When you’re putting together a Vendor Finance transaction you need to oversee the following transaction modules:

  • Marketing
  • Application
  • Qualification
  • Instructing a lawyer
  • Possession
  • Administration

An Earlier Workload Reduction

Awhile back we could see the Administration task taking up way too much time, so we outsourced this module to Vendor Finance Management. The time we got back allowed our VF business to take off again.

So our list then looked like this:

  • Marketing
  • Application
  • Qualification
  • Instructing a lawyer
  • Possession
  • Administration

But How Could We Outsource More?

Because of their high workload, we dreamt of outsourcing the Application and Qualification modules. But that wasn’t our only motivation.

We now work in a regulated environment and we wanted to make sure our Application and Qualification processes were being done in accordance with the National Credit Code’s, Responsible Lending requirements.

Too easy!! We’d outsource these tasks to a really experienced mortgage broker.

If It Sounds Easy, You Can Bet It’s Not

Two important areas mortgage brokers must be aware of are:

  1. They don’t inadvertently become ‘a party’ to a transaction they don’t wish to be involved in, and
  2. They don’t put themselves into a ‘conflict of interest’ situation.

By outsourcing directly to a mortgage broker, these two concerns become a real possibility. Another arrangement was required to protect the broker’s position.

Outsource The Expertise, Not The Broker

This is how we did it:

  1. I became a member of a mortgage broking Aggregation Group
  2. That is, I joined as a regular mortgage broker
  3. I had already become familiar with their software and discovered how easy it is to load a vendor finance credit contract into
  4. Under an arrangement with my broker, I casually employ one of her/his very experienced staff to prepare our Application and Qualification paperwork. For me to check and sign-off on. Making this casual employee an ‘employee representative’ of my ACL.

The Benefits

  1. The employee rep speaks with the prospect from the beginning of the Application process to the end of the Qualifying module
  2. The employee rep chases all the prospect’s supporting paperwork
  3. The employee rep prepares all the Guides, Quotes, Proposals and  the Preliminary Assessment Report, as required under Responsible Lending
  4. The whole paper trail, including Serviceability checking and Credit Reports is saved permanently in the Aggregator’s software in the cloud, and
  5. It’s all done at a very competitive price!

The New Workload List

Our new list looks like this:

  • Marketing
  • Application
  • Qualification
  • Instructing a lawyer
  • Possession
  • Administration

Works for us!

Familiar With The Rules?

ASIC’s Regulatory Guide 209 (RG209) is THE reference for Responsible Lending. At two recent functions, attended by mortgage brokers and vendor financiers, it was discovered NONE of the attendees had read this foundational reference. Talk about flying blind! Sure it’s great for insomnia  but it’s the bedrock of what we do.

 

Cheers,

Paul