Brokers should look to outsource as operating costs become more difficult, Vow Financial has said.
As NCCP compliance brings greater operating costs to bear on mortgage brokers, Vow Financial CEO Tim Brown has said brokers must look to cut their overheads.
"Look to outsource as many non-revenue activities as possible," Mr Brown told Australian BrokerNews. "This way they become variable rather than fixed, which helps when volumes are mixed."
Aggregators and lenders are also facing increasing costs in the compliance environment, Mr Brown said. He commented that aggregators should look to reduce overheads while trying to maintain service levels to brokers. Brown said the main costs faced by aggregators relate to compliance and software.
"They are inter-related as the first is driving the cost of the other," he said.
These costs, Brown predicted, will lead to further consolidation of aggregators.
"As margins contract and expenses increase, so will the need for scale and efficiency, so no doubt there will be further consolidation and rationalisation," Brown stated.
Brokers as well should look toward consolidating costs with other businesses, Brown said.
"I believe from a broker's perspective sharing the cost of an office and sales support can reduce their overheads while improving productivity," Brown said. "Brokers don't get paid from being good at administration."