Deposit Power national manager KEITH LEVY explains how asking one simple question could help brokers to boost their revenue streams going forward
Deposit Power national manager KEITH LEVY explains how asking one simple question could help brokers to boost their revenue streams going forward
MPA: How did you progress through the finance industry to take the top job at Deposit Power?
Keith Levy: I started off working with Westpac back in 1983, and was with them for about 10 years. I left the bank to join what was Royal and Sun Alliance at that time in the Deposit Power business in 1994. When I started I was one of four employees there. Then as the business grew I worked my way into the business development area, and in 2000 I relocated to Melbourne for two years to develop the Melbourne market for Deposit Power. I moved back two years later when the head office for our division relocated back to Sydney as the head of the business development team. In 2003 I was appointed the national manager for Deposit Power – a position I’ve basically held until late last year when the business was sold to CBL Insurance.
MPA: What changes did the business sale involve?
KL: With the sale came not only a change of owner but also a change in guarantor for the Deposit Power product. Vero has exited the deposit guarantee market and no longer issues new guarantees – although they are continuing to manage the run-off of the existing portfolio. The purchase was finalised in December 2012. It was purchased by a New Zealand-based insurance company – CBL Insurance Ltd. I stayed with Suncorp to manage the run-off and the transition of the business until the end of last year – and then in early January, I commenced my new appointment as general manager of Deposit Power with CBL.
MPA: Will the change of ownership affect Deposit Power’s goals going forward?
KL: As it is at the moment, it’s business as usual. However, the plan is to certainly increase the awareness and grow the deposit guarantee portfolio here in Australia. The benefits of CBL as an owner are that they understand the business that we’re in – as they’re a surety and insurance specialist. And they’re as passionate about the Deposit Power business as we are. So, with them comes new enthusiasm to continue to grow the product.
MPA: Where do brokers and aggregators fit into the increasing awareness plan?
KL: The brokers are a huge part of our business. They account for around two-thirds of our total business. We have some great relationships with the aggregators and their networks. What we want to do with all of our customers, but particularly the brokers, is just make the whole process easier and more streamlined. And really for us it’s all about service. We’ve got an industry-leading
service model, but we are looking for ways to improve it further. Probably one thing that some brokers won’t know is that we offer a full delegated authority to brokers who have a proven track record and experience in the industry. So, essentially, the approval process can be instantaneous. And, for any applications that are not within the normal box in terms of the information provided, we have a service where most applications are looked at and responded to within four hours. We’re constantly looking at ways to streamline and improve the service, which obviously in turn will help the aggregators, brokers and their customers.
MPA: Are you looking for broker feedback on how to streamline the service?
KL: We get a lot of feedback through the helpline, and also in talking to the aggregators and through our business development people. But we’re always looking for more feedback.
MPA: Are there any features of Deposit Power that brokers may not be aware of?
KL: We’re in our 24th year, so brokers should be aware of what the product is and how it can help their customers. But essentially we want them to treat it more as a service to their clients rather than a cross-sale opportunity. We find that people use the product because they genuinely need it – because generally they don’t have other options of paying the cash deposit. So what we would simply ask brokers to do is ask the purchasers how they are going to pay the deposit. We’re finding that more and more people are saying ‘I haven’t got it, what do I do?’ This is a great lead for brokers to offer an additional service to the client. The main game of the broker is obviously to secure a home loan, and we think that the Deposit Guarantee product is a great way of helping brokers to do that.
MPA: How do you help brokers who want to get the deal over the line using a deposit guarantee?
KL: We offer training. We have various methods of training, from face-to-face, via a disk or telephonebased. The training that we do is also accredited with the MFAA through their professional development program, so brokers can earn PD points by doing the training. But we suggest to anyone who’s looking to put an application in – if they’re unsure about anything – to call the 1800 helpline and our specialists will be able to give them the right information and the best way of getting the deal through as quickly as possible.
MPA: How are brokers remunerated for selling Deposit Power products?
KL: With any of our intermediaries – whether they’re going through an accredited aggregator, or even direct – we pay commissions. Those commissions are quite a high percentage of the fee. In saying that, we don’t believe or promote commission as the biggest incentive for brokers to sell Deposit Power. The biggest incentive for brokers should always be to secure the home loan sale and provide a great experience for their customers. The fee for our short-term product – up to six months – has not increased in nearly a decade. So we’ve been able to maintain the fee structure, pay commissions to our intermediaries and be successful that way through the support of our intermediaries.
MPA: Have you noticed any trends in terms of the type of borrower coming to Deposit Power now?
KL: The product is suitable for anyone buying residential property, and it’s basically in three typical scenarios: first homebuyers, upgraders and investors. Depending on the various government first homebuyer incentives, and what’s happening in the share market and so forth, the balance does fluctuate between first homebuyers, investors and upgraders. But there’s always a very strong demand from upgraders, and that’s what we’re seeing at the moment. The product is particularly useful for those people because, whilst they have assets, they typically don’t have the 10% cash lying around. So that’s where deposit guarantees typically come to the fore. At the moment, apart from upgraders being the key market, the outlying areas of the capital cities and, in particular, the regional areas are the strongest. The average deposit that we issue is around the $45,000-mark, so that would indicate that the purchasers that use our product are in the mid-range demographic. We issue around 30–40,000 guarantees per year, which is a reasonable percentage of the total real estate sales market nationally.
MPA: Is the guarantee secured against the client’s equity?
KL: The guarantees are essentially an unsecured product. So we’re not taking security at all apart from a counter indemnity that is signed by all purchasers. What we do is assess the purchaser’s ability to complete. So, in the situation where they’re selling and buying, the purchaser will need to have sold, or simultaneously sign contacts for the sale and purchase, or have finance in place to cover the purchase price. So it’s unsecured, and because of that our assessment criteria is simply to ensure that the purchasers have the ability to complete the purchase. And if they can demonstrate that through the various scenarios, we’re happy to give them the deposit guarantee. It’s pretty simple.
MPA: What other assets do customers typically provide to satisfy the criteria?
KL: The typical scenario might be that they have some equity in their home. Or a share portfolio that they don’t want to disturb, or want to retain because the sale proceeds of the house are coming through. Other types of acceptable assets include investments such as term deposits or cash held with a financial institution.
