In a further submission to the Commerce Commission's market study of competition in personal banking services, FAMNZ country manager Leigh Hodgetts draws the commission's attention to the Financial Markets Authority's (FMA) recent monitoring report which “shows there are no systemic issues with mortgage advisers.”
Hodgetts stressed the point that the NZ regime is principles based while the Australian regime under the Australian Securities and Investments Commission (ASIC) “has very prescribed practices and legislation that we do not want to bring to NZ.”
“We are very new in this regime and no harm or cases have been brought up as examples to demonstrate the new regulations are not working as they should,” Hodgetts says.
“We need to give this some time and ComCom was not across this at all,” she says.
Among the FMA's comments that Hodgetts highlights are that it saw advisers recommending clients borrow less than they are approved for to support affordable loan repayments, demonstrating advisers favouring clients' interests rather than trying to maximise commissions.
She cited a number of other examples in the FMA report that showed advisers have been acting in clients' best interests.
Hodgetts also called for banks to refer customers who were introduced by an adviser back to that adviser before making an early repayment so that they can fully understand any clawbacks and fees.
She cites the example adviser and FAMNZ member Jeff Royle provided in which a client incurred fees and legal costs of $5,000 because that client used an inheritance to repay a loan just one month before the clawback period ended.
“The bank representatives in the room seemed to listen to this point and agreed that was a poor consumer outcome,” Hodgetts says.
“The general response from the banks/lenders was this seems to be a fair request and something that could be easily done for the sake of good customer outcomes,” she says.
“We support and encourage this change to be adopted by all lenders.”
Hodgetts is also calling for all lenders to agree on a common online loan application portal, as is done in Australia.
“We are talking about AI and technology and yet mortgage applications are emailed and heavily reliant on phone calls chasing lenders etc. It is very inefficient and NZ banking is so far behind the rest of the world in this area,” Hodgetts says.
“This results in poor consumer outcomes and buyers at times missing out on opportunities due to slow procesing and approval timeframes.”
