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How to outsource


How to outsource: get more time in your day and protect your business

Time. Let’s be honest – there’s never enough when you’re a mortgage and finance broker. And while we can work many wonders here at Connective, unfortunately we don’t have a magic wand that creates more hours in a day. However, we do have some ideas on how you can reduce some of that noise in your business and outsource time-consuming tasks so you can focus on the important things, like growing and developing your business.

So what’s involved in outsourcing if you’re a mortgage and finance broker? Outsourcing, or the contracting out of a business activity, is a big step that needs to be approached correctly if you want it to have the desired effect of saving you time and hassle. In this article, we address the key risks associated with outsourcing and look at how you can protect yourself through implementing a risk management framework for outsourcing, together with creating an outsourcing agreement.

What are the risks with outsourcing?

Mortgage and finance brokers are practiced at managing risk through a strict adherence to compliance procedures and all of their business activities are covered by their Professional Indemnity Insurance. So it often comes as a surprise that outsourcing does not transfer all of the risks associated with that activity to the service provider. It very much remains your responsibility. So, before you outsource, it’s important that you consider all risks associated with the business activity as if it was to continue to be performed by your business.

How to establish a risk management framework for outsourcing.

All business opportunities have risks associated with them. But not every risk has an adverse consequence. Some risks are actually opportunity risks that should be explored. What’s important is that you recognise the key risks and ensure that you have thought about what controls you can put in place to mitigate any adverse consequences from eventuating.

We recommend that the following key areas be considered to help you establish a risk management framework if you are considering outsourcing and contracting services:

  • Are there procedures to identify and address conflicts of interest?
  • Business case for outsourcing a business activity. A business case for outsourcing or contracting with service providers should be developed.
  • The tender process. Determine the means for acquiring the outsourcing services and whether a public or private tender process shall be used, or if a key service provider is to be contacted concerning the provision of the services.
  • Approval of the agreement. The process for review and authorisation to execute the agreement should be identified as a step-by-step process of entering into the agreement.
  • Procedures for monitoring performance. The agreement should have levels or standards for the provision of the services. For example, will contract management software be used?

Creating your outsourcing agreement.

Outsourcing or service arrangements should be undertaken using a written document which contains all necessary terms and conditions of the agreement. (For the purposes of this article, we’re calling it an “outsourcing agreement”, but your service provider may refer to it as a Service Contract or by some other name.) As with any contract or agreement you may use with an external supplier or business, it’s important that you detail exactly what’s required and putting it in writing will ensure you are always on the same page and help to avoid any disputes.

At a minimum, the agreement should address the following:

  • Service levels and performance requirements. The agreement must clearly define the service levels and performance requirements that you require.
  • Audit and monitoring procedures. The more important the services to your organisation’s core business, the higher the risk of failure of the services and degree of monitoring required. There should also be provision for regular review of these services at periods depending on the services provided. The agreement should also permit review of breaches where service levels/standards have not been achieved.
  • Default arrangements and termination provisions. An immediate right to terminate the agreement should exist in the event of breach of relevant laws or the terms of your contract or agreement.
  • Pricing and fee structure. The agreement should provide for a clear and concise pricing and fee structure. It should also state payment terms.
  • Dispute resolution arrangements. When you enter into an outsourcing agreement everything may be rosy, but that may not always be the case. A mechanism for resolution of disputes between the parties is always a good idea.
  • Liability and indemnity. Depending on the nature of the services to be provided, our recommendation is that you request that the service provider hold adequate professional indemnity insurance under the terms of your agreement,
  • Confidentiality, privacy and security of member information. You must ensure that your agreement has provisions requiring the service provider to hold all customer information confidential. There should also be a provision that the service provider hold information in accordance with the Privacy Act 1988 (Cth) and not provide customer information to another party without the consent of the customer.
  • Protection of intellectual property. Don’t forget to protect your own intellectual property (e.g. name, logo, website address, operational and documented systems and other intellectual property). If the intellectual property is to be used by the service provider, then ensure that it is done so under licence.
  • Business continuity plans. A plan should exist for a contingency in the event the services are no longer provided. You should also ensure that you take appropriate steps to continue to provide services if the service provider is no longer able to provide the services.

Monitoring the relationship.

When outsourcing has commenced, don’t forget to continue to bring the love! It’s important to devote sufficient resources to managing and monitoring your outsourcing and service relationships. Our 3 key tips for maintaining a healthy ongoing relationship include:

  • Maintaining appropriate levels of regular contact with the service provider. Don’t just set and forget to stay in touch.
  • Establish a process for regular monitoring of performance under the agreement, including meeting criteria set out in the service level agreement, and
  • Ensure you are dealing with issues as they arise and escalating where appropriate.

Don’t forget – if you are a Connective member, your Connective Compliance Team is here to support you with any queries or concerns whenever you need assistance. We’re available on Helpdesk and Live Chat every week day.  If you’re not yet a Connective member, why not talk with us about the great support and service we provide to help you meet your compliance obligations and take your business to the next level? To get in touch, visit or call us on 1300 65 66 37.