The Banking Royal Commission

[pazza]

The lack of recommendations in terms of penalty for poor behaviour show just who pulls the strings here. If I was Labor I would go for another one and have even broader terms of reference.

 

[Pessimistic]

An enquiry into enquiries?

 

[Taylor]

This is why you shouldn't go into an investigation with a presupposition. You inevitably feel like something is up when it doesn't come out that way at the end.

You'll question everything else before your prejudice.

Did a great job of suppressing the share price of the banks the last year though.

 

[Power Raid]

you do know you can still negatively gear new property under the plan?
Its about not propping up investors to compete with first home buyers on existing stock,so they can eventually get ahead

And supply and demand means property developers will charge more and kill the pig.

The opposite will be said when the new home owners sell and the property loses its negative gearing for the ordinary. Meaning the wealthy will buy at discount prices.


#voteforclasssystem

 

[Power Raid]

WTF are you talking about?

Labor knows they will get away with their policy as they know their supporter base will refuse to accept the reality

 

[kirky]

those that will no longer be able to negative gear under labor: the ordinary worker

those that can continue to negative gear: the wealthy, business owners that can turn wages into investment streams like dividends or interest, those who are the beneficiary of daddy's trust fund


Labor says, just get a rich dad if you want to continue negative gearing. If you're the child of ordinary parents; Labor says it's your fault and you should not be worthy and no longer be able to negative gear until you are wealthy or start you own successful business.

#class system

What a load of baloney.

 

[Bombermania]

The lack of recommendations in terms of penalty for poor behaviour show just who pulls the strings here. If I was Labor I would go for another one and have even broader terms of reference.

I keep reading people say it lacks recommendations but the report itself tells a different story. In the section on fees for no service Haynes reveals he has named people to the regulator for possible charges and then he goes on to outline the legal argument that the regulator should use.

 

[Financialpanther]

I keep reading people say it lacks recommendations but the report itself tells a different story. In the section on fees for no service Haynes reveals he has named people to the regulator for possible charges and then he goes on to outline the legal argument that the regulator should use.

To be honest - there are plenty of recommendations but the mortgage broker commission one is overshadowing most things (largely because it falls in the big banks' favour (outside of the fact their mortgage broker aggregator businesses will likely face heavy impairment in the future)).

 

[Carn The Berries]

What a load of baloney.

Anything that has a negative impact on demand will, all else being equal, have a negative impact on price. When house prices were skyrocketing it was a far easier sell as there were people in the community who wanted this policy to be used to put the brakes on (I personally didn't share that view and thought it was a poor policy from day 1, but that is beside the point).

Our 2 largest housing markets have seen sustained falls over the last 12 months. Yes there is an argument to be had in relation to whether that adjustment was necessary, but introducing a policy that will most likely put downward pressure on prices is pretty reckless in the current climate.

 

[Hawk Dork]

And supply and demand means property developers will charge more and kill the pig.

Isnt this whats happpening now but also on old homes ?

The opposite will be said when the new home owners sell and the property loses its negative gearing for the ordinary. Meaning the wealthy will buy at discount prices.


#voteforclasssystem

And so will the first home buyer

 

[Taylor]

You can still rent a property without negative gearing and you can purchase the property under group collective companies, such a unit trust but neither would represent value for renters as those will both need to be in the black.

That means the best value rentals will be the negatively geared built to lowest standard boxes on the edge of the suburbs, from an investor point of view.

That's a bit of a recipe for a ghetto.

 

[Simon_Nesbit]

To be honest - there are plenty of recommendations but the mortgage broker commission one is overshadowing most things (largely because it falls in the big banks' favour (outside of the fact their mortgage broker aggregator businesses will likely face heavy impairment in the future)).

The issue with the mortgage broker commission recommendation (apart from the fact it directly affects my family) is that it flies in the face of virtually all of the information available. Mortgage Brokers didn't defend themselves at the Royal Commission itself as there was essentially no need - isolated cases (of fraud/negligence) - the biggest issues stemming from Introducers (not Brokers - and processed through branch based lenders), and following agreed reporting protocols with lenders that were seen as unsuitable. Broker Commissions were never even under dispute until CBA manipulated the story.

