Squirrel applies to become QFE

Founder John Bolton said he had applied for a peer-to-peer lending license from the FMA and hoped to have Squirrel Money operating by February. “It’s a three-month process.”

He said he had always wanted Squirrel to be a full-service financial service business but had not been able to do everything at first. “I pulled back and focused on mortgages, focused on first-home buyers. Now we’ve reached the maturity in the business and actually were aren’t like a normal mortgage broker, we’re a branded business with a big client base. There are things we’re not doing that we should be doing.”

Bolton said he was in the process of applying to become a QFE. “Once we are QFE-d we won’t need to worry about the advice piece and can run with the existing team.”

He said he hoped to be able to work with an existing, good provider offering KiwiSaver.

The changes were labour- and time-intensive, he said. “You’ve got to have huge amounts of infrastructure. We’re building our IT platform, it’s not a small task. I’m lucky I have some very good IT resource I could prioritise and refocus.”

Squirrel will also have to appoint a board of directors and deal with more compliance and audit requirements, he said. “It’s quite big, quite expensive. The FMA talks about allowing small businesses and start-ups to get into business and while it’s not prohibitively expensive, it’s not something you can do half-arsed.”

Bolton said Squirrel Money could help with things such as house renovations and could offer bigger loans than those offered by Harmoney, the only service licensed so far. It offers up to $35,000.

Comments from our readers

On 28 November 2014 at 10:35 am mcdc98 said:

Ahhh, maybe I'm missing something but the quote of "Once we are QFE-d we won’t need to worry about the advice piece and can run with the existing team.” is slightly worrying. I wouldn't think that becoming a QFE is the magic panacea that he has indicated. You still need to have a robust advice process...

On 1 December 2014 at 1:30 pm interested observer said:

I suppose it depends on whether they're thinking about employing their advisers as QFE advisers, signing them up as nominated reps, or letting them run as RFAs - as now? For the latter though, why be a QFE? The point of that regime is so you don't have to have your advisers registered individually (in the main). It's likely a comment out of context, but one that might attract a more' top of the cliff' approach to the application?

On 2 December 2014 at 1:45 pm JB Squirrel said:

@mcdc98

Its out of context.

The Advice piece refers to having to figuring out which staff need to be individually RFA'd. For example where a support person might do a fixed rate rollover. With QFE we can design our own systems and processes around the advice process and govern the whole team irrespective of what parts of the process they do. Its really moving towards the same way a bank approaches it and that makes sense for our business.

On 4 December 2014 at 10:29 am traveller said:

I think the squirrel plan is nuts!

On 12 January 2015 at 12:14 pm Amused said:

Congrats to John and the team at Squirrel mortgages with this announcement. I wish them well. They aren't the only ones who have woken up to the fact that dealer groups aren't adding value anymore to most established mortgage brokers and their businesses. Dealer groups nowadays only care about the insurer override they receive from the collective API written each month by their members. The core business activity of any mortgage broker is and always will be mortgages, not insurance. I predict that many established mortgage brokers will break away and do their own thing in the next 12-24 months as they can probably negotiate a better deal on commission or clawbacks for their business with the banks themselves than their existing dealer groups can.

Squirrel applies to become QFE

Squirrel Mortgages is applying for QFE status, and wants to start offering KiwiSaver and peer-to-peer lending.

Thursday, November 27th 2014, 6:00AM 5 Comments

Comments from our readers

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