreditation o Consider joining an Aggregation / Dealer Group What is a Mortgage Broker? A Mortgage Broker helps borrowers by providing expert information and contacts, by 'comparison shopping' the many loans available in the marketplace on the borrowers behalf and by facilitating a smooth transaction for the borrowers. Brokers usually have access to a wide range of lenders and products and should aim to source the best and most appropriate loan for their clients. A broker looks at the client s specific needs and circumstances and should be able to interpret which type of loan best suits their client and why. A broker will look at the different aspects of a loan application, and will present their client's application in its most positive light, rather than just seeing whether it meets a checklist or not. Remember, the broker doesn't get paid until the loan settles so it's in your interest as a broker to make sure you are doing things ethically and within the lending policy set out by the lenders. Good brokers will 'chase' approvals for their clients. Your service shouldn't stop with just submitting your loan, it should continue right up to and after settlement. As a broker you should be trying to minimise the legwork and hassle for your clients, and remain

2 available to answer any questions they may have, even well after the loan settles. This way you can build a relationship with them, so that you are the first person they come to when they are thinking of refinancing etc. How to get Access to Lenders Products To act as a broker you will need to have access to a wide variety of lenders and products. While some brokers may maintain direct accreditations with lenders, the major lenders often have volume and compliance standards that a broker might have difficulty in achieving by themselves. For this reason most brokers will use the services of an aggregator (a wholesaler for the finance industry) in order to have access to major lenders and maintain their accreditations. The aggregators come in various forms from discount warehouses to fully branded franchise groups. All of the aggregators will offer additional services other than just maintaining access to lenders. Some of the extra services may include: Loan comparison software, Compliance support, Credit Licence support, providing leads, CRM (Customer Relationship Management), administration, training, mentoring and many other services. Most aggregators would also provide access to other non-finance products and services that their members can provide for their clients and receive commissions or fees. Major lenders would also require a broker to either hold an Australian Credit Licence (ACL) or be authorised under a Licencee (normally by the aggregator or the groups they work with). Lenders will also require brokers to have completed a Certificate IV in Financial Services Mortgage Finance and join a Mortgage Industry Body. For more information on the various industry bodies available see the MFAA and FBAA links on page 1. For further information about Australian Credit Licences (ACL) links are also on page 1. Conduct Research Read as much as you can about mortgages, sales, and finance. There are numerous publications such as Your Mortgage Magazine, Mortgage Professional Australia, and Australian Broker that are available from most newsagents. Some other tips include: Speak with other mortgage brokers to find out how they work and through whom they operate. You can look in the yellow pages under Finance, Mortgage Finance, and Mortgage Brokers to get you started or of course Google.

3 Speak to various lenders whose products you may wish to sell and find out about their individual accreditation processes. Speak to the aggregator and franchise companies to see if any of them offer a model that suits your needs. Consider a franchise or aggregator where they provide training and support. You will need to achieve the Certificate IV in Finance & Mortgage Broking coded FNS40811 (an enrolment form is here) You will need to get professional indemnity insurance generally with a minimum of $1,000,000 per claim and $2,000,000 in aggregate. Most of the industry bodies have relationships with various insurers, as do most aggregation or franchise groups. Join an industry body such as the MFAA (Mortgage and Finance Association of Australia) or the FBAA (Finance Brokers Association of Australia). Links are on page 1. If you are joining the MFAA, you will also have to complete a Diploma of Finance and Mortgage Broking Management) coded FNS For more information on the Diploma course, please see our Fact Sheet here. Get Experience. You may want to gain some experience in the industry before you go out on your own. You can do this by utilising the services of an aggregator or franchise, or by working for an established company. The benefits of doing something like this include having some training and support, and also not having to outlay huge sums of money to get started. You can also learn while you work.

