As a father of a mortgage broker who has 8 years’ experience I want to know why the Royal Commission and Government would be denying brokers the opportunity to be paid $3,250 by the lender on a $500,000 loan yet be happy for real estate agents to be paid up to $10,000 for the sale of a $500,000 property. My son has worked hard, built a business and now what?
you will get no arguments from me on your statement. I find no end of irony in the fact that the TITLE of the Royal Commission says BANKING, however the BANKS seem to be able to suffer the slings and arrows of outrageous fortune a lot more comfortably than the BROKERS who havent been charging dead people for services which have not been provided.........
I have to say I am viewing all the current spin from the banking community about "lessons learned" and "regaining the confidence of the community"as nothing other than marketing.
And the push to hold brokers under the microscope is itself simply a strategy to shift attention from the major players, because the major players dont like the spotlight, and have the budget and ability to shift the focus onto those who are much less able to defend themselves......the brokers.......
I take my hat off to all the hard-working and conciencious brokers out there who actually DO care about their clients needs, and take immense pride in what they do. they deserve every cent they earn, and trust me, its no licence to print money any more than selling cars, or laying bricks is......its determined by the skill, intelligence and work ethic of the person doing the job.
rant over, have a great day!!!!!
Without going too much into it as I still need time to digest the full report.
However a royal commission into the misconduct of banks has seen banks share prices sky rocket the day after the report was released - how can that even be a possible outcome considering the amount of wrongdoing that was uncovered?
Every industry has it's problems and broking is no different. Have there been brokers who have done the wrong thing? Definitely. But this is not isolated to broking and it happens across all industries including health, age care, legal and even government. I'm all for change in our industry as long as it makes sense for all parties but specifically the end consumer. These recommendations definitely don't have our clients best interests in mind - ironically the same duties they want to implement into our industry, which I welcome as I'm sure the majority of brokers will too as we are already doing this.
The recommendation clearly comes from someone who does not understand our industry and has associated the word "commission" and those who receive it to the same behaviours they saw in Wolf of Wall Street.
Let's hope the treasury-led working group will have a much more sensible approach.
Here is another little rant about this issue for everyone:
the current system of commission plus trail for brokers was set up as an incentive to minimise "churn"
for those who dont know, "churn" where a broker will set you up in a brand new loan every few years to maximise the up front commission.
the trailing commission ensures that the broker has a good reason to leave the client in the best product FOR THE CLIENT. The broker gets an ongoing reward for providing the customer with the product which is best suited to the needs of that customer.
so when the trailing commission system is dismantled, what do you reckon is going to occur??? Churn. And lots of it.
"so what?" you might ask. "As long as I am in the loan with the lowest rate I dont mind changing loans every 3-4 years"
in the first 5 years of a Principal and Interest loan, virtually 100% of what you pay is Interest.
so if you jump ship every 3-4 years, then you will never pay the loan off.
It seems to me that the banks have effectively shifted media focus from the appalling conduct demonstrated across the board by banks in the last 15 years. Remember the days when you used to go to your bank for a loan, or to set up a bank account, and they DIDN'T pepper you with offers for additional services: life insurance, super, financial planning, investment advice, estate planning, retirement advice, the list goes on.
this is the reason why we ended up with a Royal Commission. Banks are no longer banks. They are multi-layered service providers, and they use the excuse that you opened a bank account to systematically provide you with as many "value-added" services as possible......because there is a LOT more money to made out of life insurance and estate planning than there is in holding a savings account and issuing a credit card to you
And they have the clout to influence the media and make the mortgage brokers the bad guy in this........which for the most part is not justified.
I dunno what the answer IS, but I suspect the answer is NOT removing commissions for mortgage brokers.