Monday, July 16, 2018
Knowledge Portal Articles Show trials are no way to enquire on the health of Australia’s mortgage sector.

Show trials are no way to enquire on the health of Australia’s mortgage sector.

The Royal Commission into banking has provided many snapshots of what has gone wrong in the mortgage world. But where were the examples of where things have gone right?

Many witnesses were called that apparently demonstrated some less-than-sound lending practices. But where were the witnesses who could testify of their good experience of borrowing to buy a family home or a successful investment property?

With five million owner-occupied homes in Australia, surely the Royal Commission could have found one borrower who was pleased they borrowed from a bank to buy their home?

And of those whose loans were arranged by a broker, surely the Royal Commission could have found one borrower who was happy with their broker’s services? After all, around 60 per cent of home loans were arranged by a broker and a survey by Deloitte showed that 90 per cent of borrowers were satisfied with their broker’s service.

Similarly, why did the Royal Commission rely on individual testimonies without having reference to the empirical research recently carried out by APRA and ASIC into mortgage broking?

After last year’s extensive ASIC inquiry into broker remuneration, ASIC’s then Chairman concluded “brokers deliver great consumer outcomes”. Why did the Royal Commission not call him to give evidence?

Following the evidence at the Royal Commission, a number of journalists made simplistic or even wrong comments about the professionalism and practices of mortgage broking.

GPs occasionally get struck off for malpractice, but we still have confidence in our doctors. Individual teachers get sent to prison for inappropriate relationships with students but no-one says there is an endemic problem with the professionalism of our educators. So, how can the Royal Commission draw conclusions about entire mortgage broking industry based on a few lending experts’ testimony?

Accredited Broker trusts that the Royal Commission takes a thorough and balanced approach to its inquiries into mortgage broking. At this stage it seems a bit reminicent of Monty Python's "The Spanish Inquisition" sketches.

 


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