4 MFAA Membership Guidelines MFAA Membership Criteria Mortgage and Finance Association of Australia MEMBERSHIP FULL MEMBERSHIP Full membership is available to individuals, firms, companies, corporations and partnerships predominantly or substantially engaged in the mortgage and business finance industries. ALL APPLICANTS FOR FULL MEMBERSHIP: - must be of good character and repute and a fit and proper person to be an MFAA Member - must not be currently Bankrupt or subject to control under the Bankruptcy Act will not be accepted for MFAA membership if they have a charge pending involving fraud or dishonesty or have been convicted of, or found to have committed, an offence concerning fraud or dishonesty in the previous 10 years from the date of this application - must not be an externally-administered body corporate as that expression is defined in the law - must be over 18 years of age - must be resident in Australia - must be appropriately registered or licensed per the National Credit Consumer Protection Act 2009

5 MFAA MEMBERSHIP CATEGORIES FOR LOAN WRITERS THE CATEGORIES OF MEMBERSHIP FOR LOAN WRITERS ARE: CERTIFIED CREDIT ADVISER (CCA) HIGHEST LEVEL CREDIT ADVISER (CA) ASSOCIATE CREDIT ADVISER (ACA) STUDENT ENTRY LEVEL FOR THE MAJORITY OF APPLICANTS NOT YET WRITING LOANS STUDENT THIS CATEGORY IS GRANTED TO THOSE WHO - ARE NOT YET WRITING LOANS & - HAVE COMPLETED THE MFAA INITIAL COMPLIANCE PACK & FNS CERTIFICATE IV IN FINANCIAL SERVICES, & - ARE ENROLLED IN THE DIPLOMA FNS50311 ASSOCIATE CREDIT ADVISER (ACA) THE ACA CATEGORY IS ONLY AVAILABLE TO APPLICANTS WHO HAVE LESS THAN TWO YEARS' LOAN WRITING EXPERIENCE** AND HAVE COMPLETED: - MFAA INITIAL COMPLIANCE PACK & FNS CERTIFICATE IV IN FINANCIAL SERVICES, & - DIPLOMA FNS50311& - ONE OF THE MFAA MEMBERSHIP CASE STUDIES (EITHER COMMERCIAL OR RESIDENTIAL, DEPENDING ON YOUR BUSINESS FOCUS).* THE MFAA MEMBERSHIP CASE STUDY HAS BEEN PROVIDED TO THE MFAA PREFERRED VENDORS OFFERING THE DIPLOMA FNS50311 QUALIFICATIONS. APPLICANTS COMPLETING A DIPLOMA QUALIFICATION THROUGH AN MFAA PREFERRED VENDOR COMPLETE THE MFAA MEMBERSHIP CASE STUDY AS PART OF THE DIPLOMA PROCESS. *MFAA APPLICANTS WHO COMPLETE A DIPLOMA QUALIFICATION THROUGH AN ALTERNATE REGISTERED TRAINING ORGANISATION (RTO) WHO IS NOT AN MFAA PREFERRED VENDOR WILL NEED TO COMPLETE ONE OF THE MFAA MEMBERSHIP CASE STUDIES DIRECTLY THROUGH MFAA.

