Portals for home loan applications? Be careful what you wish for

A mortgage adviser who has worked in both Australia and New Zealand isn't a fan of the Australian system which accept mortgage applications through an old portal and says much depends on the portal.

In a further submission to the Commerce Commission's market study of competition in personal banking services, Finance and Mortgage Advisers Association of New Zealand (FAMNZ) country manager Leigh Hodgetts for all lenders to agree on a common online loan application portal, as is done in Australia.

Hodgetts said having to email loan applications in NZ “is very inefficient” and can result in clients missing out on buying opportunities.

But Wellington-based adviser Andrew Perry says in his submission published this week following last months' conference hosted by ComCom that has been tried and failed in NZ.

“We have seen portals operated in market in NZ in various forms since I started working as a broker in 2016 – two major banks and one large non-bank lender in NZ all offered these portals in the past, but no longer do so due to the additional labour it imposed on those submitting applications,” Perry says.

“These needed to be prepared both via broker CRM (client relationship management) and then again via the portals,” he says.

“All three of these lenders have removed the requirement for portal submission subsequently and all have seen submission volumes increased, based on anecdotal evidence, due to the reduced hours by not using these portals.”

Perry, who owns a boutique brokerage in Wellington, says the market for mortgage software has become increasingly competitive over the last eight years which has resulted in “superior offerings for brokers/advisers tailored to consumer needs.”

In Australia, one company, ApplyOnline, captured the market early and this “legacy software” has been the default provider for about 20 years.

It was made compulsory for brokers but is “largely unusable,” he says.

“In my experience, the overwhelming majority of ApplyOnline users were based offshore in the Philippines and contracting to Australian-based businesses to load applications that had been emailed to them,” Perry says.

“This is a model which is inefficient, causes delays and reduces competition,” and which won't work in NZ where brokers mostly aren't paid trail commissions.

But he also worked with portals of major banks and, while he doesn't feel it had much impact on customer outcomes, “it did provide a superior service for customers via the broker channel compared to the current process in NZ,” he says.

“Portals which enable brokers to give better information to consumers are useful; those which delay submission are not.”    

Perry also complains that the “onerous regulatory environment” has meant that innovation has been “put on the back-burner,” with advisers having to modify software to comply and meet future audit requirements, rather than focusing on the needs of home loan borrowers.

In this, Perry is supporting ComCom's contention in its draft report that regulation is one of the factors stifling competition for personal banking services, although its focus has been more on the prudential regulator, the Reserve Bank, rather than on the conduct regulator, the Financial Markets Authority (FMA), which has much more contact with financial advisers.

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