Advisers aid in discounting from headline rates: ANZ
Banks' ability to exercise discretionary pricing by charging some customers less than published headline rates is a very important part of banking and competition, ANZ New Zealand chief executive Antonia Watson told the Commerce Commission's conference on personal banking services.
Monday, May 13th 2024, 3:29PM 
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Watson pointed to the “enormous” role that mortgage brokers play in informing their customers about such pricing and that's “why you see more and more use of brokers.”
Another way customers can discover these unpublished discounts is by shopping around, she said.
ASB chief executive Vittoria Shortt said while a lot of customers do use mortgage brokers, ASB is proactive in using digital experiences to offer such discounts to customers.
“There are many ways of accessing that benefit, not just making customers shop around.”
Commission chair John Small noted that while banks' published headline lending rates can be very similar, those are not necessarily the rates their customers actually pay.
Kent Duston from consultancy firm Habilis told the conference that such pricing is “opaque” and makes it difficult to compare interest rates.
“If there's no transparency in pricing in the market, it's very difficult for any individual customer to make an informed decision” about whether or not to switch banks when they come to roll over a loan from a fixed rate, Duston said.
The cost to an individual of investigating what actual pricing in the market is “is very high indeed.”
Mike Henderson from Kiwibank said the commission needs to take into account of the impact of the changes to the Credit Contracts and Consumer Finance Act in promoting customer inertia.
The CCCFA could mean that an existing mortgage customer might not qualify for a loan from another bank if they tried to switch.
Watson said that “we see 20% of switching in a month” of those refixing their mortgage, which shows that “switching behaviour is pretty strong.”
Small suggested the difficulties of switching banks “maybe more perception than reality” and Watson said ANZ would be “happy to be part of making that clear to customers.”
Tex Edwards from Monopoly Watch NZ said that “switching within the club” of the four major banks doesn't demonstrate competition and noted that the international ratings agencies “are telling us we've got an oligopoly” with the big four banks dominating the market.
The conference is scheduled to more deeply examine the role of mortgage advisers on Wednesday.
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Comments from our readers
In many instances customers who are not engaging the services of a mortgage adviser don’t now receive any advice whatsoever around the refix process. How is this change instigated by the banks themselves promoting those good customer outcomes that the Financial Markets Authority expects and demands now from all financial service providers?
Customers don’t have sufficient time now to make an informed decision. Previously the new rates been offered by banks were valid for up to 3 business days. They are now only valid for that same day. The banks still give new home loan customers 3 business days to decide which interest rate they want, so why are those customers refixing their home loan essentially been told “decide today, or the rate may change on you”. Clearly the banks don't want their customers shopping around or engaging a mortgage adviser to let them know what else is available in the market. This would seem to be a breach of consumer law in New Zealand i.e. limiting a consumer’s choice.
Finally. If the customer is using a mortgage adviser that adviser no longer has the ability to get the bank in question to sharper their interest rates if necessary to match a competitor bank. The only option left open to the mortgage adviser to ensure that their customer receives a competitive offer is to refinance them to another lender, if it’s in the customer’s best interest to do so. The digital refix process has essentially allowed the banks to reduce the margins they previously had to offer many customers using a mortgage adviser to retain their home loan business. Please tell me how is this a good outcome for consumers?
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90% of customers that have their own mortgage adviser confirm their disappointment when told they have to look online for a “digital offer “that they have no Idea is good bad competitive or not.
How is this giving ANZ customers independent advice? , and the ability to make an informed decision?
ASB also took away advisers’ ability to manage their clients on going interest rate re fixes which was/still is a huge part of the adviser customer relationship, forcing customers to “re fix online without any independent human advice at all.
On top of this they also changed the time period for when a customer can re fix and lock in a new rate prior to rate expiry from 60 days out to only 35 days out, which in a rising interest rate market is really not in customers best interests or policy competitive with other banks.