Major opportunities ahead for asset finance – but more compliance awareness needed

Australia’s asset finance sector is expected to grow substantially in coming years, with brokers set to reap the rewards – but compliance needs to be a key area of focus. That’s a key take-away message from the recent Asset Finance Broker’s conference, held by Consolidated Operations Group, Australia’s largest broker and aggregator group in the asset finance space, with net asset finance of $4.24 billion per annum.

The conference is the country’s largest asset finance broker forum, open to brokers from the Platform Finance, Centrepoint Finance and Consolidated Finance Group. This year was the third time the conference has been held and was the biggest one yet, with over 190 delegates attending.

“This year’s conference was a huge success and we covered a range of factors impacting the sector,” says Brad Crinion, CEO of Platform Finance, Australia’s leading asset finance services partner and a part of Consolidated Operations Group Ltd.

“The outlook for the next 12 months and beyond looks very positive, particularly because of strong government spending. There are many opportunities being created by federal and state governments’ commitment to upgrading infrastructure in coming years. This will create work for commercial contractors who need asset finance to grow.”

In light of the post-Royal Commission environment and changing banking regulations, Crinion says compliance was also a key topic covered at the conference. “One message that came up time and time again was how brokers and lenders need to make consequence management more of a priority,” he says.

Steve Ritchie, Head of Compliance with Platform Finance and a member of a panel that discussed compliance at the conference, says “consequence management measures are being more strictly applied now than ever”.

“In years gone by, a broker may have received a ‘slap on the wrist’ for doing the wrong thing,” he says. “However, in the current regulatory environment, there is an expectation from the regulator that acts of non-compliance are dealt with accordingly and the consequences applied to a broker are much more severe.

“As an industry we need to do more. And while major banks and lenders are starting to do more in this space, brokers need to have greater awareness of their obligations, how to fulfil them and what the consequences could be for any inadvertent or deliberate breach of compliance. That could include cancellation of accreditation, fines or industry bans,” he says.

Ritchie recounts the story of a broker whose accreditation was recently cancelled because of fraud. “The broker was under pressure to get a deal settled and when the lender requested changes be made to an accountant’s letter to facilitate settlement, the broker modified the letter himself and submitted it to the lender. When questioned by the lender, the broker blamed the customer for modifying the document. The end result was that the broker’s employment was terminated, his lender accreditations were cancelled, and he was permanently banned by the aggregator.”

The upshot, Ritchie says, is brokers need to be more aware of their obligations. “Whereas sales teams used to be the force behind many lenders, in most instances now it’s the compliance, legal and risk teams that are ‘running’ the business. However, brokers shouldn’t just assume any issues will be picked up by lenders; they need to change their mindset and understand they are the first line of defence and have an obligation and duty to themselves, their aggregator, the lender and the customer, to submit applications that contain accurate information reflective of the customer’s circumstances.

“Further, brokers should keep detailed file notes of their conversations with customers and evidence to demonstrate certain disclosure requirements were met. In the absence of file notes and evidence, it becomes very difficult to prove to the likes of AFCA (in the case of a customer complaint) or ASIC that regulatory obligations have been fulfilled,” adds Ritchie.

Ritchie says he’s noticed an increase in fraudulent activity in recent months. “The broker world is an easier target because of their business models. The majority of their transactions occur over the phone or via email,” he explains. “There’s a real need for brokers to exercise additional due diligence and not simply accept the information provided by the customer is accurate.”

Ritchie says some of the main types of misrepresentation in finance applications include:

  • Falsified pay slips
  • Falsified rates notices or utility bills
  • Fake driver’s licences

To help brokers meet their obligations, the group is producing e-learning modules, videos, lender training programs and tailored training sessions, in addition to providing a monitoring and supervision program to help ensure regulatory obligations are met. Platform Finance has also launched a new system with automated compliance controls.

“We are really excited by this new asset finance CRM,” says Crinion. “We’ll be revealing more in coming weeks but put simply, it will help revolutionise the way brokers manage and process applications daily.”

Adds Ritchie: “We are trying to automate as much as possible and take compliance out of brokers’ hands.”

Find out more about Platform Finance and partner with us today.

Related Articles

Commercial Finance for businesses

Offering finance products for businesses 97% of the Australian market is made up of small and...

Read More

Electric vehicles in Australia on the rise

The electric vehicle market has exploded in Australia. And with reduced prices and more choice than...

Read More

Car loans through a bank versus a dealership versus a broker

When you need to search for something online, you Google it, when you hurt your leg,...

Read More

Our Partners: