In a further submission to the Commerce Commission's market study of competition in personal banking services following last month's conference, NZHL chief executive Kip Hanna called for NZ sticking with commissions.
“It's our view that changing the remuneration structure from a supplier commission-based model to a fee-for-service model would provide a deterrent for New Zealanders able to access qualified financial advice,” the submission said.
“NZ's financial literacy is low and limiting access to qualified advisers would exacerbate the gap, creating further vulnerability for a large percentage of the population,” Hanna said.
Currently, the lenders pay mortgage advisers a percentage of each loan they originate.
An NZHL spokeswoman says: “We're supportive of the current commission model … moving to a full fee-based model would limit people's access.”
While consumers do actually pay whichever structure is employed, requiring borrowers to pay advisers up front “could be quite challenging,” she says.
And some people wouldn't understand the long-term benefit of receiving such advice if they had to pay for it up front.
“It’s important to note borrowers pay the same interest rate, regardless of whether they go direct to a lender or through an adviser,” she says.
It is particularly important at the moment, when the economy is depressed, that New Zealanders understand their financial position and how t take control of their finances, she says.
“A lot of people haven't had the technical side of their home loan explained to them or their options for paying back the loan.”
NZHL's main proposition to consumers is that it helps them to either repay their loans faster or to achieve their specific goals by showing them alternative ways of repaying loans.
Currently, NZHL advisers sell either Kiwibank or NZHL mortgages.
Hanna said in his submission that “while we have approached multiple lenders about the opportunity to create a product suited to NZHL's managed home loan offering, as yet there has been no further appetite to do so.”
The spokeswoman says the NZHL proposition requires a home loan product tailored to its requirements, not just a standard mortgage product.
Both Kiwibank and ASB have developed a product “to reduce debt faster or to support financial freedom,” she says.
“It does require an exclusive development of a home loan.”
NZHLhas also owned a majority stake in Link Financial Group since November 2022.
Hanna said if NZHL's offering is not suitable for a particular customer, they are referred to LFG whose advisers have access to a wide range of lenders.
