Royal what now?
In the Australian system of government, royal commissions are the highest form of inquiry on matters of public importance. The long-awaited final report of the banking royal commission was released on Monday.
First and foremost, let’s be clear about one thing, now that this royal commission report has finally been released. We are not going anywhere. We’re here to stay, here to simplify finance, here to deliver a mortgage broking service… it is 100% business as usual!
Big banks win again
Simply put, the big four banks are cheering! Their shares have gone up significantly over the last two days, and Commissioner Hayne did not recommend the big four bank Directors to be held accountable, despite their wrongdoings.
So what now?!
If the recommendations are passed, it simply gives the power to the big four. Many of our second tier lenders rely solely on the Brokers to distribute their products. The likes of Macquarie Bank, Pepper, La Trobe, Bankwest, ING, and many more. These guys DRIVE competition, they keep the big four honest! We (and you) need these lenders to stick around.
A reduction in competition ultimately means the Big Four have no need to fight for your business. Meaning, you eventually, could be paying higher rates AND a fee for our service. 🙅♀️
Impact on Australian borrowers
So what does this mean for you? The Commissioner has recommend for broker commissions to be removed, and for borrowers to pay for the services that the Mortgage Broker provides. Sadly, these recommendations could hurt the very people that this Royal Commission was supposed to protect – the Australian borrowers. It could mean that you end up paying higher interest rates and significantly higher fees, whilst the Banks enjoy an EVEN larger profit margin.
Here are a few stats to support the growth and achievements of the mortgage broker industry to date, and why some of these recommendations in the report don’t make sense:
- 6 out of 10 mortgages are now written by mortgage brokers (growing year on year)
- 96% of borrowers are very satisfied with their mortgage brokers
- 79% of borrowers have no concerns with what commissions brokers get
- 96.5% of people are not prepared to pay a fee for service
Are you feeling our confusion? Two Birds view…
So yes, we’re shaking our heads in disbelief. We did not see it coming! However, we are also not going to let it bother us or take our focus away from our jobs. If changes are a ‘comin, we will adapt and thrive and embrace the opportunities that some good old fashioned change inevitably brings!
The recommendations to change the way brokers get paid will get debated going into the next election. Our industry voices will be heard loud and clear as to the value we bring to Australians, and the economy in general. If these recommendations are actually put in place, it would hurt the smaller lenders and the smaller businesses like ours. There are thousands of small businesses in the industry (17,000 to be precise) which will be impacted.
Brokers work for you, customers first and foremost, together we keep the big banks honest! 👍
Thank you for taking the time to read. 🙏