Every review that has come out either supported brokers (96% customer satisfaction vs 60% for banks, 95% renewal v 27% for banks, 0.5% total complaints v 70% for banks, etc); was based on woefully inaccurate or misleading data (UBS - Brokers cost $6000, branches cost $0 therefore brokers are more expensive); or sourced from CBA, ABA (bank cartel) or Choice - all representing their own commercial benefit.

The fact that Heyne essentially endorsed a CBA recommendation without question or review makes the whole thing a farce. It's anti-competitive, will result in worse outcomes for all consumers (broker or branch), hurt small business and smaller lenders and concentrate power and influence to the very businesses he was charged with investigating.

 

[Taylor]

Regulation usually does benefit existing entities, that's why it comes around - it's sold as benefiting the person on the street.

Take electrical professionals. It's law (regulation) that only they can perform their job, the standard for entry into that market was set at the level of the existing skilled operators to protect them and their industry being tarnished by the rogue unskilled - result is that it costs more. The trade off is people feel that they are getting a skilled service.

That is what is happening here

 

[Carn The Berries]

Regulation usually does benefit existing entities, that's why it comes around - it's sold as benefiting the person on the street.

Take electrical professionals. It's law (regulation) that only they can perform their job, the standard for entry into that market was set at the level of the existing skilled operators to protect them and their industry being tarnished by the rogue unskilled - result is that it costs more. The trade off is people feel that they are getting a skilled service.

That is what is happening here

And that's part of the issue here... There isn't a feeling within the community that brokers aren't providing a skilled service (I"m using one as we speak and it's been a godsend!). By fundamentally changing the value proposition you're going to drive people towards making a decision to "go it alone" which for a lot of people will end up seeing them worse off.

Sadly a lot of people don't understand that and there is political capital to be gained by the ALP by standing up, beating their chest and saying they'll implement every recommendation to "stick it to the banks".

 

[Taylor]

And that's part of the issue here... There isn't a feeling within the community that brokers aren't providing a skilled service (I"m using one as we speak and it's been a godsend!). By fundamentally changing the value proposition you're going to drive people towards making a decision to "go it alone" which for a lot of people will end up seeing them worse off.

Sadly a lot of people don't understand that and there is political capital to be gained by the ALP by standing up, beating their chest and saying they'll implement every recommendation to "stick it to the banks".

It's not usually a good first step for an investigation to gather it's momentum from a general resentment of the investigated.

The banks are stuck in a bind because without them taking on the risk of lending people a lot of money to start business, build, invest almost everyone doesn't have a job - but they also don't get appreciated for taking on that risk for a first home buyer, the home buyer sees them as stealing their money for doing nothing except getting richer.

If you've ever tried to claim damages against someone uninsured for something they have done you'll know what risk I'm talking about here. It doesn't matter if you're right, it doesn't matter if the court agrees, it doesn't even matter if that person agrees they owe you the money, if they don't have it you won't get paid.

The banking industry has an image problem and everyone from politicians to super funds are leveraging that (validating it in the process) to gain an advantage.

 

[Carn The Berries]

It's not usually a good first step for an investigation to gather it's momentum from a general resentment of the investigated.

The banks are stuck in a bind because without them taking on the risk of lending people a lot of money to start business, build, invest almost everyone doesn't have a job - but they also don't get appreciated for taking on that risk for a first home buyer, the home buyer sees them as stealing their money for doing nothing except getting richer.

If you've ever tried to claim damages against someone uninsured for something they have done you'll know what risk I'm talking about here. It doesn't matter if you're right, it doesn't matter if the court agrees, it doesn't even matter if that person agrees they owe you the money, if they don't have it you won't get paid.

The banking industry has an image problem and everyone from politicians to super funds are leveraging that (validating it in the process) to gain an advantage.

