The year long Royal commission into the misconduct in the finance sector turned into a whipping post for all areas remotely connected to the finance sector, including Real Estate through lending and borrowing.
While the initial justification was to unearth the misconduct of the finance sector where, allegedly, clients were being mismanaged for the financial benefits of ‘Bank’ representatives. Ultimately, the clients best interests should ordinarily have been the primary concern and the allegations were that in a lot of cases, this was not the case.
The focus for our purpose was on lending practices mainly in the Real Estate market and the way Brokers were treated in the whole process. After a year and now 76 recommendations it looks like the real ‘take home’ is, follow the rules.
Borrowers finances will be scrutinised properly, where they seemingly weren’t in the past and banks will be required to lend accordingly, which we would have expected.
There was a recommendation that Brokers be paid by the borrower, not the lender in order to reduce misconduct, personally I see this working the other way with Brokers working harder to GET business, rather then get a loan for a client.
In any case, these are just recommendations and not all 76 will likely make it to the top.
So far, investors will be happy, the markets have responded backing banks and no doubt, the banks and shareholders will be happy.
For us, the boost in confidence will trickle down through the Real Estate market.
Thomas Merriman.
Thomas Merriman 