If a Dutch landlord wants a tenant found for them, they engage the services of a 'makelaar'. Makelaars list the apartment online and take prospective tenants for tours through the home, but once the tenant is found and the deal signed, the makelaar is nowhere to be found. This is because makelaars charge the tenant a one-off commission for brokering the deal (usually equivalent of one month rent). After this date, the tenancy's success or failure is of little consequence to them. This differs to Australia because 'property managers' are paid in small monthly instalments to ensure the tenancy is maintained.
The Banking Royal Commission has recommended a similar model to the Dutch 'makelaars' in the mortgage broking industry by ceasing 'trail commissions'. Trail commission is one of two payments made to a broker. The benefit of a trail commission is having brokers personally invested in the continued success of their clients' mortgages. If their client can't afford repayments and default, brokers won't receive their trail. If their client is unhappy with the product, they will change loans and the broker won't receive their trail. It is a structural incentive to do the right thing by the consumer and maintain a healthy professional relationship. It is also a disincentive to refinance consumers' mortgages each time there's more commission to be made.
Through some act of madness, it was recommended to cease trail commissions. This resulted in Australia's largest banks recording up to 10% share price growth within 24 hours, while mortgage aggregators saw a quarter of their market capitalisation lost in the same time. Somehow, a Royal Commission into banking misconduct turned into a huge capital-injection for Australia's banking oligopoly.
No doubt this recommendation is unfair for mortgage brokers whose business model may fundamentally change overnight, but the real losers would be Australian consumers.
We can all learn something from this expensive and highly public Royal Commission: those in ivory towers who make decisions that impact the rest of us are not as smart as they give themselves credit for.