Royal Commission report released

Not touched too much

The final Royal Commission report was out belatedly this afternoon with some 76 recommendations for the banking, superannuation, and financial services industry.

And it was a pretty light touch on the major banks by the looks of it.

Admittedly it's a punishingly long read at 530 pages, which I haven't endured in full yet. 

Notably, there appears to be nothing too dramatic on responsible lending, which may come as some blessed relief for the housing market. 

Here were a few initial thoughts that I had at 5pm:

I think the band in the background may well be CBA's Matt Comyn partying, having successfully deflected a good deal of criticism onto mortgage brokers.

And wrongly so, in my view - after all, if mortgage brokers weren't providing a valuable service, why, pray, do most borrowers then use them?

Potentially momentous changes were recommended for remuneration in the mortgage broking industry.

Source: Royal Commission

I wrote speculatively in a report back in April 2018 year that a fee-for-service model could come into play for mortgage brokers, albeit for different reasons.

But whether or not this Royal Commission recommendation is ever implemented in full is another question entirely.

The government will be reluctant to follow through with such a change to commissions given that it would significantly reduce competition in the lending market, which would be a hammer blow to smaller lenders and non-banks. 

That said, this government is all but cactus in the opinion polls, and the ALP in its infinite wisdom had previously pledged to follow all recommendations sight unseen.

All of the major banks saw a marked move higher in their stock prices today, bringing into question whether the tenor of the report - which was a bit of a nothing burger for the major banks - found its way into the market's domain before the official release.