Author Topic: Royal commission - Please sign to petition to keep brokers in the market  (Read 2056 times)

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Offline prado2004

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Please everyone sign the below two links and petitions.

Rant here, being a broker myself I am so annoyed that the original purpose of this royal commission was to punish banks for wrong doings. Now it has turned on brokers. Brokers create market choice and competition, and most importantly customers pay ZERO to use a broker. No fee or cost is added to their loans, generally we get a better rate than you do by going direct and the banks pay the fee. WIN WIN.

The Royal Commission was meant to deal with criminals in the banking industry, but surprise surprise nothing but a slap on the wrist.
In fact, the recommendations for the mortgage broking industry is going to line their pockets even more. CBA has been lobbying to get rid of brokers for a while now, so the Big 4 can reduce competition and line their pockets. Why do you think their share prices have skyrocketed???

By removing upfront commissions and forcing the customer to pay upfront the broker industry will simply cease to exist. We know people won’t pay these fees.Being a broker myself we never accept the rates offered by the banks and always negotiates better than the consumer can get at the branch. This is why we have repeat business and continual referrals. Media hype around brokers writing hundreds of millions of dollars in loans just aren’t a reflection of the industry, we run a small business in our local community.
Also, smaller banks who have great deals will become redundant as you will need to go into the branch to meet with a banker at no doubt a Big 4 bank. The very institutions accused of rorting everyday people.

Finally, the trail brokers receive is to align their interests and prevent ‘churn’. Ie. brokers will be incentivised to refinance clients every few years to boost their revenue for upfront commissions. Also business owners do assist clients even when they don’t get paid. What about clients who want pre-approvals that don’t go ahead? What about clients who go to auction but don’t win? I never hear my husband turn people away even if he thinks it’s not going to happen.

I have 100% certainty if these recommendations come to fruition it is going to create a bigger monopoly now for the big banks and it will make it harder for you and your kids to obtain loans. We have so many self employed clients who simply do not deal direct with banks as banks don't understand how to look at deals like a good broker does.

I hope the government doesn’t play into the hands of the big banks and adopt these measures. Surely there is another way?? By keeping the broker channel alive, the big banks stay competitive...

https://www.brokerbehindyou.com.au

https://www.change.org/p/federal-treasurer-josh-frydenberg-save-the-mortgage-broking-industry?recruiter=62493265&utm_source=share_petition&utm_medium=facebook&utm_campaign=psf_combo_share_initial.pacific_post_sap_share_gmail_abi.gmail_abi&utm_term=psf_combo_share_initial.pacific_post_sap_share_gmail_abi.gmail_abi&recruited_by_id=406588b1-86ad-4846-9106-eb3317df8107&utm_content=fht-14263086-en-gb%3Av5&fbclid=IwAR352JdhQZXLEmQSxqggYWHVl_as3-E4whnI7Nk-4c1QZ6xzJ94tb3MWERY
« Last Edit: February 08, 2019, 04:47:59 PM by prado2004 »
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Offline prado2004

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Re: Royal commission - What will happen to brokers
« Reply #1 on: February 08, 2019, 03:58:31 PM »
Great to see the treasurer getting behind brokers. Clearly an uneducated decision has been made in this royal commission enquiry and now people are realising it is the wrong recommendation. Consumers do not want to have to go to the big banks, they want choice in the market. Getting rid of trail income will result in brokers having to close up shop. Trail is paid for on-going support, questions and work brokers give customers. Brokers businesses are also valued on trail, ban trail and you are making many older brokers who have spent their life working hard building their business worthless over night.

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Offline wilson79

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Re: Royal commission - What will happen to brokers
« Reply #2 on: February 08, 2019, 04:05:08 PM »
signed....
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Offline prado2004

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Re: Royal commission - What will happen to brokers
« Reply #3 on: February 08, 2019, 04:48:11 PM »
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Offline krisandkev

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Re: Royal commission - Please sign to petition to keep brokers in the market
« Reply #4 on: February 08, 2019, 05:16:36 PM »
I feel for you. But while Labor is making this an election issue it will be hard for the government to ignore this recommendation. Politics being politics. I think some brokers have not helped the matter. Same old thing, a few bad ones spoil it for all.  Kevin

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Re: Royal commission - Please sign to petition to keep brokers in the market
« Reply #5 on: February 08, 2019, 06:08:24 PM »
Quote from: krisandkev
. Same old thing, a few bad ones spoil it for all.  Kevinin
in that case most banks will be closing too
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Offline rockrat

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Re: Royal commission - Please sign to petition to keep brokers in the market
« Reply #6 on: February 08, 2019, 07:10:50 PM »
While I feel sorry for brokers, I highly doubt the commissioner’s recommendation would be made without good reason.  I believe some of these include - from the interim report -

These outcomes, the commission states, are:
“Broker loans were reliably associated with higher leverage, even for customers with an identical estimate of risk.”
“Loans written through brokers have a higher incidence of interest-only repayments, have higher debt-to-income levels, higher loan-to-value ratios (LVRs) and higher incurred interest costs compared with loans negotiated directly with the bank.”
“Over time, higher leverage means broker customers have an increased likelihood of falling into arrears, pay down their loans more slowly and on average pay more interest than customers who dealt directly with the bank.”

