How will consumers be affected by the profit increase?
There have been reports of late about the profit increase from banks in Australia, most especially the big four such as the CBA, Westpac, ANZ, and NAB. This was an effect of the Royal Commission on banking that I have been talking about for the past few months. If you’re still confused about it, let me give you a quick recap.
In December 2017, the Royal Commission was formed to investigate Australian bank activities. This was established in order to investigate illegal activities that may have been done, including bribery, forging documents, approving insurance outside of a customer’s capability and more. This came after some pieces of evidence have been found out, and with this, a lot really changed over the past couple of years. Because of this, a lot has been going on. One of the things that consumers should really prepare for is how it will affect them.
Reports say that consumers will most likely to pay more for their home loans. This was a recommendation done by Commissioner Hayne. An upfront fee should be expected as well because of the stronger competition. Securing a loan now is so much harder than before because requirements from banks are stricter, and over 50% of consumers seek help in securing a loan that will fit their situation. Of course, consumers should keep in mind that there will be an upfront fee for them to gain access to the services a broker will provide. And because of this recommendation, those who are not capable of paying the upfront fee will obviously have more challenge finding ways to work on their loans plus the requirements needed and credit restrictions.
Commissioner Kenneth Haynes released a total of 76 recommendations to fix the problems regarding the report. Here are just some of the key points from these recommendations:
- Those who will be proven to have performed illegal actions will not be named in order to avoid shaming, but prosecutions would most likely be laid out.
- Westpac is the only bank that is not listed to banks for further action.
- Advising a client and being rewarded by the bank for it is no longer allowed in order to end practices pertaining to conflicted remunerations.
- All banks will have to pay for the compensations scheme the government is working on. This will be part of their license.
- While on notice, the regulators will stay where they are but should do better and prosecute often.