The Royal Commission - what it means to home loan owners

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cobby
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Re: The Royal Commission - what it means to home loan owners

Post by cobby »

For all the hoohaa the royal commission bought about, is it just the cynic in me that feels it was nothing more than a little tuneup for the big 4 where the most ridiculous practices were exposed and ceased, and a few top line execs fell on their swords.

Meanwhile it's business as usual, mostly regional areas lose 22 Westpac branches, subsequent fines for exposed breaches were a pittance, ASIC and APRA who were as worthless as a cut up kayak in stopping the problems to begin with are still the main regulatory bodies. And it's still the customers who lose out. So almost a complete waste of time and money, whilst commissioner Hayne got a fat paycheck.

You scratch my back, and I'll scratch yours scenario?.....
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Re: The Royal Commission - what it means to home loan owners

Post by maverick »

cobby wrote:For all the hoohaa the royal commission bought about, is it just the cynic in me that feels it was nothing more than a little tuneup for the big 4 where the most ridiculous practices were exposed and ceased, and a few top line execs fell on their swords.

Meanwhile it's business as usual, mostly regional areas lose 22 Westpac branches, subsequent fines for exposed breaches were a pittance, ASIC and APRA who were as worthless as a cut up kayak in stopping the problems to begin with are still the main regulatory bodies. And it's still the customers who lose out. So almost a complete waste of time and money, whilst commissioner Hayne got a fat paycheck.

You scratch my back, and I'll scratch yours scenario?.....
100% correct. and whats worse, they are trying to give them back all the market share the brokers sent to other lenders. Cop a few hundred mil in fines, but make billions in profit with the bigger market share. Corrupt as corrupt can get. :twisted:
Last edited by maverick on 10 Feb 2019, 08:51, edited 1 time in total.
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Re: The Royal Commission - what it means to home loan owners

Post by 4liters »

cobby wrote:For all the hoohaa the royal commission bought about, is it just the cynic in me that feels it was nothing more than a little tuneup for the big 4 where the most ridiculous practices were exposed and ceased, and a few top line execs fell on their swords.

Meanwhile it's business as usual, mostly regional areas lose 22 Westpac branches, subsequent fines for exposed breaches were a pittance, ASIC and APRA who were as worthless as a cut up kayak in stopping the problems to begin with are still the main regulatory bodies. And it's still the customers who lose out. So almost a complete waste of time and money, whilst commissioner Hayne got a fat paycheck.

You scratch my back, and I'll scratch yours scenario?.....
You're surpised?

Remember that the RC was only instigated after the banks essentially told the Liberals that it was OK to hold one. One year was a woefully inadequate timeframe to investigate matters thoroughly given how long the misconduct has been going on and how pervasive it was/is. It is purely anecdotal but I've heard from some people that the terms of reference did not allow a lot of the problems to be examined - probably not by accident.

I'm not totally sold on the petition though as on principle I don't like commissions where they can create a conflict of interest. I've seen how they incentivised some shitty behaviours by financial planners (my great aunt got taken to the cleaners by a CBA adviser who sold her up to all kinds of S#!^ she didn't need - she was just a little old lady who trusted the nice man her nice bank manager introduced her too and they took that for all it was worth) and since then there has been a crackdown on certain types of commissions.

Is there any good reason why the mortgage broking industry not be treated the same as financial planning and face some sort of restriction on commissions and advice?
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Re: The Royal Commission - what it means to home loan owners

Post by mingle »

My Grandad once told me: "Never a borrower or lender be..."

I borrowed once, back in 1994 - to buy my Phillip Island place. And I busted my balls to pay it off in 18 months.

Since them I've never borrowed a cent. I'm not trying to preach, and I know I've been lucky, but all I have has been achieved thorough saving and working hard.

I've drummed the same mindset into my kids and hopefully when I've popped my clogs they'll be well grounded in financial management and will be getting their money to work for them (and not the other way round!)

The banks will keep screwing the general public, regardless of the outcome of ANY investigation. I'm happy that I can get on with my life without being reamed-out by them.

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Re: The Royal Commission - what it means to home loan owners

Post by spider25160 »

Correct me if I am wrong but my understanding was that there is no push to get rid of brokers but to change the way they are paid for their services. Instead of being paid by the banks in a very opaque system, they would be paid by the customer for work actually done without trailing fees and royalties.
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Re: The Royal Commission - what it means to home loan owners

Post by shane »

spider25160 wrote:Correct me if I am wrong but my understanding was that there is no push to get rid of brokers but to change the way they are paid for their services. Instead of being paid by the banks in a very opaque system, they would be paid by the customer for work actually done without trailing fees and royalties.
That's what is proposed, but how many people are going to pay a few thousand dollars up front for a mortgage broker to assist them. Meanwhile I doubt the banks would be dropping their interest rates if they don't pay commissions to mortgage brokers.