If the above is in fact true, brokers are not, on average, adding value to their customers.

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Offline JusyApples

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Re: Royal commission - Please sign to petition to keep brokers in the market
« Reply #7 on: February 08, 2019, 11:11:37 PM »
While I feel sorry for brokers, I highly doubt the commissioner’s recommendation would be made without good reason.  I believe some of these include - from the interim report -

These outcomes, the commission states, are:
“Broker loans were reliably associated with higher leverage, even for customers with an identical estimate of risk.”
“Loans written through brokers have a higher incidence of interest-only repayments, have higher debt-to-income levels, higher loan-to-value ratios (LVRs) and higher incurred interest costs compared with loans negotiated directly with the bank.”
“Over time, higher leverage means broker customers have an increased likelihood of falling into arrears, pay down their loans more slowly and on average pay more interest than customers who dealt directly with the bank.”

If the above is in fact true, brokers are not, on average, adding value to their customers.
I honestly believe the commissioner has no idea what brokers actually do.

60% of all home loans are written by brokers.

Estimated they add $3bil to the economy.

If they get rid of mortgage brokers people will be required to go directly to a bank, which means more employees required by the bank...that means the lender pays more wages...who ends up paying for that? You

If a person defaults on a loan, pays it out early or changes lender particularly in the first 2 years of the loan, they broker has their commission clawed back by the bank. That means 0 income on that loan.

Don’t forget a broker submits a loan application to the lender, THEY either approve it or knock it back, not the broker.

My wife has worked in the industry for 10 years and she is preparing to be unemployed.



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Offline McGirr

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Re: Royal commission - Please sign to petition to keep brokers in the market
« Reply #9 on: February 09, 2019, 08:26:45 AM »
The talk is that all these recommendations will take 2 -3 years if they are acted on. Personally I cannot see 3/4 of the recommendations being implemented. With an election coming up this will all be forgotten.

I have a few friends as brokers, I charge them a monthly fee to be their friends.  ;D

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Offline glenm64

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Re: Royal commission - Please sign to petition to keep brokers in the market
« Reply #10 on: February 09, 2019, 11:15:30 AM »
Banks shares rocketed after RC report. This is another reason. Less competition. Bend over lenders and get ready for the pineapple.

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Re: Royal commission - Please sign to petition to keep brokers in the market
« Reply #11 on: February 09, 2019, 12:30:14 PM »
The talk is that all these recommendations will take 2 -3 years if they are acted on. Personally I cannot see 3/4 of the recommendations being implemented. With an election coming up this will all be forgotten......

Agree with that, Mark.
Like all RC's, there will be much excitement about the recommendations but few will be fully implemented.
Those that are, will be watered down with the passage of time as their impact will be too expensive, too restrictive, or just plain inconvenient.
In the end, the market will dictate.
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Re: Royal commission - Please sign to petition to keep brokers in the market
« Reply #12 on: February 09, 2019, 01:55:22 PM »
Signed

 :cup:

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Offline prado2004

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Re: Royal commission - Please sign to petition to keep brokers in the market
« Reply #13 on: February 21, 2019, 10:10:43 AM »
I get the fact that people read these points and think that maybe they are right. The sad thing is the only people involved in this report were the big banks, in particular CBA. They drove the whole thing. The RC started to look at the things the big banks had done and to fine any irresponsible lending. Now brokers commissions have hit the spotlight. To put it in perspective brokers previously many years ago got larger upfront commissions. Then the banks themselves said people were refinancing too much and there was no incentive long term to look after customers so they changed it to a lower upfront and then a trail commission so the customer was looked after long term. This model works well and quite often people will call me to refinance and it is not in their best interest so we keep them with their existing lender. Also existing clients consume at least half of my day with questions, scenarios etc so the trail income actually helps pay for these tasks. The RC made it out like brokers kick back and make a lot off the trailing commissions however after the report came out the big broker firms and aggregators have released a lot of data and the average earnings per annum in the whole of Australia is $100k. This is not a huge salary and trust me for the hours most do and running their own businesses it is not a get rich quick job. Like most industry's the bigger guys writing lots of loans in Sydney and Melbourne sure are making a lot of money but it shows if the average is $100k per annum then there is a lot of people also making a lot less income. If trail goes it will just mean a lot of people will constantly refinance and it will go back to the old model which does not work. I also know many businesses who literally pay a full time staff member just to look after existing clients and the trail allows them to do this. For those of you who are with a bank, do they ever call you and offer a better rate or if the fixed rate is coming up do they call and tell you their specials? No, they give you the crappiest and highest variable rate they can. Brokers actively call people and make sure they are getting a good deal. At least that is what we do, and I know a lot of others who do also.

