“The statement that ‘mortgage advisers should also put more emphasis on price’, is in some ways irresponsible, as every borrower is different,” says Finance and Mortgage Advisers Association of New Zealand (FAMNZ) country manager Leigh Hodgetts.
“While the interest rate is important, there are many other factors around individual circumstances that must be considered when a consumer takes a loan,” Hodgetts said.
Adviser Sarah Curtis, who was instrumental in getting the commission to back down on a number of aspects of its interim report in May, also criticised the commission's continued emphasis on price in its final report.
“Reducing the value we add in the adviser space to 'fighting for better rates' doesn’t fairly reflect the work advisers do in providing advocacy, supporting clients through the process step by step, or the time spent on building better financial literacy outcomes for New Zealanders,” Curtis said in a post on LinkedIn.
Curtis was still glad that the commission has changed its view on the value advisers can add, and Hodgetts also applauded the regulator's “turnaround” from its “baffling and embarrassing” draft report.
Squirrel chief executive David Cunningham also weighed in on the multiple application recommendation, saying advisers already know what each bank's credit policies and pricing is.
“We don't need to send it to three banks to get three yeses or maybes or nos, because we already know. All it would do is add cost,” Cunningham said.
Loan Market's Bruce Patten has a similar view: “We know what the banks are offering. It's not going to drive the price down.”
The commission said that where possible, advisers should present at least three actual offers to their clients "to ensure consumers are making informed choices."
Wellington-based adviser Andrew Perry of Mortgage Market said the credit risk posed by a would-be borrower is often more important than price when the adviser knows there's limited appetite among the lenders for some borrowers.
Perry noted the commission appears to think first-home buyers have unlimited options but unless they have a 20% deposit, and only about half do, they face rationing because of the Reserve Bank's loan-to-valuation ratio restrictions.
Those TMM spoke to were happy about some of the commission's recommendations, particularly that lenders should pro-rata all clawbacks of adviser commissions and bank cash contributions to consumers and on banks investing more in better digital systems.
“Only last month we asked banks to improve technology and systems so that advisers can serve consumers better, and this report echoes our call,” Hodgetts said.
Financial Advice NZ (FANZ) chief executive Nick Hakes said he will be seeking “greater clarity” on the recommendations on mortgage and lending advice.
“The detail will determine whether there are unintended consequences that could counteract competition.”