6 **MFAA APPLICANTS WITH LESS THAN TWO YEARS LOAN WRITING EXPERIENCE WHO ARE MENTORED BY AN MFAA CERTIFIED MENTOR OR THROUGH AN EQUIVALENT PROGRAMME BY AN MFAA AGGREGATOR/BROKING GROUP RECOGNISED AS SUCH BY THE MFAA, WILL HAVE UP TO 12 MONTHS FROM THE DATE OF JOINING THE MFAA TO COMPLETE THE DIPLOMA REQUIREMENT AND ARE ELIGIBLE FOR MFAA MEMBERSHIP HAVING COMPLETED THE CERTIFICATE IV FNS A CONTINUING PROFESSIONAL DEVELOPMENT (CPD) REQUIREMENT FOR EACH ANNUAL MEMBERSHIP PERIOD APPLIES TO THE ASSOCIATE CREDIT ADVISER CATEGORY. CREDIT ADVISER (CA) THIS CATEGORY IS GRANTED TO THOSE WHO HAVE AT LEAST TWO YEARS LOAN WRITING EXPERIENCE & WHO HAVE COMPLETED MFAA INITIAL COMPLIANCE PACK & DIPLOMA FNS50504/FNS50311 / FNS50311& ONE OF THE MFAA MEMBERSHIP CASE STUDIES (EITHER COMMERCIAL OR RESIDENTIAL, DEPENDING ON YOUR BUSINESS FOCUS).* * THE MFAA MEMBERSHIP CASE STUDY HAS BEEN PROVIDED TO THE MFAA PREFERRED VENDORS OFFERING THE DIPLOMA FNS50311 QUALIFICATIONS. APPLICANTS COMPLETING A DIPLOMA QUALIFICATION THROUGH AN MFAA PREFERRED VENDOR COMPLETE THE MFAA MEMBERSHIP CASE STUDY AS PART OF THE DIPLOMA PROCESS. MFAA APPLICANTS WHO COMPLETE A DIPLOMA QUALIFICATION THROUGH AN ALTERNATE REGISTERED TRAINING ORGANISATION (RTO) WHO IS NOT AN MFAA PREFERRED VENDOR WILL NEED TO COMPLETE ONE OF THE MFAA MEMBERSHIP CASE STUDIES DIRECTLY THROUGH MFAA. A CONTINUING PROFESSIONAL DEVELOPMENT (CPD) REQUIREMENT FOR EACH ANNUAL MEMBERSHIP PERIOD APPLIES TO THE CREDIT ADVISER CATEGORY. CERTIFIED CREDIT ADVISER (CCA) THIS CATEGORY IS NOT CURRENTLY AVAILABLE

7 REQUIREMENTS FOR INDIVIDUAL APPLICANTS - A COPY OF YOUR CURRENT COSL OR EXTERNAL DISPUTE RESOLUTION (EDR) SCHEME MEMBERSHIP CERTIFICATE - A COPY OF YOUR PROFESSIONAL INDEMNITY (PI) INSURANCE CERTIFICATE - A CERTIFIED COPY OF YOUR NATIONAL CRIMINAL HISTORY RECORD CHECK - A CERTIFIED COPY OF AN IDENTIFICATION DOCUMENT - A COPY OF YOUR CREDIT REPORT - A COPY OF YOUR CURRENT RESUME / CURRICULUM VITAE (CV) REQUIREMENTS FOR BUSINESS APPLICANTS - A COPY OF THE CURRENT COSL OR EXTERNAL DISPUTE RESOLUTION (EDR) SCHEME MEMBERSHIP CERTIFICATE - A COPY OF THE PROFESSIONAL INDEMNITY (PI) INSURANCE CERTIFICATE - A CERTIFIED COPY OF THE NATIONAL CRIMINAL HISTORY RECORD CHECK FOR EACH DIRECTOR, PARTNER OR PRINCIPAL DIRECTLY ENGAGED IN THE BUSINESS - A CERTIFIED COPY OF AN IDENTIFICATION DOCUMENT FOR EACH DIRECTOR, PARTNER OR PRINCIPAL DIRECTLY ENGAGED IN THE BUSINESS - A COPY OF THE CREDIT REPORT FOR EACH DIRECTOR, PARTNER OR PRINCIPAL DIRECTLY ENGAGED IN THE BUSINESS - A COPY OF THE CURRENT RESUME / CURRICULUM VITAE (CV) FOR EACH DIRECTOR, PARTNER OR PRINCIPAL DIRECTLY ENGAGED IN THE BUSINESS MEMBERSHIP FEES MEMBERSHIP FEES ARE PAYABLE ANNUALLY IN ADVANCE AND A RENEWAL DOCUMENT WILL BE ED APPROXIMATELY ONE MONTH PRIOR TO THE ANNIVERSARY OF THE COMMENCEMENT DATE OF YOUR MEMBERSHIP. A ONE-OFF APPLICATION FEE OF $105 APPLIES FOR ALL NEW MEMBERS AND COVERS THE COST OF PROCESSING NEW APPLICATIONS. AN ADMINISTRATION FEE OF $15 ALSO APPLIES WHERE THE APPLICANT HAS AUTHORISED MFAA TO OBTAIN A CREDIT CHECK ON THEIR BEHALF

