One glaring omission in banks commentary: customer diligence

Customers have the responsibility to be diligent about their finances. Picture: iStock.

There seems to be one glaring omission in the commentary about the banking royal commission – customer diligence. Don’t get me wrong, I am not defending the banks – not even the banks are silly enough to defend the banks.

But to my mind the most salient lesson in all that we have learned about banks, super funds and various kinds of financial advisers is that we, the customers, need to be more exercised about our rights, our choices and our money.

If we won’t chase down our super funds and consolidate them, who do we rely on? If we don’t check the fees charged on our accounts, who do we expect to guard our interests?

Sure, through the traditional role of banks in our lives we had learned to trust them. Guess what, lessons number one, two and three, are that those days are gone and we cannot trust them any more. We do not know bankers, we do not deal with them, they don’t give us any personal service – we deal in account numbers, PIN numbers and transfers.

We need to be wary about our own interests. Or demand a more personalised service and shift all the complicated baggage of our mortgages, banking accounts, credit cards and bill paying to an institution offering a better deal.

In this light I think the targeting of mortgage brokers could be a mistake. Undoubtedly there will be shonks in the industry – just as there are dodgy plumbers, doctors and journalists – but my experience with mortgage brokers and that of many hundreds of thousands of other customers is entirely positive.

Sure, initially my scepticism stemmed from their reliance on the banks for commission – was I dealing with nothing more than a salesman trying to chalk up another income stream? But it became pretty clear in detailed discussions that our broker was willing to look at multiple options through multiple institutions to arrange the finance that best suited us.

In finance, just like when we see a medical specialist, we face information asymmetry; so we are vulnerable. A trustworthy broker can address this imbalance for us and help pick our way through various products offered by various institutions.

So popular have these services been that the banks are no longer properly equipped to deal with our needs anyway. Go to your local branch and see how quickly you can talk to a real live human being about a loan application.

As banking customers we need to improve our vigilance about our own interests – but brokers can be our allies in this task rather than the fall guys for faceless bankers. As long as we are conscious of how they make their money, there should be no need for us to have to hand over a fee for service.