CityLife Cairns

THE “RC”
- ROYAL
COMMISSION
SCOTT BURNESS
Branch Principal & Wealth Manager
Yellow Brick Road Cairns
154-156 Mulgrave Road Westcourt
T 07 4040 2040
M 0402 073 375
F 07 4040 2070
E scott.burness@ybr.com.au
W www.ybr.com.au
The well-publicised “misconduct in
banking, superannuation and financial
services industry” first round of public
hearings has wrapped up and there
has been some horror stories involving
some of Australia’s biggest banks.
A 72-year-old widower with an
acquired brain injury granted a
$50,000 ANZ loan to funnel money
into an online dating scam.
A 30-year-old roofer with a gambling
addiction was granted multiple credit
card increases by the Commonwealth
Bank, even after confessing his problem
to a staff member.
A stay-at-home mum sold “junk”
insurance on her credit card, on which
she could never have claimed because
she did not meet strict employment
criteria.
A personal carer and Centrelink
recipient sold a second hand Ford
Focus with a Westpac loan, when the
fortnightly repayments would eat up
almost half her benefits.
The Australian mortgage industry
is a $1.7 Trillion market and the one
thing I’m sure of, not enough time was
allocated to these hearings!!
Out of the 2810 submissions
received, 70% related to Banking, 9%
Superannuation, General Insurance,
Intermediaries and 5% Financial
advice, as you can see “banking” is the
hot spot.
Some people I’ve spoken with say;
“Government get’s heavily involved
in industry there’s always a downside,
more red tape, more legal requirements
more everything, the cost gets passed
in one direction”.
Above horror stories clearly need to
stop, measures need to be put in place
so they don’t happen again, where’s
the middle ground, one things for
sure if it gets too hard to access funds
EVERYONE gets affected.
I’ve been in the financial sector for
quite a few years now and I’ve never
seen so many changes take place, the
past 18mths has been a blur. A number
of changes make no sense to me, my
advice, if you’re going to engage
someone within the financial services
industry look for someone with a lot of
experience.
An example of change that makes no
sense to me, in fact I loathe it; “Exit
Strategy”, the concept is great, the
blanket approach is appalling as it
negatively affects so many people,
especially in Regional Australia
(Cairns).
Basics; 30yr old applies for a Home
Loan, not a lot of assets, retirement
might be 65yrs of age, a 30yr loan
term is straight forward. 55yr old
similar asset position, a maximum 10
- 15yr term is likely, how do they afford
these huge repayments, can they even
obtain an approval, as their income
needs to be much higher.
If the 55yr old has other assets eg;
enough Super to pay out the home
loan at age 65, they may receive a 30yr
term, life gets in the way of many plans,
deforce, business failures, sickness…..
it’s a long list, what about these people,
don’t they deserve the same repayment
amount as the 30yr old.
As a discount lender refinancing is a
big part of what I do, the Exit Strategy
can play havoc in this situation as well.
Example; an “older person” wants to
switch their mortgage & debts to a
lower rate to save money, if it’s deemed
they don’t have enough assets they may
not even be offered the same loan term
they currently have, this is crazy - the
debt is there - let people obtain the
savings!!
If additional debt is requested sure
apply an Exit Strategy, if the refinance
is “dollar for dollar” it makes NO
SENSE, only winner here is the current
lender with higher rates. When the RC
finishes looking at this industry and
makes it’s recommendations, it’s my
hope the bureaucrats take a practical
approach, I wont hold my breath.
CityLife 70
Magazine