Totally agree with all that however what has come out of the RC is that the banks haven't done much to help change that image. It's one thing to be somewhat unfairly maligned when it might not be justified (your example of taking on default risk from first homebuyers is a good one) but it's also very hard to put your hand up and try to play the victim when faced with the sort of evidence that came out in the proceedings.

 

[Taylor]

Totally agree with all that however what has come out of the RC is that the banks haven't done much to help change that image. It's one thing to be somewhat unfairly maligned when it might not be justified (your example of taking on default risk from first homebuyers is a good one) but it's also very hard to put your hand up and try to play the victim when faced with the sort of evidence that came out in the proceedings.

I wouldn't have a clue where to start if I were managing a banking PR campaign.

Perhaps I'd set aside $5,000,000 to go into a bonus fund, it would be used to pay off someone's mortgage, as many as possible under that figure each year as long as we could film your story and have it on the tv.

I'd walk into the department managing the loans in trouble and ask for their best stories, the single mums working all week with four kids and the house is falling apart sort of story. Then I'd ring her up, or drop around and ask her if she is interested.

I'd hire an actress to represent the bank, someone cute and friendly looking like they belong in a woolworths or coles commercial and then have that person be the face of the Giving Back Program. Showing up, tears, hugs, thank yous etc, cute lady saying "I have the best job in the world" at the end.

That sort of direct action campaign might get some traction for the first bank to do it, especially if the advertisement on television truthfully can claim to have helped far more than shown on the little bit of airtime.

 

[its free real estate]

I saw a broker. Didn’t end up using him, going to the bank was more convenient in terms of rate and a few other things. But I found him pretty useful and helpful. He was more forthcoming with information than the bank was. Would be a negative if they were taken out of the mortgage market.

 

[SBD Gonzalez]

From 21/12/18 until today, my NAB shares have gone up by 5.21 % and paying a dividend of nearly 8 % My average buy price is $28 but this time next year I'm confident they will be up over $30. Investors have given their verdict on the Royal Commission … the share price for the financial sector is up 5%!

That renowned arbiter of ethics and morality, the Australian Stock Exchange.

 

[Dry Rot]

I saw a broker. Didn’t end up using him, going to the bank was more convenient in terms of rate and a few other things. But I found him pretty useful and helpful. He was more forthcoming with information than the bank was. Would be a negative if they were taken out of the mortgage market.

Just noticed your sig - love it.

 

[Power Raid]

Isnt this whats happpening now but also on old homes ?

And so will the first home buyer

no

the first home buyer pays overs and the rich property developers cash in

then the first home buyer sells, the property loses value as it loses the negative gearing and the wealthy cash in at the first home buyers expense

 

[Hawk Dork]

no

the first home buyer pays overs and the rich property developers cash in

then the first home buyer sells, the property loses value as it loses the negative gearing and the wealthy cash in at the first home buyers expense

not if the first home buyer buys the cheaper property that isnt new and isnt competing with a negative gearer for it

 

[SBD Gonzalez]

Our 2 largest housing markets have seen sustained falls over the last 12 months. Yes there is an argument to be had in relation to whether that adjustment was necessary

There is no argument to be had. Historical returns are no guarantee of future performance, as the disclaimers always say. People started to believe the property market was exempt from the laws of economics.

 

[Bombermania]

I saw a broker. Didn’t end up using him, going to the bank was more convenient in terms of rate and a few other things. But I found him pretty useful and helpful. He was more forthcoming with information than the bank was. Would be a negative if they were taken out of the mortgage market.

One thing about that purposed recommendation that has received no attention is that Haynes has also suggested that the banks should charge a fee to borrowers that go to the bank for a loan.

 

[Carn The Berries]

There is no argument to be had. Historical returns are no guarantee of future performance, as the disclaimers always say. People started to believe the property market was exempt from the laws of economics.

I think there was/is an argument to be had about whether prices had to fall (particularly around whether there was a "bubble" or not) rather than for the rapid growth to just slow a bit. You can slow down a hot market without it necessarily going backwards.