Background
I caught up for a coffee with another broker a few weeks ago. We had a nice long chat about the industry that has adopted a couple of blokes orphaned from investment banking. There’s a story he told me that’s haunting me and keeps me thinking about relationships.
Many years ago Jack*, the broker and my former colleague, knew a very happy expatriate couple who lived in Singapore.
The Happy Couple
They did almost everything together when James* wasn’t at work. They dined together every night in one of that island’s many wonderful eateries. The weekends were spent in blissful trips away. Business class trips were had either to London where James was from or Sydney where Lulu*, James’ partner, had family. You could say they had the perfect modern relationship.
Then one night in August 2008 James didn’t come home from work.
Lulu tried his mobile phone over and over again but there was no answer. She fretted all night and eventually at 2am she contacted the police. The Singaporean police take a missing persons report seriously so they swung into action within hours.
Meanwhile Lulu decided to go to James’ office as soon as it opened the next morning to make sure he hadn’t taken ill and collapsed. As she walked into the building she recognized one of James’ co-workers, Brian*, and said hello. Brian shifted his weight from foot to foot nervously as Lulu asked if he knew of James’ whereabouts being delicate so as not to ruin James’ professional reputation. Lulu wasn’t expecting the response.
The Twist
At first taken aback, Brian gathered his composure and explained that James had been retrenched from his job 11 months earlier. Obviously, James had kept this news from Lulu. To survive in an expensive town like Singapore, he had borrowed heavily and when it all got too much it appeared as though he had simply disappeared. He had borrowed against his assets in London but there were many months of outstanding bills in Singapore such as rent and utilities which had gone unpaid.
Lulu had no money of her own in Singapore but had rented out her flat in Sydney’s east so she was able to quickly re-draw on her mortgage to cover the debts in Singapore.
Back Home
Jack caught up with Lulu in Sydney a few weeks ago. It had been ten years since she’d seen or heard from James. She’d travelled to London to search for him but no one knew where he was (not even his parents). The police in Singapore had a hunch that he had either gone to Cambodia or Vietnam. Although why those two destinations was a mystery to Lulu.
Lulu kept saying one phrase over and over again. “You think you know somebody.” and “I trusted him completely.”
Jack’s reason for catching up with Lulu was professional. She wanted some advice on her home loan. So, Jack asked her to bring along a loan statement and a loan contract if she had one.
Lulu has a very trusting nature. She believes in relationships both personal and professional. She had trusted James completely and one look at her loan statements suggested that she also trusted her bank completely. She was being charged 5.8% p.a. for a mortgage on her flat in which she lives. She also pays principal and interest.
When Jack said to her that she was being overcharged by almost 2% she was in complete disbelief. He convinced her to go to her bank that afternoon and ask for a rate well under 4%.
Lulu doesn’t like confrontation so she asked Jack to accompany her.
The Loan Officer
They walked into a local branch 200 metres from where they were dining and asked to see a loan officer. Fortunately, the loan officer was available. Lulu introduced Jack as her mortgage broker and the loan officer broke out in a cold sweat.
She handed over her loan statement asked him what he thought was wrong with it. The loan officer very nervously took the loan statements and typed a few numbers into his computer.
He immediately offered her a rate of 3.90%. Lulu was about to accept until Jack whispered to her not to.
He said in a very low voice but audible to both Lulu and the loan officer “what about them overcharging you for the previous five years?”
The loan officer was typing again and Jack could see from the reflection in his glasses that he was typing an email. He knew Lulu would get a good rate now. The loan officer asked them to give him a few minutes until he received authority – although he didn’t say for what.
Lulu and Jack were ushered into the main branch and asked to take a seat. Through the glass partition they could see the loan officer having a conversation with someone over the phone. The only words they heard were mortgage broker.
The loan officer hung up typed a few more things into his keyboard and came and fetched them.
In his office he began by apologising and said that for a twelve month period they would give Lulu a special rate of 3.69%.
This time Lulu looked at Jack for direction. He whispered “ask him what happens at the end of 12 months”.
The loan officer’s response was that her rate would revert to the prevailing interest rates at the time.
Not Good Enough
Jack pulled out his laptop and logged into his system and saw that there were a few lenders offering that rate. He suggested to Lulu that the rate was good but it shouldn’t come with a sunset clause. She agreed and to their surprise so did the loan officer.
Which immediately indicated to Jack the loan officer had added the 12 month sunset so that the interest rate would revert back to a much higher rate when the discounted rate expired. Sneaky.
Is it any wonder banks aren’t trusted anymore.
Relationships
Lulu’s faith in relationships has faded a little these days but a leopard never changes it’s spots.
Some time later Jack asked Lulu “if James turned up tomorrow would you take him back?” Lulu shook her head violently and bravely held back her tears. “There would be no trust. I couldn’t.” She responded.
Sometimes you have to end relationships and sometimes, like Lulu, you have to know when they’ve run their course. But if your relationship is all one way and the other party has deceived you is that a relationship worth maintaining?
Even if they agree to bend to your will, how long have they been deceiving you? Will you ever trust them again?
The good thing about Lulu using a mortgage broker like Jack is that Jack will diarise a periodic health check to make sure she’s getting the best possible deal and that the mortgage product that she has is still appropriate for her.
The bank is unlikely to ever do that.
As for Lulu’s relationship with James, that’s a matter for her.
If you still think you have a relationship with your bank check your bank statement and compare them to prevailing market rates. Better still give us a call.
Epilogue
Jack has decided to retire from broking after the banks, responding to the Royal Commission, changed their commission policies. He was forced to pay back thousands of dollars to the banks last month. He’s a loss to the industry.
His comment to me was that he’d be working for free for the next 12 months at this rate. His trail book is up for sale.
*all names and some locations have been changed to respect Lulu and Jack’s privacy.
The writer received Lulu’s and Jack’s permission prior to writing this article.