ComCom's 3 applications per loan demand is 'crazy': FAMNZ
The Commerce Commission is sticking to its recommendation that mortgage advisers should have to submit three “actual offers” to every mortgage applicant, the Finance and Mortgage Advisers Association of New Zealand (FAMNZ) says.
Thursday, February 13th 2025, 8:52AM 
2 Comments
by Jenny Ruth
The Commerce Commission is sticking to its recommendation that mortgage advisers should have to submit three “actual offers” to every mortgage applicant, the Finance and Mortgage Advisers Association of New Zealand (FAMNZ) says.
The competition regulator is demanding that advisers agree to do this or it will “recommend government intervention,” FAMNZ country manager Leigh Hodgetts says.
The ComCom has written to FAMNZ making this demand which it claims will promote price competition and choice for home loans.
Hodgetts says if ComCom makes good on this threat, it will hurt consumers by driving up costs, blowing out application processing times and affecting customers’ credit ratings.
“This is a classic case of a solution looking for a problem. Nothing is broken,” Hodgetts says.
ComCom is demanding that advisers submit applications to at least three different lenders for each of their clients.
“This is a classic case of a solution looking for a problem. Nothing is broken,”
Mortgage lenders have spent the last couple of decades persuading mortgage advisers that submitting multiple applications for the same mortgage is unprofessional, time wasting and drives up costs.
TMM Online understands that no other jurisdiction has such a requirement – while Australian practice is for advisers to provide customers with comparisons of what they could get from three separate lenders, there is no requirement that advisers actually lodge separate applications with three different lenders.
During the ComCom’s hearings as part of its market study of personal banking services last year, a number of mortgage advisers tried to persuade it that mandating multiple applications per loan was not the right approach.
They also emphasised that price was only one of a number of considerations and that part of the expertise advisers offer is which particular lender will be most amenable to other of a borrower’s wishes, for example whether they will lend on interest-only terms or whether they’re prepared to lend on apartments.
A large part of the skill advisers offer is their knowledge of the market, the interest rates different lenders offer and the parameters around what each lender is prepared to lend on at any given time.
In some cases, such as for the self-employed, there is only one lender prepared to lend to them.
FAMNZ managing director Peter White says the ComCom’s recommendation is “crazy.”
“Even in Australia, which ComCom has referred to throughout their study, advisers (called brokers there) don’t submit multiple applications,” White says.
“Three applications means lenders will be spending time and resources processing applications they know they will likely never get and other applications will be pushed aside,” he says.
FAMNZ attempted to educate ComCom last year on how advisers work but “they clearly still have no idea and now want to make things worse.”
White is asking Commerce Minister Andrew Bayly to intervene immediately and is seeking an urgent meeting with the minister.
“Advisers already promote competition, consumers are increasingly choosing to use advisers, and complaints are almost non-existent,” White says.
“FAMNZ wants to work with ComCom to continually improve our industry and work in the best interests of Kiwi consumers, but unnecessary regulations and bureaucracy isn’t in anyone’s interests,” he says.
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I'd rather just follow one in every three Comm Comm recommendations.
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Aside from bank turnaround times increasing significantly meaning that finance dates could now be put in jeopardy watch what happens to banks’ ability to provide preapprovals to borrowers if mortgage advisers are made to submit a customer’s application to three different lenders each time. All that capital been tied up unnecessarily by banks now in anticipation of a home loan been drawn down which ultimately won’t be happening at two of the lenders approached by the adviser. Watch what happens… Clearly Commerce Commission officials don’t understand the impact the Reserve Bank’s bank capital holding requirements are now having on banks in New Zealand ability to issue preapprovals. The above demand by the Commerce Commission will be an earthquake for the banking industry here and ultimately disastrous for customers wanting finance approval to purchase a property.
Mortgage advisers are one of the best examples of a profession operating in New Zealand today that clearly aids consumers in them getting a good deal. Mortgage advisers by their definition are a competitive force for good for consumers seeking home loan finance from a bank/lender. The clear advocacy role that advisers offer consumers is backed up by the fact that 60%+ of Kiwis now routinely engage a mortgage adviser when securing a home loan. This illustrates that consumers clearly see value in what the mortgage adviser industry offers and to stick a cherry on top we are also 99 percent of the time a free service to customers been paid by the lenders. How many other industries offer such a great service to the consumer?
The Commerce Commission seems be incapable of understanding the above. Our industry to date has been patient with Commerce Commission officials on them understanding the role that advisers play in adding competition, but this is simply not good enough anymore and now calls into question the competency of these Commerce Commission officials been employed by the NZ taxpayer. Frankly, the mortgage adviser industry is now at the point of fatigue having been dictated to by successive Wellington bureaucrats e.g. MBIE who are clearly not adding any meaningful value to the country with their recommendations made.
In summary, what the hell are we doing here?