As many of you are probably aware, the final report from the Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was released to the public on Monday, 4 February 2019. The report made 76 recommendations, many of which have the potential to have a significant detrimental impact on the mortgage broking industry and the way you will access your lending in the future.
The recommendation made by Commissioner Hayne that presents the greatest concern to the broking industry and you as mortgage and finance consumers are:
- Recommendation for a consumer pays system, broker or direct bank originated
- Immediate abolishment of trail commissions to brokers;
- Eventual abolishment of upfront commissions to brokers;
What Commissioner Hayne has abjectly failed to understand is the impact these recommendations will have on you as the consumer.
Currently, when your broker provides you with credit assistance, the lender pays an upfront commission and, in many circumstances, a trail commission for the period of time your loan remains with that lender. In effect, the lender currently pays us for the services we provide to you.
Under Commissioner Hayne’s proposal, you as our client would have to pay a fee for these services, even if you chose to deal directly with the bank. That is a direct out of pocket cost to you, and potentially one that could make obtaining a basic home loan unaffordable.
Commissioner Hayne’s recommendations will mean:
- The big four banks will secure a much greater share of the market than they currently have
- Smaller lenders will lose market share, meaning more power to the big four banks
- Due to reduced competition in the market, it is likely we will see increased upward pressure on interest rates and loan costs to you
- The valuable services of your broker will no longer be affordable to many consumers
The directors, brokers and staff at Launch Finance are seeking your support in protecting our industry from the consequences of the short-sighted Royal Commission recommendations. Our key industry body, the Mortgage and Finance Association of Australia (MFAA) is running a petition to Government called Your Broker Behind You. Please click this link to add your name to the petition to support our industry and keep the big four banks honest. It will only take a minute of your time.
We appreciate your support in navigating these turbulent times in our industry and we can reassure you, that we will continue to provide you with highest levels of service, whilst always putting your best interests first.
The Team at Launch Finance