Fed up with the major financial institutions in the wake of the royal commission, Samuel Philipos left his job at one of the big four banks to set up NSW’s “first and only” social enterprise mortgage broking business.
The freshly minted Benevolence Financial Group, which is supported by Macquarie University Incubator, invests up to 50 per cent of its profits into a microfinancing project for vulnerable women called The Hunger Project.
The amount invested depends on the size of the loan, with the smaller the loan, the lower the percentage of profits end up with the charity.
Philipos told The Fifth Estate that The Hunger Project appealed because of its high impact, with each $1 million home loan understood to empower the lives of 38 women and their families.
He says the charity “uses the power of finance” to helps women build sustainable businesses.
“We don’t want to build reliance on handouts”.
The team of five is still in their first weeks of operation so at the moment is only investing in the one charity. But the plan is to grow the list of partner charities so that customers can select the cause that resonates with them the most. Philipos says charities will be screened to ensure they align with the broker’s mission.
“We want to make sure every dollar has the biggest bank for buck.”
As a bonus, customers get a tax deduction by going through the social enterprise and can save up to $1080 in taxes (depending on the taxable income).
Royal Commission the catalyst for Benevolence Financial Group
Samuel Philipos was a relationship manager at one of the big four banks when the first stories from the Royal Commission started to emerge. At first, internal communications were steeped in denial and ambiguity, but before long, the bank was issuing grovelling apologies as the allegations of misconduct piled up and became indefensible.
Allegations of the pushy selling of a complicated insurance product to a boy with Down Syndrome struck a personal cord for Philipos, whose brother also has Down Syndrome.
“What if that happens to my brother?
The inquiry brought systemic issues to the fore, such as the sole focus on revenue.
“How can we trust people with our money when all their KPIs are based on sales?”
Just 21 per cent of customers think banks act in their best interests, according to a 2018 report from Deloitte.
It’s just like any mortgage broker
Like other mortgage brokers, Philipos says his group will rely on commission from bank fees as their main revenue stream.
At the moment, the company accesses the same panel of banks as other brokers but down the track, Philipos wants to screen out ethically-dubious banks, such as those that support fossil fuel projects. At present, the company does its best to educate customers about the pros and cons of each lender.
He says that “we’re just like any other broker – the same lenders, the same products, the same services, and with backgrounds in banking” so customers can be confident their money is in good hands, even if the economy continues to veer in a turbulent direction.
Philipos is also confident in the broker channel, and says it’s still the preferred way of securing a loan for most Australians.
Once business is in full swing, he expects Millennials to make up a significant chunk of the customer base because they are most likely to be interested in the social impact element.
The long term plan is to attract high network clients and offer a broader range of products, including commercial lending.