Advisers dismayed at Dosh and Westpac tie-up

Mortgage advisers say they have been slapped in the face by Westpac powering fintech Dosh to offer home loans without any financial advice and giving a loyalty cashback reward of up to 0.20% over the term of a mortgage.

Invercargill-based mortgage and insurance adviser Brenda Nom says Westpac is saying on the one hand more than 50% of Its mortgage business comes through third party advisers and on the other hand it is almost doing the dirty behind advisers’ backs because its tie-up with Dosh has not been communicated well. 

“It’s upsetting that a client can go online, apply for a Westpac mortgage through Dosh, get no financial advice whatsoever and trail income paid back to them, which will just decimate advisers’ books in the end,” Nom says.

Mortgage advisers are paid about 0.2% trail from Westpac and mortgagesonline founder Hamish Patel says under the Dosh scheme this gives away about 60% of that trail to the home owner, with no financial advice.

“It is something third party mortgages advisers absolutely cannot do.”

Nom and Patel say even if mortgage advisers could go down the same route as Dosh, it is not viable.

Nom has already had a client ask if she could match Dosh. “As advisers, of course, we can’t. As part of the regulations we work under, we have to offer financial advice and we are not allowed to offer inducements to clients, such as giving them part of our trail income, to sign up with us.”

It is written into contracts advisers have with the major banks.

Westpac says advisers haven’t grasped that Dosh can’t give financial advice to customers because it is not an authorised adviser.

“Mortgage advisers are authorised and can provide financial advice to their customers, so they are offering a difference service.” 

On its website, Dosh says it acts as a payment service provider only. 

Dosh teamed up with Westpac in March, to offer an online platform where customers can apply for a home loan in minutes and get rewards that are in addition to any bank offers, such as a cashback.

At the time Dosh co-founder and chief executive Shane Marsh said the fintech sees this as an offer that will drive competition, potentially leading to lower rates and savings for Kiwis throughout the country.

“We’re not a traditional provider. Our digital-only, no-advice approach means Dosh can bring exceptional value to a large number of people”

Under the Dosh loyalty cashback dubbed Dosh Streak, homeowners are offered a cash payment equal to 0.01% of the loan balance, up to a maximum of 0.20%, over the lifetime of the mortgage with Dosh.

For a $600,000 home loan this works out to be about $715 in the first year and $13,487 in total over the life of a 30 year loan, as long as the home owner stays with Dosh.

Nom doubts the incentive is a good deal over a 30-year loan. “Without financial advice those homeowners don’t know how much more they could save.

“It is adviser’s job to be talking to mortgage clients about how they can increase their repayments when they have paid off other loans, for example, a car, or their children have left home, and they have more discretionary income. The opposite also applies. Dosh can’t offer that.”

A Q&A on Dosh’s website a month after it launched says it is pleased with the early take-up, and being digital it has the opportunity to significantly scale.

It made the decision not publish the rates it offers. Other new entrants, such as Super Bank failed to grow market share because established banks matched their rates, it says.

Nom says in reality Dosh’s offer is probably a retention tool and can expose vulnerable clients, which is absolutely a no go in the legislation registered advisers adhere to.

Patel says the biggest problem with the Dosh platform comes down to the adviser community in good faith never poaching Westpac clients with cash incentives.

“We haven’t done that for 10 years. It would be unethical to advertise with cash incentives, such as giving Westpac clients $500 to refix with me exclusively and I would get all the trail income.”

He says effectively Dosh is set up to steal advisers’ Westpac clients, take over their trail and massacre their books. “That’s what the platform is designed to do and I don’t think a lot of advisers realise what is going on.

“If I advertised and gave away 60% of my Westpac trail to clients who refixed exclusively through me, the bank would have a massive fit, but it is what Dosh is doing.”

Patel says he finds it hard to understand why Westpac has teamed up with Dosh. It’s basically competing with itself, by saying to existing customers ‘hey, why don’t you just get some cash through Dosh’.

“It's disingenuous. It's like, okay, if you're going to do that Westpac, why don't you just give all your existing clients a rate discount, instead of giving a profit to Dosh for your advertising? 

What will happen, he says, is the relationship between advisers and Westpac will be decimated. The bank has spent 10 years building up a good relationship with advisers and it is a good partner in all other respects.

Westpac NZ head of consumer banking and wealth Helen Ryder says because Dosh operates differently to traditional mortgage advisers, the bank does not consider it part of its adviser channel.

“Unlike mortgage advisers, Dosh is online-only and provides an information-only service, which means it can’t provide financial advice to customers, nor does Westpac provide advice to Dosh customers. 

“Dosh supports simple home-lending structures and doesn’t offer the range of products available to a mortgage adviser.”

So, while Dosh will be a great option for some customers, she says engaging a traditional mortgage adviser may suit other customers looking for advice, support and a full range of options through the homebuying process.