Yellow Brick Road’s Mark Bouris says that the royal commission’s first round of hearings was “not representative of what goes on in our industry” but that upcoming hearings would uncover more scandals regarding lending.
Speaking to The Adviser, Mr Bouris said that he had not been surprised by any of the stories from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry so far but believes there was more to come.
“In terms of what has come out so far, I’m not surprised about any of it. I’m not surprised that the biggest focus was on wealth and financial planning because that is such a broad topic and things can go wrong so easily,” the CEO said.
Mr Bouris suggested that while there had been some examples of misconduct in lending (“where people have been lent money that they shouldn’t have qualified for”), he said that it was not prevalent or systemic today.
Further, touching on some of the discussion around brokers, Mr Bouris said that he felt as though “CBA threw Aussie under the bus”.
“I thought it was unfair on Aussie and I don’t think it is representative of what goes on in our industry,” Mr Bouris said.
He continued: “I’m all for weeding out bad apples and anyone who is a bad operator, but I think, overall, consumers really do need brokers. And even more so in the future because things are getting much more complex, the stakes are much higher, and you do need a third party.
“Whether or not a broker needs to disclose more to a customer, or whether they need to have more or greater responsibilities to receive trail, is still to be decided. But I don’t think that any broker is going to deny that those things should be done and, by the broker, I think brokers are ready and willing to do those things.”
Mr Bouris said that he was “more interested in what the Combined Industry Forum’s findings around brokers are, and what ASIC and the ACCC and the Productivity Commission are saying about brokers, as opposed to what the royal commission is saying”.
He elaborated: “It’s part of the maturity of brokers. The broker system has evolved; now we are [at] the point after a 20-year evolution, and I think [some changes] would have happened anyway. To be frank, I don’t think we needed a royal commission to tells us any of these things. I think ASIC was already all over it, and I think all the other agencies are all over it. Including the MFAA, FBAA and major broker groups.
“At Yellow Brick and Vow, we are already doing this stuff, and I think that a lot of the bigger groups are as well. I don’t really see anyone resisting this [package of reforms]. To me, it’s a no-brainer.”
Mr Bouris said that he was “not perturbed” about the findings of the royal commission so far but had been “dismayed at some of the behaviour”.
“I’ve been talking to people in organisations who just cannot believe it. If you did something like that in a small business, you wouldn’t last five minutes. So, it will be good to see those behaviours change.”
He suggested that the next round of hearings could uncover larger scandals.
Commencing on 21 May, the next round of public hearings is set to focus on loans to small and medium-sized enterprises, with responsible lending and unfair contract terms coming into focus.
The hearings will consider the conduct of several of the leading banks in respect of their dealings with small and medium enterprises, in particular in providing credit to businesses.
They will also explore the current legal and regulatory regimes as well as self-regulation under the Code of Banking Practice.
“If you think it’s been interesting so far, once they start talking about small business lending from the banks, it’s going to get really untidy. They’ve saved the best to last,” Mr Bouris said.
[Related: Royal commission to focus on credit to SMEs]
The need to create a more inclusive broking industry is more impo...
Women would need 10 months longer to save for a 20 per cent depos...
In the latest Elite Broker podcast, broker and podcaster Marcus R...