Millions of consumers are potentially missing out on solid financial advice, falling through the cracks in a system which has turned away from self-employed borrowers.
New research by
Pepper Money has found that 3.6 million Australians (or 18%) have been turned down for a loan by a financial institution. Of those who were turned down, 54% were unaware that there were alternative options available.
This highlights the fact that a growing proportion of Australians are being locked out of the financial system and the support they require to meet their goals.
There is a need to educate these consumers about the alternative options available, Mario Rehayem, Pepper Money’s managing director of Australian mortgages and personal loans, said.
“The big banks have set criteria for loan applications that not everyone conforms to. We don’t expect this to change, though it means a significant number of Australians are missing out. There is an opportunity for brokers to help consumers understand their options and potentially access the real financial support they need.”
Through its lengthy partnership with the broker community, Pepper Money has allowed tens of thousands of Australians to access funds, he said.
“Our aim is to continue to build this partnership, raising awareness of alternative finance options while working with brokers to assist borrowers who are currently being turned down by the banks.”
Pepper also seeks to help brokers cater to their clients in this everchanging environment, Rehayem told
Australian Broker.
“We want to educate brokers about the full suite of options available to their clients – a no from a bank is not the last resort. There are a number of viable alternatives that can offer the financial support that their clients are looking for,” he said.
“Pepper is continually looking for innovative ways to deliver high quality, accessible education to brokers. We have just completed our insights national roadshow, which saw record numbers of brokers in attendance, we also have a suite of other education opportunities for brokers including insights appointments, our Better Business eLearning Program offers brokers the opportunity to learn from independent business coaches and includes a comprehensive eLearning platform that hosts a variety of content.”
Pepper’s research also found that 26% of Australians turned down for a loan were refused because they were self-employed or worked part-time.
“The gig economy and the rise in flexible work are leading to a growing number of Australians who fall outside the bank’s lending criteria. Pepper Money offers an opportunity for brokers to provide finance to this underserviced market and help consumers on the journey to meet their financial goals,” Rehayem said.
“Over 90% of Pepper Money’s home loan applications are conditionally approved because we take a different approach to assessing Aussies. We look at the whole picture of an individual’s circumstance when making a loan assessment to understand their real life.”
While gathering more information is good practice for brokers, many consumers may feel that this is a cumbersome process despite the added protection that it provides, Rehayem said.
“We understand that finding out more information from clients, can take more time. That’s why we’ve embraced digital tools to assist brokers by way of online access to bank statements via bankstatements.com.au and zip ID to reduce the level of paperwork for brokers when helping customers with a personal loan.”
Pepper's recently created Product Selector Tool for brokers also helps with this issue, he added.
“The aim of this mobile/tablet enabled tool is to help brokers convert more business. Through a selection of questions and the applicant’s credit score, the tool facilitates the selection of best fit Pepper products for the client. This tool in itself should help with shortening that time, while still providing a personalised and human element to the process.“
He finished saying that Pepper understood that no one could understand another human better than another human.
“We do understand that it can take more time, but no computer can understand what kind of life event a human has endured and find the right solution for them.“
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