The Royal Commission blunder - giving all the power and profit to the banks

To say that I'm saddened by the recommendations from the Royal Commission is an understatement. Outraged would be a better way to describe my feelings. 

The only winners here are the banks and their shareholders. And they will profit by millions if these recommendations are passed.

The recommendations, in a nutshell, are that brokers trail commission be abolished and replaced by a fee for service from our clients - which isn't fair on you, and certainly isn't fair on us.

The fact is that 59.1% of borrowers are currently going to brokers rather than directly to banks.

People are going to brokers because they're dissatisfied with the banks. If you fit the mould of a "perfect" borrower - with long, stable employment history, genuine savings, recorded actual spendings, perfect credit history and you want a really straight forward loan, then the bank might be able to help.

If you don't fit the "perfect" criteria - if you've been late paying your credit card just once, you've managed to pull together a deposit from various sources, if you're self employed, on probation, have a small deposit, are over 50, recently separated or divorced, or you're just a little bit out of the box that the banks try to fit you in, then, without a broker, you may not be able to get a home loan.

As a mortgage broker, my sole purpose is to help people borrow money, mainly to buy homes but also investment properties, cars and business equipment. I take that responsibility really seriously. I want my clients to be comfortable with their level of debt, I team up with accountants and financial planners to make sure loans are structured right and that the most ideal solution is found for my clients. I help self-employed people borrow money. I question the banks, I push them to turn things around faster, to look at all the facts - even the ones that sometimes don't fit perfectly in their box. I make my clients look good to the lenders. I help them achieve security, and hopefully wealth, through property ownership. I give them strategies to pay off their loan faster so they can retire earlier, or to use the equity in their homes to buy investment properties so that they have passive income in their future. 

There's so much value that mortgage brokers offer to our clients, and we do this by getting paid a small upfront fee and a very small trail on each and every loan we write. 

There are over 17,000 mortgage brokers in Australia, small business owners who, like me, are raising families, employing people and supporting the local economy - while helping clients achieve their dreams of owning property.

Our industry creates competition. This recommendation will achieve nothing other than putting the power and the profit back in the hands of the banks. Many of those 17,000 brokers would lose their business and their livelihoods.

For me, I will just re-invent my business. It's too important to me to lose. My clients mean more to me than that, and I will continue finding ways to help people finance their dreams. 

I'll join with others in my industry to fight this recommendation and the obscene power play.

In the meantime, if you need finance, if you don't fit perfectly inside that box that the bank wants to put you in, now is a great time to get yourself organised, and I'd love to help! Please call or email to arrange a time to meet.

Take care and, if anyone asks, tell them that these Royal Commission recommendations are ridiculous!

Caroline

[email protected]

07 3366 8604