A third-party veteran has warned that the reputations of mortgage brokers and other industry professionals are being damaged by the “horrendous stories” coming out of the banking royal commission.
Wizard Home Loans co-founder Paul Ryan said that we need to bring back the slogan “keep the bastards honest”, made popular by the late Australian politician Don Chipp in 1980.
Mr Ryan, the founder of online advice marketplace simplyaskit, has called on Australian consumers and small business owners to take back control of the way they ask for and receive advice.
“It’s very clear that there is very little trust in the financial services industry. The horrendous stories from the royal commission is all the proof we need,” Mr Ryan said.
“Everyone is asking the question, ‘What is going to change and what penalties are going to be big enough for any change to be meaningful?’
“I keep hearing bank CEOs saying they need to bridge the trust gap. They’re nice words, but there’s no meaningful action.”
During the second round of hearings, the Hayne royal commission heard evidence from Westpac customer and registered nurse Jacqueline McDowall.
Ms McDowall, whose husband is a truck driver, approached Westpac in 2015 with a plan to buy a bed and breakfast as part of her retirement plan.
On the advice of Westpac/BT planner Krish Mahadevan, who still works at the bank, the McDowalls sold their family home and transferred their $200,000 combined superannuation balance into an SMSF.
The couple also took out life, TPD and income protection insurance, costing them $27,000 per year — netting Mr Mahadevan $16,000 in upfront commissions — on the assurance that they would be able to borrow “up to $2 million” to finance the B&B.
However, after finding an appropriate property in Victoria to purchase within the newly established SMSF (which was incurring administration fees from Heffron), the McDowalls discovered that they would only be able to borrow $200,000.
After rejecting two compensation offers from Westpac, the couple accepted an FOS settlement of just over $100,000. They are currently renting in the Northern Territory where Ms McDowall is once again working as a registered nurse.
Interestingly, a question was asked on simplyaskit three weeks ago about whether or not someone can live in the property they purchase within their SMSF.
“Two industry experts came back with ‘no’ being the answer,” Mr Ryan said.
“Within a couple of hours of the question being asked, everyone visiting the platform could go back to their adviser and say that advice you gave me is not correct — this would have saved some people tens of thousands of dollars.”
Mr Ryan is challenging the banks, the financial services providers and the insurance industry to be proactive in bridging the trust gap by mandating their advisers, bank managers and mortgage brokers to be on simplyaskit and be available to answer consumers’ questions.
“There are some fantastic advisers and industry experts who are tired of their reputations being tarnished by the actions of their peers,” Mr Ryan said.
“We, the punters, now have an opportunity to stand up to the big end of town. When you ask for advice, get it in writing, make the expert accountable for their advice and then seek a second opinion.”
Mr Ryan, a finance professional for over 25 years, founded simplyaskit as an open marketplace to ensure people always had access to accountable information so they can make better, informed decisions.
“simplyaskit removes the intimidation or assertive behaviour of some advisers and helps people identify the better advisers and industry experts more efficiently,” the founder said.
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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