Black & White Finance update - Royal Commission
Happy Chinese New Year everybody and we wish we had joined those of you who were at Sydney’s Darling Harbour yesterday with Jonesy and Amanda breaking the Yum Cha world record. First and foremost, let’s be clear about one thing now that this final Royal Commission report has been released. We are not going anywhere. We’re here to stay, here to simplify finance for you, here to deliver our special mortgage broking service and will continue making everything black and white. It's business as usual - with no grey areas.
Big Banks Cheering
Simply put, and as weird as it is, the big four banks are cheering now. Their shares have gone up over the last two days, and it’s almost like this has all fallen into place for them. Commissioner Hayne did not recommend any big four bank directors to be held accountable, despite their wrongdoings. He did call out NAB Chairman Ken Henry but the others he left untouched.
Impact on Australian borrowers
The Commissioner did recommend for broker commissions to be overhauled, and for borrowers to pay for the services that the mortgage broker provides, which has been for as long as I can remember a free service. Sadly, these recommendations could hurt the very people that this Royal Commission was supposed to protect - Australian borrowers. It could mean Australian borrowers end up paying higher interest rates and higher fees.
Big banks getting more power
There could be less chance for smaller lenders now to compete with the big four banks because there will be fewer brokers around to distribute their products. Those second or third tier lenders such as Pepper, La Trobe, Macquarie, ING, Newcastle Permanent, Bankwest and more, who rely on the broker channel to distribute their products to drive competition, may not survive. This means fewer people will be getting approved and able to buy their dream home because the big 4 banks cannot approve every single loan out there. And with the power that the big 4 banks could hold, it could mean that they will charge whatever interest rates they want. They’re not the most competitively priced lenders in the industry at the moment. Imagine what they will do when they have more of the market share – more power.
Stats
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 just don’t make sense:
- 6 out of 10 mortgages are now written by mortgage brokers nationally, not by the bankers
- 96% of borrowers are very satisfied with their mortgage brokers - us 100%
- 79% of borrowers have no concerns with what commissions brokers get
- 96.5% of people are not prepared to pay a fee for service so again
Hmmmm
Our view
So yes, we’re all shaking our heads in disbelief. The recommendations to change the way brokers get paid will get debated going into this next election – even though most Australian’s have no drama with it now. We’re hoping that both sides of politics understand that such changes would only enhance the power of the major banks. Our industry voices will be heard loud and clear as to what 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 which are impacted so careful consideration we hope, will be given to the radical recommendations provided by Commissioner Hayne. Let’s hope the benefits, like those our Black & White Finance business delivers for Australian borrowers and the economy is realised and competition is not destroyed.
Brokers work for you – customers first and foremost, we keep the big banks honest. Let’s hope we don’t give the big banks a free kick.
We are here for you, not for the banks
Ask us something or sign the petition
We are keen to hear what you think and also keen to receive your questions. If you want to know more about each banks requirements or more details on the Royal Commission, please send a note to peter@blackandwhitefinance.com.au or simply call 0448890186. Lastly, if you want to get behind the cause to support your mortgage broker, please take 5 seconds to sign this petition here. Once again, thank you for reading.
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