Banking Royal Commission: Gold Coast mortgage brokers furious after Banking Royal Commission decision ‘decimates’ industry
Gold Coast mortgage brokers have hit back at a Banking Royal Commission finding that they say will “decimate” their industry. They say the move will in fact help the banks.
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Gold Coast mortgage brokers fear a key plank of the finance sector Royal Commission — for borrowers to pay them instead of banks — will “decimate” their industry.
Commissioner Kenneth Hayne, who delivered 76 recommendations to clean up the banking industry, said among them home-loan borrowers should pay brokers direct for finding loans.
Currently, lenders pay the broker via commission — and also via ‘trail commissions’ over the life of the home loan.
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The release of the findings this week sparked several major mortgage broker’s stocks to slump including Mortgage Choice, which saw shares plummet more than 30 per cent.
Mortgage Choice Burleigh, Miami and Palm Beach owner James Hasselle said such a move would “destroy” the industry and benefit banks.
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Mr Hasselle said: “59 per cent of every loan in Australia originated with a mortgage broker … banks don’t have the ability to do what we do.
“What I would ask (Commissioner) Hayne is whether he’s ever had to use a mortgage broker, whether he’s ever found it hard to get a home loan. He’s a lawyer, so probably not.
“It’s mums and dads that are finding it harder than ever, and mortgage brokers can negotiate that environment.”
The decision to remove trail commissions, ongoing commissions paid over the loan, was made by Commissioner Hayne after he described them as “money for nothing”.
Mr Hayne asked in his report why a broker should continue to benefit once the loan has been arranged and paid out.
Owner of Arundel’s Go Mortgage Xavier Quenon said the change could force brokers to stop providing assistance and advice throughout the course of the loan, and instead finish their dealings once the loan was finalised.
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“Every time they called me and asked to check their home loan I’d have to say, ‘can you tip me $500 because I don’t have time to do that’,” he said.
“Banks are paid interest on the loan amount and on an ongoing basis, so they’re getting exactly what they said brokers can’t get.
“It’s not a level playing field, so how are we supposed to operate in such an environment?” Mr Quenon said.
“I could probably survive if I just went back to a home office and sacked my staff but if we want to keep providing a professional service then the model they’re proposing is not okay. It doesn’t work.”
The Federal Liberal-led Government isn’t endorsing the switch in its entirety but Labor has indicated it likely will.
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