It’s been a few weeks since the mortgage broking industry had the biggest storm of #adversity hit since the GFC in 2008. Here’s my take;
- 9 of the 76 Royal Commission report recommendations have a direct impact on the mortgage broking industry, in particular they have made recommendations on the way we get remunerated.
- Whilst at this stage they are only recommendations, the government (as part of the election battleground) look likely to accept the recommendations, which could mean a change to the way we get paid.
- Trailing commission looks set to go from July 2020, with only a review to move to a fee-for-service model (in which the borrower would pay for the advice upfront).
Mortgage brokers represent a level of competition to the banks that keep them honest and maintains a better outcome for the everyday Australian. This is a channel which continues to be supported by consumers, with records stating in 2018, that 61.7% of Australians would rather use a broker than deal with a bank directly. However, the recent Royal Commission may derail our industry and prompt many to shut up shop.
But it is my belief that out of adversity always comes opportunity;
- Accepting there will be some change (although I strongly believe this will stop short of actually moving to a fee-for-service model, due to the unintended consequences of removing competition in the mortgage market, which is bad for all consumers)
- Be ready to zig (or zag) stay nimble in your business and don’t be in denial or you will be behind the 8-ball
- Stand behind your value proposition, strengthen your service offering and look to diversify your revenue stream
- #adversity will result in a consolidation of mortgage broking numbers as people will leave the industry, new entrants will potentially be deterred until everything levels out. #resilience will be rewarded for those that stand the course.
- Keep on fighting! It’s not over, the industry and community have really banded together (did you see the MFAA #yourbrokerbehindyou #dontkillcompetition advert on TV last night?) let’s hope the politicians listen to what the Australian people want!
Feel free to get in contact with me at [email protected] or on 0430 227 328 should you wish to discuss the implications of the Royal Commission or anything else finance/mortgage related.