by Jenny Ruth
The survey conducted by Chatswood Consulting on behalf of the New Zealand Mortgage Brokers' Association found that 68.5% of respondents either agree or strongly agree with the statement "trails are best."
Only 24% disagreed or strongly disagreed. Both ANZ National Bank's retail brands have decided to stop paying trail commissions, ASB Bank has never paid them and Bank of New Zealand doesn't deal with mortgage broker.
That leaves only Westpac still paying trail commissions, although it has tightened up its clawback provisions for loans that don't stay on its books long and has reduced trail commissions for the first five years of a loan but increased them for longer-lived loans.
The survey also shows brokers are mostly averse to switching to charging up front fees instead of taking commissions and at the same time are luke-warm on disclosing commissions and mostly think brokers should be regulated differently to financial planners.
Those in favour of charging up front fees totalled just 17.6% while 53.4% either disagreed or strongly disagreed with the idea. Nearly 45% agreed with the proposition: "Undisclosed commissions are no less moral than undisclosed retailers margins" while 34.4% disagreed.
Nearly 60% think brokers should be regulated differently to financial planners while only 22% think the same regulation should apply.
However, only 22% think brokers should be regulated at all while 55.4% think they should be regulated.
More than 200 brokers responded to the survey, about 25% of the NZMBA's membership. Collectively, they expect to write more than $7.5 billion in loans over the next 12 months. The survey shows they typically write two or three loans a week and the value of new loans each writes a year is about $20 million. Tellingly, most activity is new loans with top-ups and re-fixing loans at modest levels, although the latter is a growing activity. Most advisers report about 50 re-fixes a year.
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