In light of the #RoyalBankingCommission, I interviewed Suresh Rakheja for his thoughts on how brokers’ service compares with the banks’. #EthicalSales
Hi guys it’s Ben Lai from Sales Ethos. Today I’ve got with me Suresh Rakejah, who is the director of DBIJ Finance, a mortgage broking company. Today I thought it would be interesting to get his perspective on the Royal Banking Commission because he’s had an extensive experience in the banking industry as well as the mortgage industry. So, welcome Suresh!
Thank you very much Ben, thanks for the introduction. I personally think given you mentioned that I come from a banking background and now the mortgage brokering there would be a lot of brokers like me and I have seen a lot of bankers leave the banks and get on to the mortgage brokering industry. More so I think from purely a perspective on ethical selling point of view. People who have been in the industry would understand like myself that the upper level management was very keen in terms of chasing numbers.
And the numbers are being chased around. Ethical selling is out of the door and from that particular perspective the Banking Royal Commission was a real Segway in terms of identifying the laxes and the style of operation by the banks in terms of getting sales. Which is why I like the Bank Commission what they have done.
But at the same time, it’s a flip side to the coin is… When you normally investigate all of this stuff. There’s much more in-depth investigation that needs to be done. I think it might have taken that part of it. I’m not really sure the reason why I’m saying I’m not really sure is from what I understand from the banking commission report is this was a report; this was an investigation against unethical setting of the banks and we all know fees charged to customers who are dead and also, home loans given to customers who can’t afford… Credit cards given to customers who can’t afford… Insurance products that did not bring the required results for what the fees were charged. And there’s a whole can of worms that they wanted to open up yeah this is part of the investigation.
And as a result of these investigations they’ve uncovered all of these issues. And it’s very unfortunate that with the 74-odd recommendations that the government has already said that they’re going to action all of them how that’s going to look when it gets to legislation is potentially going to cause a lot of problems. Especially for the small to medium businesses such as yours. But what do you think, Suresh, will be one of the or some of the potential consequences for the small players?
Yeah. So out of the 76 recommendations that can Hayne has come up with… As I was talking to you earlier about the flip side of the investigation… Was mortgage brokering… Was brought up with regarding to as part of one of the recommendations that remuneration to the brokers has got to be seized. Now Richard really has got to be seen in the light of what the industry has to… What the brokers have to offer to the industry. Which basically means that the given as of the latest reports that came out was out of every 10 loans written by the banks, six of them are written by the mortgage brokers. That is 60% of the mortgage business written by brokers.
Why do customers come to brokers? It’s a very interesting question. People like myself, who believe in ethical selling – we are more for the customer, which is one of the platforms… Initially was for the banks to sort of, make customers first as part of their business strategy and the vision that the banks had. But as we all know, they moved out of that focus into purely profit driven… for shareholders and so forth. Which basically has caused the angst amongst the wider community and Ken Haynes was instrumental in the recommendations.
So your question was, “What do I see in terms of the aftermath of once?” This is going to have a very major impact not only as a mortgage broker. Now I do understand and I’ve heard and I’ve seen these recommendations are legislated?” A few mortgage brokers who actually are very passionate with the customers like myself. I believe you’ve got to do right by the customers. It is about when you do right by the customer, it’s about understanding in totality, the need of the customer. Really understand the need of the customer, you tailor a solution that basically matches that need with their financial goal. And then you literally come up with a solution that helps them to get to where they want to be in the financial space.