13 Feb A post-Royal Commission
Unless you have zero interest in finance or banking it would have been hard to avoid news on the findings of the Royal Commission. Despite the uproar it has created it was not a totally unexpected result. I don’t like to focus on negatives, dwell on the past or worry about things outside our control, here at IBN, we focus on what we can control.
Behaviours, culture, growth and our reactions to change are things within our control – as individuals, as a team and as an industry. We need to ask: how do we reinvent ourselves, diversify our offering and become the ‘trusted advisors’ I wrote about in October last year?
Mortgage broking has a future – whether this year, next year or in 10 years, it will be completely different landscape to what it is today. It will not be simply number crunchers, it will not be data input operators and it will certainly not be a simple set and forget loan writer.
In the past week I have spoken to several large broking groups, some of the biggest in Australia. It was interesting to note across all groups that whilst none were happy with the findings of the Royal Commission and the focus on brokers as opposed to Banks, they were all preparing for the future. None were overly down in the dumps, simply seeing it as another hurdle they had to overcome. These are groups which stand to lose substantial income, however they weren’t prepared to put up the white flag just yet. Yes they are fighting tooth and nail but they are also preparing, evolving and expecting rapid change within their own organisations. Rarely would you ever hear anyone lamenting that they were too prepared.
As an industry, the one thing we cannot lose sight of, is that the client is the most important person in this whole transaction. If the client loses out it is a sucker punch from the Royal Commission. You could imagine how everyone would feel if a taxpayer funded commission ends up charging tax payers more for the simple act of getting a home loan. It is tough to look at the big picture when people’s livelihoods are at stake.
We do have to look at overseas markets and how they operate. Can our industry survive without trails? Well, yes and no. Some will certainly find a way to thrive; they will see opportunity in adversity and rise to the challenge. Others, many of whom rely on trail commissions, may merge with other groups or find a way to diversify. Maybe some will disappear.
The recommendations for the Royal Commission may be shown to be merely a band aid on a far deeper issue. Mortgage brokers were in the firing line but the ironic thing in all this is that of the 10,323 submissions received a resounding 61% were specifically related to banking, while a mere 9% related to the broad term ‘Financial Advice’.
This was a Royal Commission into banking. The findings have claimed a few scalps already yet overwhelmingly the focus and blame has been shifted to the broking industry and we have seen bank shares go through the roof. Some might argue that shareholders at least thought it was a very soft landing for our revered pillars of the economy.
There is no doubt our industry needs to change. Change: it is something that scares most of us, yet like death, it is the thing in this word most inevitable.
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