One of the millions of self-proclaimed experts on Twitter last week asked: “Why would politicians think they’re qualified to reject any of the Royal Commission’s recommendations?” At the time, I thought: “Now this is a person who has enormous faith in judges and lawyers!”
And when it comes to the law, I’d certainly want to be given the best views on legal matters by judges of Ken Hayne’s and his team’s stature. However, when it comes to economics and the best way to run business systems, I reckon there are better people to talk to.
Anyone who knows how chaotic bright people like lawyers and doctors are in business will get my point.
Yesterday I said that Ken and his team of inquisitors did a great job and the finance industry will be a fairer and more honest place for consumers because of their good work. But on mortgage brokers, I reckon they have shown that as lawyers and judges, they’re not close to the real world.
Remember it was the arrival of John Symond, Mark Bouris and others such as the guys at AFG out of WA that stuck it to the banks. Collectively, they made banks cut interest rates to us by 2% or more.
Who can forget John telling us on TV and radio: “At Aussie, we’ll save you!”? And he and tens of thousands of brokers have done exactly that since the early 1990s when their growth took off.
Sure, some brokers have looked after themselves by selecting a lender that paid a higher commission but I bet you in 99 out of 100 cases, the borrower went from an expensive loan to a cheaper one.
In capitalism, if we make laws for all sellers of products to charge the lowest possible price, we’re creating socialism!
One broker who contacted us yesterday said in the morning he had a business he could sell for $1 million but now it’s worth nothing! And if his trailing commissions are banned, he’s right. He has no business left to sell.
While we are at controlling what brokers get paid, let’s legislate that barristers can only be paid $200 a hour or $1,600 a day, which most of us would think is a more than fair way. Let’s do the same and set hourly rates for all businesses. The clear stupidity of this explains why politicians need to think about and debate aspects of the Royal Commission.
For mortgage brokers, the Royal Commission has ended up as a kangaroo court and Ken is the hanging judge and that’s why Scomo and Bill have to show that they’re leaders who get it, rather than scared rabbits who want to live in the Lodge!
The Royal Commission plus the Government can kick out crooked brokers, but governments of the past using ASIC could have done that anyway.
Yesterday I answered Royal Commission questions for listeners on 2GB, 4BC and 2CCC for the Chris Smith Show. And one lady Mary said how she had used AFCA.
This was set up by the Liberal Government in November last year to help people sort out fights with financial institutions, financial planners, mortgage brokers, etc.
Chris asked what she thought of the process and she gave it a mark of 10 out of 10.
The finance business has to cop the ruling of the mediator but the consumer can opt to go to court if they think the decision is wrong. If someone complains to a finance business, they have to refer it to AFCA — the Australian Financial Complaints Authority — and then mediation will follow. And it doesn’t cost the consumer a red cent!
It’s a great idea and it seems crazy, though typical, that the Government has not marketed this great achievement that I’m sure Labor will keep, if it wins the May poll.
Finally, Yellow Brick Road’s Mark Bouris hasn’t yet come out throwing punches, as he loves to do. Well, he explained he can’t say anything until he makes statements to the ASX because he’s chair of Yellow Brick Road.
Whoever is in Government this year needs to think of the ruin that will be done to so many small business mortgage brokers. This Royal Commission is a win for the big business banks and a complete slap in the face to small business owners. This is downright not fair.