Good partners are key to your business success

As a mortgage and finance broker, having third party relationships is key to any successful business.

If you’re looking to enter a third-party relationship e.g., a referral source, outsourcing arrangements for your loan processing or with a business looking to purchase or sell a customer mortgage trail book to you, conducting due diligence on the third party should be part of your business operations.

Conducting thorough due diligence will help protect you from risk exposure and financial loss. It will also identify opportunities for improvement and ensures that you will be working with reputable partners.

Referral partners can be a great way to generate business, but it is important to ensure that they are reputationally sound and are not engaging in any unethical or unlawful activity.

It is essential to conduct due diligence on third-party service providers before outsourcing your loan processing to ensure that they are reliable, trustworthy and meet regulatory requirements. It is important to assess their experience, reputation and credentials and that you have comfort in their data security measures and quality control.

When it comes to businesses that purchase or sell trail books, due diligence is also critical. In the past, there have been instances of brokers paying deposits for the purchase of trail books that were never provided. You need to ensure your dealing with reputable businesses and individuals that are financially stable and have a track record of success.

The MFAA recommends for any party with which you plan to transact business:

• To meet either face to face or virtually.
• In relation to a company, confirming company, directorships and shareholder details through an ASIC company search.
• In relation to an individual, ensure the person you are transacting with is not banned or disqualified through a search of the ASIC Banned or Disqualified Persons register.
• If the individual you are transacting with is holding out that they have (or they are required to have) a particular license for example an Australian Credit License or an Australian Financial Services License, confirm this through a search of the ASIC Professional register.
• To confirm authenticity and ensure the veracity of the person or business you propose to conduct business with, confirm business website, conduct searches of social media sites as well as online reviews and conduct media article searches for any adverse content as well as to look to getting testimonials from other brokers and businesses for outsourcing arrangements that have used their services.
• Obtain independent legal advice around contracts and agreements.

If you like further information, contact ua.moc.aafm@ecnailpmoc