One expert’s controversial take on meaningless minimum qualifications and the industry complacency behind them
Whilst there is some high quality education provided in the mortgage broking industry by some very dedicated and passionate teams and businesses, the industry is being let down by short-term-thinking and training providers willing to cater to demands for ‘fast and cheap ‘education.
Unless you’ve been hiding under the proverbial rock for the last few months you would have seen the Sydney Morning Herald reports on woeful education standards and cheating in the financial planning industry which has led to numerous Senate enquiries. The mortgage broking Industry would be wise to pay heed to the lessons being learning in the financial planning industry. If this industry thinks that it is immune from such speculation then it needs to think again.
Mortgage broking is an aging industry and many groups are looking to grow by bringing in new people into the industry. These new entrants will, when they have received their certificates, be appointed authorised representative’s under someone’s ACL and PI cover and that is where the rubber meets the road.
What actual cost to business and more importantly cost to reputation will ACL and PI holders incur now (and ongoing) when inadequately trained [but certified] brokers, make mistakes because their qualifications were issued without the student really achieving competency?
"We are allowing these so called education providers to give new entrants a sub-standard level of education and then accepting that the burden of really training the person falls on the business"
Somehow, we’ve arrived at a point where we think it’s OK for education providers to tell us that they can teach a new entrant everything they need to know to achieve a Certificate IV level of competency in a couple of weeks online, with minimal trainer contact and all for only $500. We are allowing these so called education providers to give new entrants a sub-standard level of education and then accepting that the burden of really training the person falls on the business. Aggregators and Franchise groups are basically having to complete the foundation training that should have been provided by a genuine Certificate IV level training program.
It seems that the industry places so little value on the quality of education being provided by education providers that qualifications are viewed as just a piece of paper that has to be purchased prior to getting on with the real work – i.e. it’s just a ‘ticket to operate’. This means, the provider who is willing to provide the cheapest rate and shortest time-frame gets the nod. In my personal opinion, quite a number of these ‘crash course’ training programs would not pass an audit by the training regulator. The scary thing is, if an RTO is found to be operating in a non-compliant manner they can be compelled to withdraw the qualification from the student but not compelled to provide a refund.
What am I referring to? Simple. If you are new to the mortgage broking Industry, you cannot reach Certificate IV level of competency in the time frames that many of the RTOs are currently delivering it in. You certainly cannot reach a diploma level of competency in 3 weeks if you are new to this industry. We hear this all the time, the new entrant with their newly minted qualification doesn’t actually know what an LVR is when they arrive at the new aggregator or broker business. Figures quoted to me on new entrant drop outs are alarming at best, damning at worst – more than 60% of new entrants drop out within three to four months of joining the industry.
"If you are new to the mortgage broking Industry, you cannot reach Certificate IV level of competency in the time frames that many of the RTOs are currently delivering it in"
It’s time we started taking a more sustainable and long term view. The industry must start placing more demands on training providers and no longer accept cheap qualifications of no substance delivered in ridiculously short time frames. We must send a message to those institutions educating our new generation of best and brightest that the industry does not want worthless pieces of paper. We want our new brokers who have a qualification to actually come with a solid foundation of knowledge about the industry they operate in - the products, loan structuring, how to market themselves, how to conduct client interviews and importantly how to do all this whilst maintaining compliance with the various state and federal legislation that they operate under.
Brokers graduating from quality education programs will help franchise groups, broker businesses and aggregators to grow their business by focusing on fine-tuning the new entrants, helping them achieve their goals not having to try and babysit them and give them the education they should have received in the first place. Or worse still, toss them in the deep end and only work with the ones that survive.
Paul Eldridge is managing director of the Intellitrain group of companies and co-founder of Australis College. All views expressed in this article are his own.
Do you agree with Eldridge? Do you notice a lack of knowledge in your junior brokers? Add your comment, or email the editor.