Becoming a broker can be rewarding in many ways — the advantages to customers are many; with choice and competition in loans at the top of the list.
Setting a brokerage up is no small feat — even if you have your Australian Credit Licence, you’re still competing with the Big 4 banks, well entrenched brokers, and non-conforming lenders. Getting together a lending panel can take time too; it’s the Catch-22 of being big enough to be noticed but needing the influence to grow your business.
However, thanks to advances in regulation and technology, you can find a middle-path: aggregation. Aggregators can help you gain access to a panel of lenders without jumping through hoops to have individual banks or lenders on your panel. Here are tips on how to choose your finance aggregator — and how they can help your business.
What is a finance aggregator?
An aggregator acts as an intermediary between lenders and finance brokers and are entities that also hold a current Australian Credit Licence. Brokers have access to a wide variety of lenders through aggregators.
They offer business tools to brokers so they may manage their clients, lending procedures, marketing initiatives, and regulatory requirements.
In addition to education, mentorship, professional indemnity insurance, and access to qualified specialists who can help you with loan applications to lenders, the scope of services offered by an aggregator might vary.
What to look for in an aggregator
Before you engage with a finance aggregator, you need to do some background research first. Like all businesses, not all aggregators are the same. You need to decide what type of brokerage you intend to run: will you be offering home loans, car loans, personal loans, or commercial loans? What kind of fee structure do they offer? How will you earn commissions? How are commissions paid, and how can it be split between referrals? Do they have a good reputation? How much help do they supply when it comes to regulatory compliance? Do they hold the right licences and memberships in industry associations? Is their software straightforward to use and integrate into your own systems? You can find out more to add to your “shopping list” here.
More than just a lending panel
An aggregator is more than simply access to a lending panel. Aggregators also offer ongoing professional development and support services for your brokerage. This, of course, varies between aggregators. Some aggregators may offer Business Development support on an ongoing basis. Others may set up loan application workshops, software training sessions, compliance support, marketing help, and business coaching. Some aggregators may also offer professional indemnity insurance — a boon to your start-up, especially if they can access discounts.
Make sure the finance aggregator is licenced and compliant
Once you’ve proven that they have the right licences and tick all the right boxes, it’s time to sign with an aggregator.
Ensure that you have a written contract with all parties involved that outlines the terms of your agreement. Make sure you understand all the clauses in their broker agreement, including your contractual responsibilities related to money flows and compliance. If you’re ever unsure, seek legal counsel.
