Wayne Ormond says mea culpa and cops serve from John Symond over Refund's collapse
Refund Home Loans business founder Wayne Ormond has come under heavy fire from the man he sought to usurp as the king of mortgages, John Symond, as he finally broke his silence on the reasons behind the collapse of his franchise empire.
Ormond built a significant media profile on the back of numerous appearances on shows like Today Tonight, where he presented himself as a John Symond-like figure battling the banks while sharing lender commissions with borrowers.
Symond, though, has little sympathy for the collapse of Ormond’s business, which with around 350 franchisees had grown to rival Aussie Home Loans in size and reach – though without the same deep pockets – before its fall from grace.
“I’m not surprised what’s happened because I thought [Refund Home Loans] was a fundamentally flawed model,” Symond told BRW magazine.
“You can’t afford to say, ‘Hey, here’s $1,000’. You have to put that money in technology, business infrastructure and people coaching, everything that goes towards building your brand... How can you do that under his model?”
Symond’s comments come more than a month after Refund Home Loans collapsed owing 119 creditors a combined $9.7 million and as Ormond explains some of the factors that led to its sudden demise.
Ormond blames the franchise group’s lender for it being placed in administration as well as shouldering some of the blame himself for the business failing.
He accepts that he should have focused on its core proposition – mortgage broking – rather than diversifying into a number of other ventures including financial planning and real estate services.
Ormond had ambitions to open 400 real estate franchises nationally, operating along the same business lines as the mortgage broking business, with estate agents sharing up to half of their sales commissions with the buyer and seller.
Refund Real Estate and Refund Financial Planning were placed in voluntary administration two weeks after parent business Refund Home collapsed.
“We got away from our core business right at the end,” Ormond told BRW. “My advice is stick to what you know. Opportunities come along that will be tempting, but your core business is your bread and butter.”
Ormond says troubles began for Refund Home Loans when its lender (identified by BRW as Bankwest) demanded an audit report before providing any further funding.
The report revealed that Refund owed creditors and the Australian Taxation Office money and had entered into a deferred payment plan with them. It also identified other issues such as the company not having a chief financial officer at the time, and that it requiring a new accounting system as well as better financial management systems.
As a result of the audit report, the bank required Refund clear its debts before providing any more funding.
“The bank’s belief was that I required an equity solution, not a debt solution,” he says.
Ormond says he managed to raise $1.5 million from two investors but could not raise enough money after the share market collapsed and the business environment turned sour.
He says he is now focusing on “ensuring a smooth and easy transition for franchisees and considering new business opportunities outside of the real estate sector”.