The Finance Brokers Association of Australia is targeting around 1000 vendor financiers across the country to try and bring them into the finance broker fold.
FBAA has formed a vendor finance steering committee to represent vendor financiers’ interests and bring them into the mainstream.
The committee, overseen by FBAA chief executive Peter White, will include real estate vendor financiers and other industry professionals.
White told
Australian Broker there are an estimated 1000 vendor finance specialists nationally – bar South Australia where this style of lending is not carried out – and FBAA will target them all to give them protection through a professional association.
A group of vendor financiers came to FBAA on their own accord and are part of the steering committee, he said.
“The FBAA is already working on PI insurance issues for vendor finance brokers and will continue to advocate for the industry in discussions with various authorities.
“I believe the new committee will promote better mutual understanding between all industry participants.”
Vendor finance is Australia’s oldest form of property lending, dating back to the 19th century. It was Australia’s main source of residential property finance until other lenders entered the market later in the 20th century.
Large parts of well-known suburbs, such as Chatswood in Sydney and Sandringham in Melbourne were sold in the early 1900s using vendor finance, White said.
“Since vendor finance was reintroduced to the residential market place in 1998, it has encountered significant market growth. It is now regarded as an alternative lending source for residential and commercial property, particularly for borrowers not able to source traditional lending.”
FBAA’s representation of vendor financiers will not take attention away from its main finance broker membership.
“Most certainly no,” said White. “These people are already a part of our industry today.”
Vendor financiers who will be represented must be current ACL holders, and will usually run finance brokerage businesses and hold real estate licences as well, White said.
“They have the same checks and balances and more than what finance brokers do today.”
The sector primarily deals with instalment contracts, second mortgage carry-backs, and deposit builder products.
White said with the advent of professional licensing, the FBAA is offering vendor financiers the benefits of representation by an industry association to work on their behalf on issues directly affecting them.
“Now that the steering committee is approved, the FBAA looks forward to working with a group of industry professionals who add diversity to the finance market place.”
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