Smart50 rank: 6
Revenue: $10.44 million
Growth: 106.68%
Founders: Wayne Ormond, 35
Based: Queensland
Employees: 25
Industry: Finance and insurance
Website: www.refundhomeloans.com.au
Wayne Ormond launched Refund Home Loans in September 2003 after starting his career with the big banks where he became a successful lender of home loan products and services. But Ormond says he became disillusioned seeing his customers struggle with high interest rates and increasing bank fees.
"That was when I realised that there was a better way for borrowers, that we should be able to give something back, to say thank you to customers who trust us with the biggest financial commitment most families make - their home loan," he says.
This was the genesis of the concept of Refund Home Loans, with the promise of a cash refund for every loan taken out. The Brisbane-based company now has 170 franchises and revenue of $10.4 million, up from $7.64 million in 2006-07.
But the mortgage broker market was tough and Ormond faced harsh criticism and treatment from established brokers, including some very large and publicly-listed companies. The refund offered by Refund prompted three major banks to threaten to shut the company down or to refuse to make funding available to the company - neither of which happened.
Ormond stood his ground and lodged a complaint against one bank with the ACCC for price fixing. This is currently before the Federal Court and Ormond says it represents the first time an Australian bank has been prosecuted for breaches of the Trade Practices Act.
When Refund commenced operation in 2004, the industry statistic was that 20% of home loans were handled by mortgage brokers. That recently grew to 55%. However the market has been hit hard by reductions of up to 30% in bank commissions.
But Ormond says he won't change the business model which is based around sharing the broker commissions with customers, although he would slightly adjust the amount of commissions refunded to the client to offset reduced earnings for franchisees. He says his customers still feel they are better off because they get something from Refund and nothing from other brokers.
"The slowdown in volumes hasn't affected us - our volumes keep increasing every month and so do our franchise numbers," he says. Ormond says he receives around 800 franchise inquiries a month - many of which are from established brokers.
Ormond says nearly a fifth of revenue comes from the website, which is easy to navigate, and offers industry information and calculators.
He says he is looking to expand the business model into other areas of financial services, such as financial planning and general insurance. "We're talking about up-skilling our brokers and looking at other industries that correlate with home loans," he says.