I have no problem with commissions if they are disclosed and understood upfront. There is typically a commission after settlement and then a smaller trailing comission as long as the loan is maintained. Using a broker effectively avoids the bank having to do as much work in the application process and lowers their risk. That's a lot of what the commission covers.
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Re: The Royal Commission - what it means to home loan owners

Post by 4liters »

shane wrote:
spider25160 wrote:Correct me if I am wrong but my understanding was that there is no push to get rid of brokers but to change the way they are paid for their services. Instead of being paid by the banks in a very opaque system, they would be paid by the customer for work actually done without trailing fees and royalties.
That's what is proposed, but how many people are going to pay a few thousand dollars up front for a mortgage broker to assist them. Meanwhile I doubt the banks would be dropping their interest rates if they don't pay commissions to mortgage brokers.

I have no problem with commissions if they are disclosed and understood upfront. There is typically a commission after settlement and then a smaller trailing comission as long as the loan is maintained. Using a broker effectively avoids the bank having to do as much work in the application process and lowers their risk. That's a lot of what the commission covers.
One potential solution I’ve already seen mentioned is putting the up front broker fee in the loan.

Are there any countries where trailing commissions have been banned?
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Re: The Royal Commission - what it means to home loan owners

Post by cobby »

4liters wrote:
cobby wrote:For all the hoohaa the royal commission bought about, is it just the cynic in me that feels it was nothing more than a little tuneup for the big 4 where the most ridiculous practices were exposed and ceased, and a few top line execs fell on their swords.

Meanwhile it's business as usual, mostly regional areas lose 22 Westpac branches, subsequent fines for exposed breaches were a pittance, ASIC and APRA who were as worthless as a cut up kayak in stopping the problems to begin with are still the main regulatory bodies. And it's still the customers who lose out. So almost a complete waste of time and money, whilst commissioner Hayne got a fat paycheck.

You scratch my back, and I'll scratch yours scenario?.....
You're surpised?

Remember that the RC was only instigated after the banks essentially told the Liberals that it was OK to hold one. One year was a woefully inadequate timeframe to investigate matters thoroughly given how long the misconduct has been going on and how pervasive it was/is. It is purely anecdotal but I've heard from some people that the terms of reference did not allow a lot of the problems to be examined - probably not by accident.

I'm not totally sold on the petition though as on principle I don't like commissions where they can create a conflict of interest. I've seen how they incentivised some shitty behaviours by financial planners (my great aunt got taken to the cleaners by a CBA adviser who sold her up to all kinds of S#!^ she didn't need - she was just a little old lady who trusted the nice man her nice bank manager introduced her too and they took that for all it was worth) and since then there has been a crackdown on certain types of commissions.

Is there any good reason why the mortgage broking industry not be treated the same as financial planning and face some sort of restriction on commissions and advice?
No I'm far from surprised, hell any royal commission is 3/4 and exercise of giving a few people a fat paycheck for little results.... The commentary surrounding the report has been almost non-existant too. (although I did catch Tom Elliot on 3afuneralhome slam APRA, ASIC and the findings of this very topic...)

My understanding of how it currently works is the initial and trailing commissions are taken out of the banks money, part of their profit on the interest usually. The way Hayne wants it done is a bill on the customer not to dissimilar to that of the solicitor costs when buying a house, or as you said part of the loan amount. Thats either a few grand upfront taken from savings/equity, or thousands and thousands of added interest over the life of the loan that now comes from the consumer and not the banks profits, meaning the banks end up with a greater profit margin off of a loan. And ultimately end up with a bigger slice of the mortgage pie given the big 4s highly aggressive marketing.

It's a different setup to that of investment management/brokering. It's more transparent even with the current commission structure given you can spend an hour on Google and compare your broker obtained loan to the generic loans offered by all banks and other financial institutions. Those investment management offerings by the banks are barely worth the paper they're printed on...
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Re: The Royal Commission - what it means to home loan owners

Post by Seasherpa »

Done Mav, hopefully you get an outcome from it.
We went down the broker road when we bought the apartment, mostly due to the level of advice and service.
Geoff disclosed the commissions as we went through the options in meetings that were held at our place often at time we’ll outside of office hours as myself and Maz were working flat chat at the time. After discussing options after the original meetings we weren’t happy with our LTV decided that the timing wasn’t right and we ended up perusing the idea almost two years later.
Geoff again came and ran us through the whole process when we would have been written off as time wasters by the banks.
The apartment we ended up buying came on the market on a Monday and we were due to fly out to Ireland for any sisters wedding on the Friday. Our offer was accepted, we flew out on Friday morning and Geoff took care of everything liasing with the Conveyancing company and real estate agent here on the ground while we were away.
From our point of view he earned his commission and if it was double he still would have earned it, and when we go down the property road again I know who I’ll be calling.
Having been through the service I’d now happily pay a fee up front or included in the loan as Ian suggested but unfortunately for newcomers enetering the market trying to scrape together deposits this may not be the case.
It’d be a shame to see them lost from the market.
All the best with it Mav :thumbsup:
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Re: The Royal Commission - what it means to home loan owners

Post by peatop »

Just from the responses so far posted it tells a story of ease in securing your first, second or even a portfolio of properties, when approached by muy son and daughter outlaw :lol: (who were buying a seconhand :lol: property) i was asked which bank should we use (no pun) straight away without thinking my answer was find a good broker :up: even my daughter took the same advice an sort a broker when buying a new home.

Brokers are in the game, they know whats going on day to day, why wouldn't you at least get Free advice, before one of your biggest investments in your life? ;)
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