8 FBAA Membership Guidelines FBAA Membership Criteria Finance Brokers Association of Australia The FBAA have two main membership types: Accredited member and a Corporate Membership. Accredited Member Completed and signed membership application form forwarded to FBAA together with certified copies of the requested accompanying documentation. Evidence of a minimum of 2 years proven experience in finance industry. If less than two years with the appropriate experience they must be mentored by another member who has the experience and time in the industry of finance/mortgage broking. Mentoring to continue until the completion of the two year requirement and the Mentor is satisfied that they have met the requirements and experience necessary. Evidence of completion of Certificate IV in Finance and Mortgage Broking FNS40811 or the equivalent. National Police Check: Applicant must provide a National Police Check with their application. This document must be dated no later than three months prior to this application. In the instance where the applicant is a company, partnership, business or firm, all directors, partners and principals directly engaged in the business must provide this document. This can be the original document that can be returned to you on request, or a Certified Copy. NB: On legal advice original and copies of police documents are not kept on file and are destroyed after processing of application. Nomination of four lenders to provide written or verbal references. N.B. Referees are contacted personally by FBAA staff to confirm references. Declaration of any pending charges or convictions for fraud or dishonesty. Declaration of current bankruptcy or Directorship of a company under previous or current External Administration, Receivership or Involuntary Liquidation. Certificate of Incorporation where applicable. ASIC Search in the instance where the Applicant is a Company: This search must be dated no later than three months prior to this application and must list all current Directors and Shareholders. Copy of Business Name Registration where applicable. Full Resume of Individuals/Directors/Partners. Photographic identification (Drivers Licence or Australian Passport number) of individuals for membership or nominees of company applicants

9 Evidence of any prior learning or training: N.B. FBAA members are required to accrue 25 CPD points per annum as evidence of continued learning. Evidence of Professional Indemnity Insurance by way of a Certificate of Currency. Evidence of membership of an ASIC approved External Dispute Resolution Scheme. N.B. The FBAA s preferred scheme is Financial Ombudsman Service (FOS) formally BFSO and can be found at Evidence of an acceptable individual AML/CTF (Anti-Money Laundering and Counter Terrorism Financing Act 2006) compliance training. A copy of your Credit Report / or that of Nominee of the business - which is dated no earlier than three months prior to application for membership. Copy of your registration details with ASIC if you are conducting consumer lending (i.e. ACL or ACR). Corporate Membership is available to approved non-broking entities associated with the finance industry and includes: Credit Providers (Banks, Building Societies, Credit Unions) Mortgage Insurers Mortgage Managers Fund Managers Trustee Companies etc

10 Mortgage Aggregators Explained What are Mortgage Aggregators / Dealer Groups? Mortgage Aggregators, Dealer Groups and even Franchise Groups act as a wholesaler between lenders and Mortgage Brokers. Here all of these bodies will be referred to as Aggregators. For a mortgage broker to be able to introduce loans to a lender and get paid by that lender, they would normally need to work with an aggregator. The reason for this is that most lenders have volume and compliance requirements that the average broker would be unable to sustain unless they were a large business. Even then, they might only be able to maintain the volume required to a few lenders and need to employ staff to manage their compliance and relationship with the lenders. This could greatly reduce the offering they had to their customers and increase their overheads and work load. Aggregators have evolved from the early days of the Mortgage Broking industry. Initially they began as a mortgage broker and were approached by new brokers wanting access to lenders through their accreditations. Over time, through the process of bulking loan volumes (or aggregating these volumes ), they were able to negotiate better lender commission and service levels from lenders and set up systems and processes. Today most aggregator not only offer brokers access to the lenders but would also offer support services for their members. The support offered varies between aggregators and could include services like software (loan comparison, loan lodgement, CRM management), training (lending, sales and compliance), Management support, lead generation, branding, back office support and most importantly commission management. The aggregator or franchisor may even offer their members the ability to be an authorised representative under their Australian Credit Licence (ACL) so that the broker is not required to obtain a licence themselves. Please note that the broker is still required to complete all the necessary paperwork required for an ACL, The aggregator simply administers the compliance issues and ensures the broker operates within the ACL guidelines. The aggregator will charge a fee for offering these services. These fees may be in the form of a percentage of the upfront and trailing commissions received from the lenders or they may charge a fee per transaction or a flat monthly or annual fee. Some groups also charge a joining administration fee or franchise fees. Most aggregators will also offer their members more than just lending products (e.g. Insurances, Leasing, Commercial products, personal loans etc.) to offer clients that the broker would not otherwise have access to or be able to sell to their clients. Working with an aggregator allows brokers the ability to operate their own business offering a wide variety of lenders and loan products, but with the support of the aggregator. Many of the Aggregators offer mentoring services for new brokers as ASIC requires new brokers to be mentored for their first two years of practise. (please note; some aggregators do not provide mentoring services so it is important to establish this upfront). With this assistance a Mortgage Broker is able to provide a sustainable benefit to consumers. Customers benefit from being able to compare different mortgage products available from a panel of lenders through one source (the Mortgage Broker) and subsequently receive products that match their needs and individual circumstances.

