Local expert: ‘Big banks have thrown mortgage brokers under the bus’
LONG-TIME Dubbo mortgage broker Daryl Coxon is furious that the Royal Commission into banking, which highlighted so many wrongdoings, was turned on its head at the last minute to make out the nation’s mortgage brokers are the bad guys.
He said less than one per cent of the claims of misconduct investigated by the Royal Commission (RC) involved brokers, yet his industry stands to be regulated out of existence while bank share prices rose.
“It is baffling that if the RC recommendations were carried out that the banks would seem to benefit from an inquiry that was called to investigate their misconduct,” Mr Coxon said.
“Somehow, the big banks managed to turn attention away from their own misconduct by throwing brokers under the bus!
“In my opinion, some of the evidence provided by the banks was intentionally misleading, or at best shows that they in fact have little understanding of the actual role played by Mortgage Brokers and the extent of the service that we provide to our clients,” he said.
Mr Coxon believes the recommendations of the RC would lead to a possible legislation change that threatens the mortgage broking industry, which could see all Australians having less access to smaller lenders and even less access to credit.
There is currently no additional cost to borrowers of using a broker.
“A significant recommendation is that, rather than the banks paying mortgage brokers, borrowers pay brokers a direct fee for their services,” Mr Coxon said.
“Not surprisingly we see that this would only favour the banks and would lead to customers deserting brokers, cutting access to smaller lenders and driving customers into the branches of the Big 4 banks.
“As competition and choice declines, bank power and the risk of higher interest rates increases,” he said.
Mr Coxon said he was so devastated by the Royal Commission’s attack on brokers that he was inspired to pen a satirical piece to give his colleagues a laugh.
It’s since taken off amongst the broking industry and is now getting wider acclaim, his idea to compare the banking dramas to the dairy industry making a huge impact. (See the sidebar to this story for part of Mr Croxon’s opinion piece.)
“It is amusing to me that the banks expect that asking the Aussie public to pay for broker services, that until now have been paid for by the banks, could in any way, shape or form be considered in the customer’s best interest,” Mr Coxon said.
“I am sure that customers would see right through this for what it potentially is – an attempt to kill competition and help the banks make more profit.
“The RC recommendation is a bit like Coles or
The final report of the Royal Commission was submitted to the Governor-general on February 1, 2019, and tabled in Parliament on February 4. Woollies blaming the Dairy Industry for milk prices and expecting the public to pay more for milk whilst they pay less to the farmers – their attitude is akin to claiming ‘the cows make the milk, why should we pay the farmers?’
He listed these key points for people to consider, rather than just taking the banks’ perspective: z Brokers drive interest ` rates down, which helps all borrowers. Broker competition has contributed to a fall in net interest rate margin of over 3 percentage points (according to Deloitte Access Economics – The Value of Mortgage Broking July 2018).
z Brokers facilitate more than 59 per cent of all Australian home loans and act as a shop front for smaller and non-bank lenders.
z Only 1 per cent of consumer credit complaints to the Financial Services Ombudsman Service between 2013 and 2017 were about Mortgage Brokers. The proportion of complaints against brokers has dramatically decreased over the past 10 years, compared to the growth in the number of broker members. The RC appears to have only focused on a small amount of negative information and has not considered the significant positive customer outcomes derived from the broking industry.
z Brokers are critical in regional and rural areas where retail banks are less accessible.
He said his small brokerage business is a reflection of how important the industry is, particularly in regional and rural areas where there are far less smaller lenders with bricks and mortar offices – he said local brokers provide that footprint.
z Aussie Dubbo (Mr Coxon’s business) is a local family owned business and services a large part of rural a NSW (roughly mirrors the NSW Federal electorate of Parkes).
z Approximately 63 per cent of loans arranged by Aussie Dubbo are with lenders outside of the Big 4 banks.
“We don’t want to see a situation where the Government hands all the power back to the banks which would result in every day Australians being hardest hit,” he said.