Trail Book Purchaser Introduces Requirements

A trail book purchaser has introduced a new requirement for all trail book sales, stipulating that brokers must provide ongoing service to clients as part of the transaction.

The move by Trail Homes is designed so that clients remain with their broker and not sold on as part of the trail book transaction.

For brokers leaving the industry altogether, the company is insisting that a new broker is appointed to look after the existing broker’s clients’ ongoing financial needs.

Nick Young, founder of Trail Homes, said the measures had been implemented to formalise borrower support, as well as foster growth and sustain legacy within the broking community.

He added, “We want to make it clear that even through you might be selling your trail book, your ongoing obligation to service clients remains. 

‘We believe that it’s critical to create environments that promote good customer outcomes whilst supporting the broking industry.’

 “We believe that it’s critical to create environments that promote good customer outcomes whilst supporting the broking industry. 

“This simply isn’t possible if clients are bundled into a trail book sale, which consequently severs client relationships and the broker’s ability to continue to write new loans or refinance old loans.

“It’s a much healthier ecosystem for all involved if the broker’s bloodline remains intact, and untouched.”

For partial trail book sales, the new agreement structure reinforces the expectation to service the borrower in a manner consistent with good practice and as required by the aggregator.

For trail book sales in whole, the agreement stipulates that a broker must arrange for another mortgage broker to service their borrowers in consultation with Trail Homes and their aggregator before exiting the industry and/or ceasing to trade. 

Young said, “The intent of this addition is significant, as it encourages brokers to actively think about and seek advice on co-ordinating well-structured succession plans as part of their exit strategy. 

“This approach has a number of immediate and longer-term benefits: it invests in the industry by fostering the growth and development of the beneficiary broker and thus creates an optimal environment for clients to continue to be nurtured, whilst fiscally and ethically, supporting the exiting broker.”

In the instance of when a new broker is introduced, Trail Homes further encourages a revenue sharing model between the incoming and exiting broker during the handover period. 

This strategy is designed to streamline the succession plan process and provide the opportunity for the new broker to be mentored and the exiting broker to be invested.

Young said, “Furthermore, we strongly believe that it’s the responsibility of financial services providers to actively support brokers by helping to preserve client relationships and aid retention. 

“Our hope is that the updated assignment agreement will help prompt discussion about best practice measures, business growth, and reinforce that we’re all on the same page in preserving customers’ best interests.”

See the article on Australian Broker here.

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