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Mortgage advisers miss an opportunity

Is it complacency or disillusionment that has driven such a lack of engagement by mortgage advisers with the rewrite of the FAA? Susan Edmunds shares her opinion.

Monday, April 10th 2017, 12:28PM

by Susan Edmunds

I have been writing about financial advisers – whether they are mortgage brokers, insurance advisers or financial planners – for about seven years now. For that entire time, regulation has been a huge theme of conversation.

People complained that the Financial Advisers Act brought in too much of a regulatory burden for Authorised Financial Advisers in particular, and drove small players out of the industry. I was told of paperwork mountains, extra costs and reporting requirements that seemed to be purely for the sake of it.

So by the time the review of the FAA rolled around, I was certain that the industry would be full of people just itching to have their say about how it could be made better. I imagined a tidal wave of submissions headed MBIE’s way when it asked the industry what could be done to make regulation work better for providers and consumers.

When initial proposals suggested that the new regime would mean a level playing field for all financial advisers, and mortgage and insurance brokers would soon have to deal with a lot of the compliance work they had so far dodged, there was an initial wave of concern from the industry.

One adviser told me it would be almost impossible for mortgage brokers to work under anything like the disclosure requirements required of investment advisers, because the turnaround times of a mortgage application just did not allow it. He said, if mortgage brokers had to document the suitability of the advice given in each circumstance, as investment advisers do, the number of applications mortgage brokers could write would diminish sharply. In a world with little trail commission, he said, this was a big concern.

So I expected that there would be a flood of protest in response to those initial documents but, in the end,  few from the mortgage industry even made a submission.

And as the process has tracked along, mortgage brokers’ engagement with it has decreased. There were no mortgage-specific submissions made on the Financial Services Legislation Amendment Bill.

This seems crazy considering that it is very likely that mortgage brokers are going to be some of the most affected by the coming changes. You will all soon have to be financial advisers working for licensed financial advice providers, or financial advice representatives with a more limited scope of service. There will be disclosure, competence and client-first requirements to meet – and document that you have met them.

To not to have made a submission, or argued for the needs of the industry when offered the chance seems like a wasted opportunity.

Sure, I understand the argument that it is frustrating to make attempt after attempt to engage only to have it ignored. Many people see the bill as a win for the big guys and little progress for the small end of town.

But isn’t it worth trying? There is a saying that gets rolled out every election campaign: If you don’t vote, you can’t complain.

If you have not made a submission as this review process has rolled through, can you complain if the outcome does not work for you and your business?

Tags: Mortgage Advisers

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Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 ▼3.39
ANZ Special - ▼2.55 ▼2.69 ▼2.79
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone 4.44 4.44 4.44 4.44
BNZ - Classic - 2.65 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 3.19 3.49
SBS Bank Special - 2.79 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 ▼2.69 ▼2.75 ▼2.99
The Co-operative Bank - Standard 4.40 ▼3.19 ▼3.25 ▼3.49
TSB Bank 5.34 ▼3.35 3.49 3.79
TSB Special 4.54 ▼2.55 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.55 2.69 2.79
Median 4.55 3.19 3.22 3.39

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