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.

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Another way customers can discover these unpublished discounts is by shopping around, she said.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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