I’m looking at the recommendations (a summary by CA Australia) and scratching my head. After all the emotion and hype, all the excitement and even the poor behaviour of the industry that’s been well documented, one thing stands clear above all else… The Big end of town doesn’t get the impact they have on people or small business.

Did the Royal Commission Just Look after the Banks?

The Stock exchange thinks so. Look what’s happened to the share price since.

According to IBIS world’s research into the broking industry, it employs 18,073 people through 7,120 businesses, that’s an average of fewer than 3 people per business. So Small businesses are once again being ignored (screwed) by the “powers that be”.

The complete ignorance of that fact, once a loan has been established, there is no discrimination to the customer on where that loan came from, is ignored. The funding of the trailing commission is coming from the Bank. Savings in this area are not paid to customers of the banks. The ‘profit’ is taken in house, presumably instead of paying banking employees (many of whom became brokers).

Shouldn’t People Come First?

It seems the recommendations into banking focussed on the Mortgage broking industry rather than the real problem of the banks. In the days following the commission findings, bank shares went up? Isn’t a rise in share price a clear sign that they’re on the right track? But isn’t that the polar opposite of what should have been expected?

Didn’t the Mortgage Broking industry and the thousands of small businesses in it create competition amongst the traditional banks and other players because the Four Pillars Policy of banking failed to create true competition among the banks?

If the Broking industry wasn’t serving the community, why has it flourished?

Aren’t there better ways to hold the banks accountable, rather than to attack the one intermediary that has been looking after the interest of the community in the main?

I’m not suggesting for a minute, that every broker has done an amazing job of advising clients appropriately, but the results shout from the rooftops that there is a need for this industry to exist. That this industry has done a lot to keep members of the public from the predatory practices of the banks?

In Conclusion

Having a Royal Commission headed by someone who’s not been in the real world for some time has delivered a lot of insights into mismanagement, and even corruption within the industry, but the core problem seems to have been missed. The traditional policies of Governments of Australia (on both sides) have protected a few at the expense of the average Australian. Correcting this will take a plan to create competition, not a plan to attack the very industry that is creating competition and small businesses while they’re at it.