The Hayne Royal Commission has made sweeping recommendations that will change the landscape of financial services in Australia.
What’s Changing?
First and foremost, we would like to say that Jones Financial Group is here to stay and is not going anywhere. We are working ‘business as usual’ and put our customers at the forefront of what we do, and will continue to find and structure the best value offering for our customers using our years’ of experience and knowledge.
There is a lot of misrepresentation, bias and ill-informed commentators out there at the moment, and it’s disappointing and difficult to hear sometimes. What’s most difficult for us to hear is the many stories of poor advice and interactions our new customers have had with other brokers or bankers in the past. Yes, there are always some bad eggs in every basket. It happens in every industry and this is why reform and continuous improvement is so important to help us evolve and better eliminate these people from our industry.
News Coverage
As you have no doubt read or seen in the news, the business model for mortgage brokers may be significantly changed as a result of the recommendations and this is clearly a major concern for the many businesses that make up the broking industry.
It’s positive that both the Government and Opposition have acknowledged the broking sector’s crucial role and are committed to consultation and gradual implementation.
We support the best outcome for the consumer which is good quality advice, competition and choice. As the major parties have acknowledged, changes to remuneration need to take place over time and involve careful consultation with all affected groups.
Banks and Brokers
The major banks support mortgage brokers and acquire many customers via this channel. The real reason, we feel, that major banks such as CBA are pushing so hard for this change is to reduce competition and increase market share.
You see, mortgage brokers have played an important part in reducing interest rates and increasing competition. Many smaller banks and ‘challenger banks’ utilise mortgage brokers as their distribution channel because they do not have branch networks or their branch network is very limited. The majors would love to take this from them, and utilise their existing footprint, branch network and deep marketing pockets to reduce competition and increase market share. The removal of brokers will no doubt hurt the majors in the short term, but will allow them to take a stranglehold on the market and squeeze the smaller players out of contention for your business. We all know reduced competition means they control the market and can then price as they see fit.
In Summary
Mortgage brokers play an important role in helping customers navigate what can be a stressful and complex process. At the end of the day, someone is going to be paid to complete your loan application – it’s just a matter of whether it’s someone who is independent and has your best interests at heart… or whether it’s a banker who can only recommend their own product and service, leaving out important information and not telling you about better deals available in the market.
We see brokers as integral to promoting competition and choice within the broader industry. If we work together, I’m confident we can create a better future and help ensure the industry continues to serve Australia consumers within any new regulatory framework.
If you have any questions, please reach out and I am more than happy to discuss this further with you and allay any fears or concerns about the industry or what this means for you.