Also there has been speculation that some banks pay more than others so brokers are skewed to write deals to those who pay more commission. This is simply not true, the difference in commissions is absolutely bugger all, and if this is an issue I am all for the government making them all the same and so are other brokers that is no problem. There has also been a lot of data released showing out of the major banks ANZ pay the lowest, ironically they have the most broker loans out of any other bank. So go figure, that theory is dead now too. Truth be told probably 1 in 50 clients can go to any banks, most only fit a few due to them being self employed, earning overtime, age of the applicant, bad credit history, bad payment history, their house not valuing enough. These go on and on. So the fact is if you use a broker you will more than likely be found a solution, if you go to a bank direct you will more than likely be turned away. Also brokers 100% get given better rates than the public get given. This is purely due to overall power of the broker and the banks try and win the business. This will make competition so much less fierce and the consumer is just going to lose out.

In terms of higher leverage and higher default rates this is not true at all. Recent surveys have come out in the last week showing that 67% of customers have at one point been unhappy with their bank, 1% of customers are unhappy with their broker. Brokers work for you, not the banks. There are a lot of bigger firms out there like Aussie 100% owned by CBA, mortgage choice bulk owned by CBA, Rams owned 100% by Westpac. These guys are skewed in the products they give you, whether they admit it or not. But the independent brokerage firms who are family owned like mine genuinely care about the customer, the bulk of my book is under 80% and not one customer in over 1000 customers has defaulted in the last 5 years. Unless there is extenuating circumstances of things like cancer, job loss maybe people miss some payments or have to ask the bank for a repayment holiday. Interest only loans are governed by the government, on my book I have less than 5% of my entire client base on interest only, the banks direct were up A LOT higher that is why the government intervened.

Hopefully this gives some insight into a bit more than just what the RC report shows.




While I feel sorry for brokers, I highly doubt the commissioner’s recommendation would be made without good reason.  I believe some of these include - from the interim report -

These outcomes, the commission states, are:
“Broker loans were reliably associated with higher leverage, even for customers with an identical estimate of risk.”
“Loans written through brokers have a higher incidence of interest-only repayments, have higher debt-to-income levels, higher loan-to-value ratios (LVRs) and higher incurred interest costs compared with loans negotiated directly with the bank.”
“Over time, higher leverage means broker customers have an increased likelihood of falling into arrears, pay down their loans more slowly and on average pay more interest than customers who dealt directly with the bank.”

If the above is in fact true, brokers are not, on average, adding value to their customers.
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Offline prado2004

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Re: Royal commission - Please sign to petition to keep brokers in the market
« Reply #14 on: February 21, 2019, 10:13:02 AM »
Labour are fast back peddling, they want to get rid of negative gearing, stop franking credits, get rid of brokers and charge customers a $5000+ fee regardless of going to a bank or a broker for a loan.

It is almost like they are trying to lose the election. They can see it all slipping away after they thought they were a sure thing and it is now making them change what they have originally recommended. Hopefully now more and more of them are realising that there was not enough evidence for these drastic changes.
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Offline chester ver2.0

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Re: Royal commission - Please sign to petition to keep brokers in the market
« Reply #15 on: February 21, 2019, 10:41:56 AM »

Sorry guys i cant agree with the above statement

"If a person defaults on a loan, pays it out early or changes lender particularly in the first 2 years of the loan, they broker has their commission clawed back by the bank. That means 0 income on that loan".

Sorry but i think in those cases the broker should not get any income off that loan because apart from paying out out early in the other scenarios the broker has done a crap job of assessing the borrowing capability or market conditions in the first place
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Offline JusyApples

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Re: Royal commission - Please sign to petition to keep brokers in the market
« Reply #16 on: February 21, 2019, 11:00:05 AM »
Sorry guys i cant agree with the above statement

"If a person defaults on a loan, pays it out early or changes lender particularly in the first 2 years of the loan, they broker has their commission clawed back by the bank. That means 0 income on that loan".

