Banking Royal Commission Reports & Government reponse

Discussion in 'Loans & Mortgage Brokers' started by Peter_Tersteeg, 4th Feb, 2019.

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  1. miximitosis

    miximitosis Well-Known Member

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    One of my favourite points of irony is that trail supposedly encourages brokers to not refinance clients to a better deal (although a broker stands to make far more by obtaining another upfront commission and the trail from the new loan provider).

    Tell me how introducing a client paid fee on all loan applications, whether through a branch or broker, would encourage competition through refinancing and improve consumer outcomes? Put simply, the new fee would simply be another cost barrier to discourage customers to refinance. Who does that stand to benefit?

    Another cracker is how this fee 'could be capitalized' to the loan. So not only does the customer pay the fee, they could also potentially pay interest on it for 30 years!

    I find it truly shocking how poorly these proposals have been thought through if the royal commissions intentions are to improve consumer outcomes. Fingers crossed reasonable discussion will be had between both sides of parliament and all stake holders prior to implementing any recommendations.
     
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  2. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Brokers wont get paid ANYTHING to refinance a clients existing loans under the proposed reforms so that addresses the churn issue for refinance. In future, a broker will get paid ONLY for what is newly drawn down.

    The impact on consumers does pose a concern. If a broker notes a client on a higher rate and can access a lesser rate then they will likely explain - I cant help you unless you pay me for my effort and time. Or do you say - "I dont get paid so go speak to Westpac" etc....It just makes brokers look like pirates. Contrary to the ASIC report on the industry.

    I hope that ASIC and the ACCC provide feedback to Govt so that some of these reforms are adjusted to benefit consumers. Consumers who borrow just got nailed by the royal commission. Its also so anti-competitive its like the banks wrote the script.

    and....Bill Shorten directly caused this. First actual strike. So far its been conjecture about how the ALP will kill the economy. He just impacted every battler and borrower.
     
  3. miximitosis

    miximitosis Well-Known Member

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    Oh well.... i'm sure the banks will look after their customers knowing that brokers can't do it now.:D
     
  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    it worked :)

    [​IMG]
     
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  5. miximitosis

    miximitosis Well-Known Member

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  6. Marty McDonald

    Marty McDonald Mortgage broker Business Member

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  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    all good

    I stole it ........

    ta
    rolf
     
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  8. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    ACCC will soon require mortgage choice to change its name for being misleading to consumers
     
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  9. albanga

    albanga Well-Known Member

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    Hahahahaha
    New name “Choice4”
     
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  10. tobe

    tobe Well-Known Member

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  11. Blacky

    Blacky Well-Known Member

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    The big 4 laughing... all the way to the bank?!
     
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  12. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Its now being used as an argument that competition will be increased by removing brokers. o_O Rates will fall.

    The ABA must have spent a while working out this strategy. I would love to find evidence of banks colluding to achieve a royal commission that gave the decision that the banks were chasing the whole time.
     
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  13. JamieS

    JamieS Member

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    I'm not sure what all the fuss is about.

    A client would be more than willing to pay a flat fee if brokers truly provide value for a client, whether it be saving a client money on a loan or helping them getting a loan a client might not have been able to get themselves (wink wink).

    The disappearance of the dodgy brokers will mean less competition and the remaining good ones will have more than enough to work off.
     
  14. The Y-man

    The Y-man Moderator Staff Member

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    The argument is that the average beginner in the property investment field would likely
    1. NOT know that they should seek a broker for setting up correctly, getting the most suitable (as opposed to cheapest) deal etc.
    2. The banks could offer the same service "for free" - "Sit down with one of our loan officer, and we'll get you the best offer (for the bank)". By the time they have shopped around, their credit inquiries will be lighting up (certainly what I would do in the banks' shoes).
    I suspect the only ones then who will pay are:
    1. experienced investors who don't DIY
    2. I just signed a unconditional contract and the banks have declined... (by which time it could be too late)

    The Y-man

    p.s. disclaimer - I own bank shares!
     
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  15. Redwood

    Redwood Well-Known Member

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    Where were the dodgy brokers in the client testimony? where did they disadvantage the end customer?
     
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  16. D.T.

    D.T. Specialist Property Manager Business Member

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    I think majority of brokers dont have a clue about structuring or possibly even investing. Most of the ones ive met are all "talk to me to see if i can get you a better interest rate"

    The ones that frequent these forums are obvious minority. And perhaps this creates a niche space that will be very profitable for them. There's never really been a shake up of this level before to see how it lands.
     
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  17. HUGH72

    HUGH72 Well-Known Member

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    I feel really sorry for all the great brokers on PC and can’t imagine obtaining finance without one.

    The thought of going back to the dark old days of grovelling to the local bank manager for funds is a scary thought. Most trips to a local big 4 bank have left me underwhelmed to say the least. Those writing the loans are poorly trained and their lack of knowledge just isn’t compatible with an investment strategy. Get ready for more cross collaterisation, declined loans and hits to credit ratings.

    The big banks are only fair weather friends.

    Let’s hope that some of the recommendations aren’t acted upon, really bad policy, reducing competition in the market place and hurting consumers. This will harm all the second and third tier lenders as well.

    I’m a bank shareholder but I’m actually stunned that the RC has essentially rewarded the big four.
     
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  18. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    You're right. If what they're suggesting goes through, businesses will shut up shop b/c the compliance, stress and **** pay (to be) will make it a job that no-one wants to do. The pay they're suggesting will only be okay for sole operators working from their kitchen table.
     
    Mark likes this.
  19. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    What if the dodgy ones stay? I'd say the percentage wouldn't change at all - less brokers = less dodgy brokers, but they certainly won't all leave.
     
  20. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    dont think paying a broker to co commit fraud is a good idea, wasnt even a good idea when comms are being paid.

    ta
    rolf
     

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