In the association's submission on the Financial Intermediaries Task Force's option paper, Salt says excluding advice on owner-occupied houses could result in the most vulnerable in society being excluded from the protections being considered by the task force.
"The task force appears to be of the view that advice on residential property should remain outside the scope of the review and the options for regulation while advice surrounding the purchase and funding of an investment property should be within the scope," the submission says.
Salt gives two examples to illustrate why this isn't a good idea.
A retired couple with a modest income and a modest, mortgage-free home seeking advice on an equity release product wouldn't be covered by the task force's deliberations and the subsequent regulation.
But a young, professional couple with substantial disposable income seeking advice on suitable debt funding for a block of, say, 10 rentable units would be covered.
"It seems that both debt instruments carry risks to the consumer. The problem is that the most vulnerable group, it could be argued, have been excluded from the protections being considered by the task force. This is an absurd result."
While the NZMBA could support any of the four options for a regulatory framework proposed by the task force, Salt is keen to see the level of regulation matching the level of risks to consumers.
The NZMBA would prefer co-regulation overseen by a government-appointed body.
She argues that the level of risk involved in getting advice from a mortgage broker is relatively low, particularly since the decision to purchase a property has already been made before a broker is consulted.
As well, competition in the mortgage market lessens the risk that a consumer will be sold the wrong or more expensive mortgage.
While the NZMBA supports disclosure of the fact that lenders pay brokers commissions, the disclosure of the exact dollar value of any commission is "logistically difficult" and unnecessary because commissions aren't directly factored into the price the consumer pays.
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