How the Banking Royal Commission could affect you
How the Royal Commission could affect you and how you can help us
Just over two weeks ago, the final report of the Banking Royal Commission was released. The fallout has been significant, or perhaps insignificant, depending on where your interest lies.
What you need to know
Everyone thought the big banks would get what was coming to them. However, despite the public outcry that demanded a royal commission, and the various testimonies of bad bank behaviour, the commission delivered no recommendations of any real significance to the banks. The share market’s interpretation of the impact of the commission was clearly evidenced by the dramatic share price rises of all the big banks the day after the report was released.
The Commissioner did however make significant recommendations with regards to mortgage brokers. He suggested broker commissions be overhauled, and borrowers pay for the services that mortgage brokers provide as opposed to the banks. In making these recommendations he went against the advice of various reviews and submissions that have been conducted over the last 3 years by a range of independent bodies – ASIC, APRA, Treasury, the Productivity Commission, even the Sedgewick Banking Review (commission and paid for the banks) – and actually seemed to agree with the recommendation of the CBA CEO Matt Comyn, which was that borrowers should pay mortgage brokers as opposed to the banks. Go figure!
These recommendations affect the viability of the mortgage broking channel which then affects the distribution capability of small lenders which then affects competition. If you impact competition, power returns to the big banks and there would be nothing stopping them from charging higher interest rates and fees. By reducing the number of lenders, fewer people could end up getting approved and be able to buy their dream home because the big 4 banks cannot approve every single loan out there. Simply put, the people who were meant to be protected may well come off worse.
Let’s work together
Brokers work first and foremost for you, the customer. We keep the big banks honest. If these remuneration changes came into being, they would threaten the viability of the mortgage broking channel. This will have a significant impact on you.
Our industry association, the MFAA has launched a multi-faceted campaign to gather support for the industry. Our fight is now a political issue and an important one running into the upcoming election. Please support us; there are a number of quick and simple ways you can do this:
Sign the petitions. Sign the petitions available at:
- https://www.change.org/p/federal-treasurer-josh-frydenberg-save-the-mortgage-broking-industryto ensure policy makers understand the weight of support behind the channel.
Pledge support for brokers at #ChoiceMatters
Email your local politician. Contact your Federal MP and let them know how you feel, by going to www.brokerbehindyou.com.au and emailing your politicians with the email-a-politiciantool.
Spread your experiences with us to your friends, family and colleagues and raise the awareness of the value we add to the community.
Let’s not give the big banks a free kick.
We are eager to talk to you, our clients, and clarify any questions regarding the Royal Banking Commission and the possible outcomes for mortgage brokers. Please feel free to call Gareth, Paul or Murray anytime and we’ll make sure you’re up to speed with what’s going on. You’re safe in our hands and we intend to keep it that way.