Autumn 2021

Talk Around Town

To all our clients living outside of Victoria, congratulations you have done extremely well to date with the balance of handling this pandemic and keeping your State working, jobs safe and the economy bubbling along.

To all of us Victorians bunkered down in Mexico, it has been a tough time for all of us. Lockdowns 1,2 and 3, business recovery halted, business shutdowns and a general feeling of jealousy when looking at other States, watching how they have handled outbreaks as we hover around our kitchen tables.

The vaccine has finally arrived on our shores and has begun rollout. Whilst this may take a few months to complete hopefully this is the beginning of the end of these lockdowns.

When I was in Ireland a few years back, I experienced Lock-ins, where those inside the pub at closing time where locked in and the constabulary locked out as the party continued long into the night. Give me an Ireland Lock-in over a Victorian Lock-down any day of the week.

Interest rates are holding steady at the lowest levels on record and some pundits say this will eb the case for the next 2 years, I say no that is not the case, if property in Sydney & Melbourne continues to raise towards the projected 18% increase over the next 2 years – I can see the RBA increasing interest rates in the second half of this year to tamper demand in the housing sector and slow the burners a little. The Banks are doing their best to slow the markets, given the average home loan is now taking 6-8 weeks for approval – if you are considering looking at purchasing a home or bidding at an auction, start the loan application well before you bid or buy a home. Get pre-approved early on.

Instant Asset Write-Off

June 30 is Fast Approaching

We now have an Instant Asset Write-off in place and the asset value it applies to is unlimited, both in the amount you spend and in the number of times you can buy assets.

With June 30th fast approaching, NOW is the time to order and buy equipment to claim your Instant Asset Write-off this financial year.

The tax breaks are conservable, they are extremely generous and if as a business owner you do not take advantage of this scheme – you are doing yourself a dis-service.

Any Tax Losses declared this year are carried forward to next year.

Plan today, plan now to ensure that by the time June 30th, 2022 rolls around you have maximised your allowable claims. There are delays in availability of ready stock, do not wait until May and think that you will have your asset ready and delivered before the end of June.

Delays and Long Waits for Credit Decisions

What difficult times we live in…a few short years ago almost all Banks and Finance Companies offered a ‘Tick & Flick’ asset loan product that provided nearly immediate approvals provided certain boxes where ticked.

Now the Banks and Finance Companies want full credit submissions, supporting documents, two+ years of financial reporting, breakdowns of balance sheets, ATO Tax portals, cost of living statements, details of your Foxtel and Netflix monthly subscriptions and then when you provide all the above – your can expect to wait the best part of 2 weeks for a decision.

Count your lucky stars that you are looking for finance for a Truck or Excavator – buy a house and it could take 7-8 weeks to get a response for that home. Please be advised, do not offer to buy a property on a 30-day settlement – you will be in for a lot of pain and delays if you do. We are still achieving excellent results for our clients but taking a little longer than before get the job done. It is frustrating for us and no doubt frustrating for you however we are getting the deals settled – so please be patient, work with us and it will get done.

Brokers Advantage in 2021

The delays and extended approval decision making that we are experiencing is playing into our hands. The Commercial Equipment Broking sector that we are a part of, is currently experiencing its busiest period on record.

73% of all Commercial Asset deals settled are settled with Banks & Finance Companies via a Broker.

An East & Partners Broker Channel Analysis commissioned by CAFBA in February 2020 found that 72.9% of new commercial asset finance transactions are settled through commercial brokers. According to Scottish Pacific’s SME Growth Index, SMEs value ease, speed and ongoing support most when choosing a lender. As accessing finance becomes more difficult, brokers are best placed to provide these: as an advocate for the client, they can present a range of options that meet business needs and structure more complex deals appropriately. As well as simplifying the application process for clients, they reduce the risk of error, which speeds up approvals.

Domenic Lo Surdo, Managing Director of Stamford Capital and member of CAFBA’s Board of Directors, says brokers are the new relationship managers.

“Most customers don’t have a relationship with their bank like they do with their broker. Turnover of bank relationship managers means brokers have taken on that role.” If you are experiencing painful delays when looking to access finance through your Banks, then please give us a call today to see if we can assist you with your requirements and take the stress out of the process.

Used Vehicle Pricing

There is no doubt that the Covid-19 pandemic has had a positive influence on used car pricing.