11 ACL (Australian Credit License) Any person who puts themselves out as a Finance Broker is required to obtain an Australian Credit License (ACL) under the NCCP Act. (National Consumer Credit Protection Act) NCCP National Consumer Credit Protection (NCCP) Act came into Law on 1 July The first stage of this legislation involved all parties involved in the credit process registering with ASIC. From 1 January 2011, all people and entities providing credit advice are required to either hold an Australian Credit Licence (ACL), or operate as an Authorised Representative of a licence holder. (MFAA/FBAA membership renewals, lender agreements, aggregator agreements and PI renewal will all require you to show compliance). You have two choices under the NCCP legislation: 1. Become an ACL Holder 2. Become an authorised representative under a licence. Either option will require you to be registered with ASIC and obtain a Certificate IV in Financial Service - Mortgage Finance (FNS 40811) 1. Become a Licence Holder If you are thinking of obtaining a licence, it would need to be the same legal entity that the agreement has with your aggregator and any lenders, or you would need to appoint that entity as an authorised representative. (i.e. the company or trust that has the agreement). Employees and directors of a licensed entity are automatically covered by the licence, but may choose to register as Authorised representatives. Any contractors are required to be registered as Authorised representatives or hold their own ACL. If you hold the license you are responsible for the entire compliance requirements, processes, training and record keeping etc for you and all the authorised representatives under your licence. When applying for a licence you will be required to provide (along with the application) several checks to show you are a fit and proper person. These are:

12 1. Character and Credit Checks o Class 25 Federal Police Check ASIC Financial Services Licensing Requirements Valid 12 months this is a different check to ones you might have previously had done. o Bankruptcy Check (ITSA Bankruptcy check) is conducted through a government Valid 12 months This is new and has not been previously required by anyone o VEDA credit check Valid 3 months o A minimum educational standard of Certificate IV in Mortgage and Finance Broking (FNS or equivalent) o Professional Indemnity Insurance o Membership of an external Dispute Resolution (Ombudsman) Service - Generally COSL (Credit Ombudsman Service) or FOS (Finance Ombudsman Service) 2. Become an authorised representative under a licencee Several aggregators and groups will offer you the opportunity to become an authorised representative under their licence. Groups will have slightly different requirements and costs associated to manage their Authorised representatives compliance. They would generally require credit and police checks. As an authorised representative you will have no option to do any sort of credit business that is not authorised by the licensee or on their panel of lenders Please note: Whatever form of license is chosen it is an ASIC requirement that all new Finance Brokers be mentored for the first two years of their practise. A suitable mentor is one who holds a license already and is no longer in a mentored position themselves. (The MFAA has a list of accredited mentors that may be used). There will be a fee involved for the mentoring service. Should the ACL applicant be new to finance broking but previously involved in the finance industry they may not need to be mentored but in all instances should check with ASIC (