Broking industry scapegoated in banking commission report
On Tuesday, 4 February, the Royal (Banking) Commission declared, among its many recommendations, that a borrower should pay up to thousands of dollars, capitalised to your loan, (thus increasing the cost by around 50% of said fee due to interest) for the services of a broker or bank to arrange a loan for you.
Deciphering the royal commission report directly, this is line by line the recommendation made to Treasury.
Labor, if elected, have stated they plan to implement every recommendation. Labor is also pegged to win in a landslide in this year’s federal election.
For 19 years in banking and finance, we have never had to charge a client a fee in a branch or as a broker. As a broker, the bank will no longer be required to pay a commission and will receive a fee for work they already do for free. It’s a doubly good outcome for banks, a poor outcome for brokers, and a terrible outcome for consumers.
Now as a consumer they’re asking you to pay. This is the consumer paying the price for the banks’ misconduct. This is completely absurd and you should be outraged that our policy makers have allowed banks to mislead them to this conclusion.
Many brokers will exit the industry with another recommendation that trail being banned as of next year, which will mean many cannot afford to operate. This recommendation already has a date on it to be implemented.
In a time of credit crunch when most brokers I speak to are 30-50% down on volume, year on year, this is devastating news. These are the businesses weathering the storm of the credit crunch, finding ways to finance commercial, asset, and residential finance for the people of Australia.
Without them, and only the branches, call centres or online platforms and Australians needing to navigate policy rates and processes, the mind boggles at how the economy will keep moving.
Aside from one NAB broker and one Aussie independent broker, the broking industry was not implicated in the banking corruption; yet they have been scapegoated in the recommendations of the report.
They are already struggling to trade. Commissioner Hayne, paid to create a report has simply stated that trail income is ‘money for nothing’. Hayne has grossly impaired judgement on the value of mortgage brokers and singlehandedly, in one unfounded comment, killed an industry that contributes $2.9 billion to the Australian economy (YE2017) and supports 27,100 full time workers (YE2017).
Their businesses’ value has been eroded overnight and they are already struggling to see the value in continuing with this new blow. Given the intense amount of paperwork, red tape, and difficulty obtaining finance, we do double to triple the work for the same success. This was the fallout of 2018 royal commission’s media spectacle.
This is devastating for you the client, our broking industry, for healthy competition against the big four, and for credit in Australia. Experts will be lost and the crunch will get worse.
Industry bodies estimate each non major will need 118 branches regionally to replace the broking industry. Again, your mortgage is handed to the banks on a platter
The big four have played this so well with their recommendations to Hayne, despite astoundingly poor levels of customer satisfaction and high complaints. This is in stark contrast to the opposite reports on the broker industry.
I anticipate that media releases coming out will poorly represent the gravity of this for borrowers. Satisfaction levels for brokers are a resounding 90% compared with 20% of customers giving these rankings to direct to lender channels.
This is TESTAMENT alone to the value of brokers. Brokers represent a staggeringly disproportionately LOW portion of finance complaints despite now representing 59.1% of the residential market. Our businesses must survive and rally for the Australian people to keep us alive, to keep the current model.
For Astute Financial it is simply business as usual, and information will be supplied as to what you can do to speak to your local member if you do not want to be charged fees to lend moving forwards.
We continue to represent all lenders on our panel, the majors and the second tier lenders, and will always act in the best interest of the clients’ needs.
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