Connective’s lending panel is comprehensive. Our members have access to over 45 residential lenders, 22 commercial lenders and over 30 asset finance lenders. Our brokers are not limited by choice, with a lending solution available for the overwhelming majority of your clients.
However, when dealing with a niche loan scenario you may find you require the use of a lender who is not on Connective’s lender panel. This may include sourcing funding from private funders or non-bank lenders.
Nevertheless, there are some things you need to be aware of before you recommend them to your client.
Private funders or non-bank lenders
Non-bank lenders or private funders are lenders who may not hold an Australian Credit License; that is, they do not offer products for credit regulated products or clients. In addition, they are not a bank, credit union or building society therefore do not have an authorised deposit -taking institution banking license. They generally source their own wholesale funds and lend out these funds with an added margin for profit. While non-banks may hold a credit licence and are regulated by the Australian Securities and Investments Commission (ASIC), they are not regulated by the Australian Prudential Regulatory Agency (APRA), which provides an extra level of regulation.
Any non-panel lender you are considering should also hold AFCA membership, however many of them don’t, which means if there is a complaint where the lender is partially or fully at fault, you as the broker may be fully liable for the full financial compensation if they find in favour of the complainant.
Other things to be consider when dealing with off-panel lenders
- Upfront costs and ongoing fees may be higher than for comparable lenders.
- Interest rates may be less competitive, and margins can be exceedingly high
- They may place restrictive covenants on the property, which restrict the borrower from doing certain things and only protect the interests of the lender
- PI Insurer’s may not cover you for loans submitted to these lenders
- Products can be restrictive and have less features
TIP: Do your research
Review our lender panel to identify lenders that be able to assist your client including a Brokerpedia search. You may be able to expand your lender panel with a new accreditation.
Contact lender BDM’s to discuss your scenario, an exception may be considered.
Engage your broker peers through the Connective Community or directly. They may be able to suggest panel lenders to consider and/or share their experiences with non-panel lenders.
Complete an internet search to learn more about the proposed lender and peruse client reviews.
Ensure the proposed lender has an Australian Credit Licence and AFCA membership.
Contact your PI insurer to confirm your policy will cover this transaction.
Talk to your Broker Support Manager or CHL BDM they are a source of experience from across the industry.
Obligations for Connective Credit Representatives
You must use Connective’s panel of lenders for referral or submission of applications unless approved.
In circumstances where you need to access a lender on our panel, it is possible to seek a one-off approval, subject to certain information being supplied.
The process is to email the Compliance team (email@example.com) seeking the use of the specific lender.
In this email we will request:
- The clients name, loan amount, loan purpose, security, LVR and interest rate.
- Panel lenders which were considered in the loan scenario
- The reason that your customer's needs were not serviced/approved by any of our current list of panel lenders.
- About the lender - provide a summary of the proposed lender. This includes their AFCA membership number. To protect brokers and their customers in the event of a complaint, Connective will not consider any lender who does not hold AFCA membership.
You will also need to ensure that your private insurance covers lenders that are not on our panel.
Finally, it is important to remember that when approval is granted, that this is a one-off approval and not a blanket approval to use that lender without the consent of Connective’s General Manager.
Please do not hesitate to contact the compliance team for any further assistance.