The Royal Commission into Banking has released their report with recommendations for changes to the industry. Not only would these changes affect banking, they can have a huge affect on YOU.
Please read the following and take a second to sign the MFAA petition (Mortgage & finance Association of Aust).
(Full disclosure; if these recommendations are to be implemented they would have a devastating impact our ability to make a living, now and in the future,. All this after many years of providing the best service & advice to hundreds of you,)
WHAT DO THE RECOMMENDATIONS MEAN FOR YOU?
YOU will be paying the broker.
Currently the banks pay the broker, so it is FREE for you to use a broker to find you best and most suitable loan. If this changes and you still want to ensure you get the best deal, YOU have to PAY the broker.
Less Choice
If OUR SERVICE is no longer a FREE for our customer, most will be driven to the banks directly to save themselves the extra fee. You then won’t have as EASY access to smaller lenders (eg. ING, Suncorp, Liberty, Heritage, Home Start Finance, Macquarie, ME Bank, Pepper, Prosper, Bank West, Virgin Money, Teachers Mutual Fund, Blue Stone Mortgages and MANY more) who can potentially provide you a better product.
Big Banks get control.
With the big banks getting most of the business, brokers will no longer be able to support themselves, will close up shop and the smaller lenders will disappear. The likes of ANZ, CBA, NAB and WBC will the have control of the market.
The big banks won't be kept honest due to lack of competition.
This is why the Royal Commission was investigating in the first place and what they are ‘very much against’.
Rates will increase.
Less Competition = Higher rates.
With more control over the market, and less choices for YOU to choose from the major banks will be able to push interest rates higher.
We have already seen the big banks push higher in recent months, EVEN WITH the Reserve Bank keeping their own rates steady.
Regarding the loss of Trail Commissions to Brokers. This was NEVER an ADDITIONAL INCOME for us. Years ago brokers only got paid once for a loan. The banks decided to change the structure of our income to protect their bottom line and help to retain loans for a longer term. So now we get paid a portion of the fee upfront and the remainder is paid in small amounts over the remainder of the loan term. So, if the loan doesn’t run it’s full 25 or 30 years a broker doesn’t see the FULL commission anyway!
FUN FACT:
Guess who is FUNDING the Royal Commission into the banking industry?? CBA and other big banks. We’ll let you draw your own conclusions...