Non-bank lender meets rising broker demands for fairer clawback policies
Non-bank lender MA Money has launched a new suite of lending solutions into the broker channel, including commercial loans, SMSF commercial loans and residential bridging loans.
Reflecting a rising trend in the non-bank lending space, the new offerings come with zero-clawback policies.
Clawbacks are a significant source of frustration for brokers, with the Finance Brokers Association of Australia (FBAA) even linking them to rising stress levels in the broking industry.
Clawback provisions first emerged in the early 2000s in response to rogue brokers unnecessarily refinancing loans in order to pocket a quick commission.
Lenders introduced these provisions, typically valid for 12 to 24 months of a loan being originated, to incentivise long-term customer value rather than quick commission grabs.
However, there are rising calls for fairer policies to safeguard brokers’ commissions for reasons beyond their control – for instance, when a client must sell their property within the clawback period due to separation or death.
Read more: The case for and against clawbacks
As broker-led businesses, many non-bank lenders have backed clawback-free lending policies to assuage these concerns.
Earlier this year, mortgage aggregator LMG partnered with specialist non-bank lender Bridgit on a co-branded, clawback-free product, Bridgit by LMG.
ORDE Financial, meanwhile, has a zero-clawback policy across its entire product range, as does alternative lending giant La Trobe Financial.
Discussing ORDE’s clawback-free policy with MPA in June, chief lending officer Ryan Harkness said: “When we first launched ORDE, we actually spent a lot of time dealing with brokers and working with brokers… In addition to the points – like inconsistent service, slow SLAs, and not feeling as well-served as they used to be – clawback was a key concern, even five years ago.”
In announcing MA Money's new product range, national sales manager Tim Lemon (pictured, left) echoed Harkness’ comments, saying: “We’ve been working with a pilot group of brokers over the past few months to make sure we had the right process and service in place. Our goal is to give brokers more flexibility and speed, backed by the service they expect from MA Money.”
It is worth noting that zero-clawback mortgages typically come with a risk fee chargeable to the borrower. MA Money’s prime commercial loans, for instance, carry a 1% risk fee, per official product documentation.
MA Money pursues diversification
MA Money’s latest product expansion is part of a broader push to diversify beyond residential lending.
The lender recently appointed mortgage industry veteran Craig Stuart (pictured, right) as head of commercial, aiming to strengthen its presence in the $100 million commercial lending market.
Lemon described MA Money’s diversification push to MPA as “a broker-led development”, driven by ongoing demand for robust commercial finance products under the MA Money banner.
“Commercial lending is an area where brokers are looking for simple, reliable solutions, and that’s exactly what we’ve built,” Stuart said this Tuesday. “With loans up to $8 million, flexible terms and no clawbacks, our commercial products give brokers a straightforward path to meeting their clients’ needs.
“We’ve taken the same service-first approach MA Money is known for in residential and applied it to commercial, so brokers can expect quick decisions and policies that make sense.”
MA Money’s new SMSF commercial loans offer up to $2 million at 80% LVR, while full-doc commercial loans for retail shops, offices, light industrial, and warehouses are available up to $8 million at 80% LVR. Residential bridging loans are available up to $5 million at 80% LVR, with loan terms between six and 12 months.