I have witnessed huge pricing being paid for Trade-in values from both Dealers and Auction houses, if you have a late model 2,3- or 4-year-old car – why not make enquiries on what it is worth today, you could be pleasantly surprised.

The ‘fear’ of getting back on public transport, working from home, in fact any number of reasons have resulted in the demand for late model secondhand cars to increase significantly.

If you are thinking that now would be a good time to trade-up and take advantage of the Instant Asset Write-off allowances on offer, you may very well get a great price on your current vehicle, drive away in a new car, and claim the full price of the new car as an instant write-off this financial year. Talk to your accountant and see if this makes perfect business sense for your company.

Senate inquiry recommends RLO repeal

Source: Mortgage Business

By Annie Kane

Why is this needed.

The APRA requirements on Banks post the Banking Royal Commission has resulted in lending credit decisions extending out far too long, especially for small business and individuals.

It has resulted in delays which cost contracts and restrict business growth.

I look forward  to these changes passing through the Federal Parliament and rolling down through the system.

The Senate economics legislation committee has recommended that the bill repealing responsible lending laws be passed.

The committee has released its final report for its inquiry into the National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020.

The bill largely focuses on amending the credit laws so that they remove responsible lending obligations (RLOs) and extend the best interests duty to more credit assistance providers, among other changes.

The chief intention of the removal of the RLOs, as set out by the federal government, is to reduce the time it takes for individuals and small businesses to access credit and streamline lending regulation. 

After receiving more than 100 submissions and holding two hearings into the matter, the committee has now recommended that the bill be passed and the obligations repealed.

The report reads: “The committee notes that a well-functioning credit market is essential for economic growth generally, and for Australia’s recovery from the COVID-19 pandemic specifically. 

“The committee agrees that the current consumer credit protection framework is potentially overly prescriptive and that regulatory duplication between the responsible lending obligations, under the Credit Act, and the prudential standards issued by APRA could be an issue.”

It went on to say that it was “concerned by evidence that the regulatory framework has resulted in consumers being unable to access credit in a timely manner to buy their first home or to obtain a grant under the HomeBuilder scheme”.

It added that it was also concerned by the “invasive and onerous nature of the inquiry and verification processes required under the existing responsible lending obligations”.

The report reads: “The committee notes the key concerns with the proposed reforms raised by inquiry participants, both through their submissions and at the two public hearings held in Canberra. 

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“The committee is of the view that these regulatory changes will not undermine consumer protections and that the principal of ‘responsible lending’ is deeply embedded in Australia’s broader regulatory framework, which credit providers and credit assistance providers must still operate within and comply with.

“Additionally, the committee notes the vital role that AFCA plays in the efficient resolution of complaints and redress for consumers who need it. It is a free, fast and independent dispute resolution scheme, which improves the level of support and outcomes for consumers, especially those who are in substantial hardship. The committee suggests that the government continue to raise awareness of and promote the dispute resolution services available through AFCA, with an ongoing focus on continual improvements of AFCA’s processes and services.”

The Senate committee also “welcomed” the extension of the best interests obligations, which currently apply only to mortgage brokers, to other credit assistance providers, and “the enhancement proposed by APRA to its credit risk management prudential standard (APS 220) requiring ADIs to assess an individual borrower’s capacity to repay a loan without substantial hardship”. 

The committee also notes similar arrangements are expected to be put in place for non-ADIs through a legislative instrument.  

“The committee is acutely aware of the harm that unsuitable SACCs and consumer leases can cause vulnerable members of the community, and strongly supports the proposed enhancements to consumer protections for these products,” it said.

“In addition to protecting vulnerable members of the community, the committee believes the reforms proposed by the government will promote financial inclusion through the introduction of a new protected earnings amount and a cap on costs for consumer lease. 

“The committee believes these reforms will reduce the risk that consumers are unable to pay for their basic needs, or will default on their other commitments.”

Senator Slade Brockman, Liberal senator for Western Australia and chair of the committee, concluded: “The committee recommends the bill be passed.”

The National Consumer Credit Protection Amendment (Supporting Economic Recovery) Bill 2020 is now scheduled for debate on Monday (15 March) in the Senate.

If the bill is passed, the date of effect for the amendments will be the day after Royal Assen