Sorry but i think in those cases the broker should not get any income off that loan because apart from paying out out early in the other scenarios the broker has done a crap job of assessing the borrowing capability or market conditions in the first place
You understand that all loans are independently assessed by a bank right?
The broker does the hard work in terms of searching for the correct loan, preparing the documents, getting all the required docs (pay slips, banks statements etc etc some of these can be very complex especially with self employed). Once all the work is done (hours and hours of work) it is submitted to the chosen lender for assessment. So it’s not the broker doing the ‘crap assessment’ it’s the lender.


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Offline JusyApples

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Re: Royal commission - Please sign to petition to keep brokers in the market
« Reply #17 on: February 21, 2019, 11:01:45 AM »
Labour are fast back peddling, they want to get rid of negative gearing, stop franking credits, get rid of brokers and charge customers a $5000+ fee regardless of going to a bank or a broker for a loan.

It is almost like they are trying to lose the election. They can see it all slipping away after they thought they were a sure thing and it is now making them change what they have originally recommended. Hopefully now more and more of them are realising that there was not enough evidence for these drastic changes.
They can’t be trusted, they are back peddling to try and keep votes, but once they are in power then what?

Both shorten and Bowen said if you don’t like changes to franking credits then don’t vote for us.

It doesn’t pay to be a self funded retiree under their government.


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Offline Aussie Camper

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Re: Royal commission - Please sign to petition to keep brokers in the market
« Reply #18 on: February 21, 2019, 12:59:53 PM »
Signed,

After working in the Banking industry (including Mortgage Broking) for the best part of 40 years these guys don't seam to understand the benefits that Mortgage Brokers can provide.

If people are worried about 'perceived' favoritism by Mortgages Brokers towards a lender that pays higher commission/trail why don't they just mandate a standard Commission/Trail rate, at a reasonable rate of course. Most lenders commission rates are very similar anyway.

The brokers I have worked for really only consider what is the best product/lender for the client, based on the clients requirements and objectives and the amount of possible commission is not considered.   

Offline chester ver2.0

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Re: Royal commission - Please sign to petition to keep brokers in the market
« Reply #19 on: February 21, 2019, 01:42:17 PM »
You understand that all loans are independently assessed by a bank right?
The broker does the hard work in terms of searching for the correct loan, preparing the documents, getting all the required docs (pay slips, banks statements etc etc some of these can be very complex especially with self employed). Once all the work is done (hours and hours of work) it is submitted to the chosen lender for assessment. So it’s not the broker doing the ‘crap assessment’ it’s the lender.


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Offline WilSurf

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Re: Royal commission - Please sign to petition to keep brokers in the market
« Reply #20 on: February 21, 2019, 04:25:27 PM »
To Royal Commission have made it harder for the normal individual to get a refinance of their mortgage.
We are in the process of refinancing and the bank is asking stupid questions.
And they are adding some monthly payments double  to calculate our monthly expenses.
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Offline rockrat

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Re: Royal commission - Please sign to petition to keep brokers in the market
« Reply #21 on: February 21, 2019, 07:24:32 PM »
To Royal Commission have made it harder for the normal individual to get a refinance of their mortgage.
We are in the process of refinancing and the bank is asking stupid questions.
And they are adding some monthly payments double  to calculate our monthly expenses.
I had to provide a statement of financial position recently so it gave me a good chance to really understand where our hard earned goes. I listed all the insurance policies, rates, utilities, kids school including extra curricular activities, car costs, food, entertainment etc. Then I took a look at the Housing Expenditure Metric to see where we stood against the norm. My monthly tally was way more than the HEM so I can see why people come unstuck if they just use the HEM.

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Re: Royal commission - Please sign to petition to keep brokers in the market
« Reply #22 on: February 21, 2019, 07:40:56 PM »
I've had a quick look around to find a Housing Expenditure Metric calculator online but cannot see one,
any links?

Offline rockrat

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Re: Royal commission - Please sign to petition to keep brokers in the market
« Reply #23 on: February 21, 2019, 07:45:50 PM »
Truth be told probably 1 in 50 clients can go to any banks, most only fit a few due to them being self employed, earning overtime, age of the applicant, bad credit history, bad payment history, their house not valuing enough. These go on and on. So the fact is if you use a broker you will more than likely be found a solution
What I’d love to know is what banks are accepting the 98% of clients that can’t go to any bank? Surely this is a recipe for higher defaults, a risk that is often reflcted in higher interest rates. One solution might be to establish an industry wide standard for assessing a person’s application that ALL lenders must use.

Also, what % of people that go to a broker end up getting knocked back. And do you knock them back, or do you simply rely on the lenders?

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« Last Edit: February 21, 2019, 07:50:58 PM by rockrat »