2 Comments 2 Commentsby Sally Lindsay
New Commerce and Consumer Affairs Minister Scott Simpson says the Commerce Commission’s demand mortgage advisers get three completed offers from lenders to present to clients “acts, frankly, as a disincentive”.
“It’s costly for the banks, it's costly for consumers, because it adds cost to the whole process of trying to get a mortgage, so yes, we’re working on it,” Simpson says.
A solution is in the wings, he says, although he didn’t define what it was.
In its final report after last year’s personal banking services competition study, the commission said mortgage advisers providing three completed offers for borrowers will promote price competition between lenders and choice for home loan borrowers.
Mortgage advisers see the commission’s demand as a waste of time and money and only leading to further clogging up lenders’ home loan application processing times.
After a “constructive meeting” last week with Simpson, FAMNZ country manager Leigh Hodgetts says he seems to understand the Commerce Commission’s insistence on three completed lender offers to borrowers will create chaos.
That chaos will not only be bad for borrowers but also lenders and advisers, Hodgetts says.
She is hopeful any solution satisfies the commission and avoids any legislation about how mortgage advisers do their job, but says the campaign to protect the industry is ongoing and repeated calls for industry support.
Financial Advice New Zealand’s (FANZ) mortgage aggregators’ ceo forum is also active in fighting the commission’s push to have three completed offers presented to borrowers.
Hodgetts says the bigger question is why mortgage advisers are seeing such detrimental recommendations at all.
“Sadly there is a perception the commission and others across government don’t understand the important role mortgage advisers already play in driving competition, and maybe even don’t try to understand.
“There are many advisers across New Zealand who may be unaware that right now, our industry - and their business - is at risk.”
“We’d like to believe this is not the case which is why we are continuing to work with the commission and assist it.”
In a stark message to mortgage advisers, she warned, “there are many advisers across New Zealand who may be unaware that right now, our industry – and their business – is at risk”.
FAMNZ has been talking to lenders, aggregators, the FMA and members for the past 12 months and Hodgetts says while there has been progress, too many mortgage advisers don’t see the gravity of what is happening.
“If these recommendations are forced upon us – and remember this is a threat provided in writing – we will see costs blowing up for consumers as advisers juggle multiple applications and multiple credit checks, while lenders will be forced into paying for extra valuations and more staff.
“Application times will go to 30 days plus and consumers will potentially be pushed directly to the bank for quicker approval times.”
Her message to advisers is to, “get on board before it’s too late and let’s stand together on this”.
“Right now mortgage advisers can and should be presenting customers with a comparison of three lenders ‘where possible’.”
She says this should include the rates, approval amount, repayment, cashback, and other benefits and policy nuances.”
Until a successful outcome is achieved, Hodgetts says she will keep going and asked mortgage advisers who want more information to contact the association.
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Why would the mortgage adviser industry need any new legislation applied to it now? We’ve already had the code committee etc. exhaustively look at how financial advisers provide advice in New Zealand and every mortgage adviser operating today now needs to be licenced to give financial advice to a customer, either via their own FAP licence or under somebody else’s. The code committee & FMA did not insist that mortgage advisers submit a customer’s loan application to three banks each time as part of the advice process so how can Commerce Commission officials have the authority now to demand this?
These Commerce Commission officials who believe that mortgage advisers need to submit a loan application to three different lenders each time are just like the same “geniuses” at MBIE who advised the previous Government that borrowers’ contributions towards a house deposit should be included as a fixed ongoing expense once they applied for a home loan. They are all cut from the same cloth these public servant officials in Wellington. They don’t understand the various industries that they are charged with reviewing, and they always think that they know best. More competition occurring in New Zealand industry is not held back by the idiots we elect as Ministers ever 3 years, it’s the public service officials in Wellington who are the problem. Recommendations like the above from the Commerce Commission illustrate that fact abundantly clear. All these public servant officials do nowadays is disadvantage the consumer. The government needs to overhaul the Wellington public service making sure that it is fit for purpose.
For the third time…Mortgage advisers are one of the best examples of a profession operating in New Zealand today that clearly aids consumers in 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?