Source: Pepper Money
New research released from Pepper Money reveals a large group of Australians are being under serviced by financial institutions and potentially getting lost in the system.
The research results found that 3.6 million (18 per cent) of Aussies have been turned down for a loan by a financial institution and more than half (54 per cent) of those turned down for a loan were unaware that there was another option available.
Pepper Money undertook the research to highlight the growing proportion of Australians who are being locked out of the financial system, unable to access the support they need to meet their financial goals.
Mario Rehayem, Managing Director, Australian Mortgages and Personal Loans, at Pepper Money says that there’s a need to educate these consumers on alternative financial options.
“The big banks have a set criteria for loan applications that not everyone conforms to. We don’t expect this to change, though it means a significant number of Australians are missing out. There is an opportunity for brokers to help consumers understand their options and potentially access the real financial support they need.
“Pepper has a long history of partnering with the broker community, which has allowed tens of thousand of Australians to access the funds they need to reach their financial dreams. Our aim is to continue to build this partnership, raising awareness of alternative finance options while working with brokers to assist borrowers who are currently being turned down by the banks.”
A growing market
The research also found that more than a quarter (26 per cent) of the Aussies that were turned down for loan were refused because they were either self-employed or work part time, highlighting the limitations of the current system. With 2.4 million self-employed workers in Australia, there are a number of Australians who need financial support and are not receiving it.
“The gig economy and the rise in flexible work is leading to a growing number of Australians who fall outside the bank’s lending criteria. Pepper Money offers an opportunity for brokers to provide finance to this underserviced market and help consumers on the journey to meet their financial goals,” says Mr Rehayem.
“Over 90 per cent of Pepper Money’s home loan applications are conditionally approved because we take a different approach to assessing Aussies. We look at the whole picture of an individual’s circumstance when making a loan assessment to understand their real life.”
The research also finds that 42 per cent of Australians do not feel their financial institution understands their needs and financial goals; feeling their main financial institution is focused on business profits, rather than customer service. 63per cent of Aussies revealed that they withhold information from their main financial institution and one in ten are concerned about having all of their information in one place.
“There is a growing disconnect between Australians and financial institutions, which is causing many Aussies to fall through the cracks. Brokers play a vital role in helping to access these people, understanding their whole situation and helping them to find a solution that meets their needs.”