Royal Commission’s final report

On February 4th, Commissioner Hayne’s final report from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industries was released after it was tabled in Federal Parliament.

The report contained 76 recommendations, 75 of which the Liberal government has pledged to adopt. The Australian Treasurer, Josh Frydenberg, rejected the final recommendation relating to customer paid fees for service, claiming it would harm competition – and he is absolutely correct, it will.

It is interesting to note that after initially accepting all 76 recommendations, the Labor Party has since abandoned this stance, announcing a new proposal. With the Federal election only months away, only time will tell which party’s policy will become legislation.

Our company, Shore Financial, has made it clear that we believe independent mortgage brokers provide a vital service to Australian consumers and that it is important to keep competition in the industry alive. Mortgage brokers stand for almost 60% of Australian mortgages written; we give a voice to the smaller players who are vital for competition against the big four. These numbers speak volumes as to where the majority of Australians prefer to originate their mortgages.

Brokers are the voice of all the second-tier lenders such as Bankwest, ING, Suncorp, Macquarie and countless more who rely on brokers to distribute 80-90% of their loan settlement volume. Without brokers, these second-tier lenders would struggle to offer their products and services, which are also generally more competitive than the major banks. Some of the recommendations made by Hayne would potentially wipe out the broking industry, so this needs to be considered.

Overall, there are five major points in the Hayne Report that have been recommended for the mortgage broking industry. Most of them we support and that’s because they pertain to best practices.

The phenomenal growth in the mortgage broking industry over the past decade is proof that brokerages are providing a much-needed service. The broking industry has grown from representing 15% of total loans settled to almost 60% in the 10 years I’ve personally been in mortgages. The reason for this is that it is clearly an industry which is delivering better outcomes for clients.

Why would you speak to a bank with one set of products and services when you could speak to a broker who offers over 30 banks’ products and services?