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Bank targets criticised

Bank targets for mortgage advisers cause more damage to customers than adviser commissions, according to lender Southern Cross Partners.

Friday, March 29th 2019, 9:26AM 1 Comment

The peer-to-peer lender has called out banks for enforcing targets for mortgage brokers, putting pressure on advisers to place certain levels of business or face losing their accreditation. It believes the targets are not in the best interest of customers.

Terry Butler (pictured), acting CEO at Southern Cross, said: "Mortgage advisers’ commissions are not the problem and should be left well alone; it’s bank enforced targets put on mortgage brokers that are the issue." 

Butler wants Commerce and Consumer Affairs Minister Kris Faafoi to "scrutinise the performance targets that some banks put on mortgage advisers – many of them border on coercive".  Butler added: "If a broker hasn’t put a certain volume of business through a particular bank, the bank cuts them out – that’s the problem."

The comments come as Faafoi is poised to launch a consultation document in May that will scrutinise commission paid by lenders and insurers to advisers.

Butler warns changes to adviser commission could "concentrate more power in the hands of banks". Butler supports a more "uniform commission structure" for mortgage advisers.

The call to focus on bank targets was echoed by Andrew Scott, the general manager of Newpark Home Loans.

Scott said bank targets were not in the best interest of consumers and caused unnecessary upheaval. "Targets are skewing behaviours. Forcing advisers to place a certain number of deals or cancelling their accreditation, it is leaving brokers powerless," he said. 

"The behaviours are inconsistent with regulatory reforms we're seeing across the finance industry. Lots of brokers have legitimate reasons for not hitting targets, such as illness, personal circumstances, or going part-time," Scott added.

Scott wants regulators to look at lender behaviour, as scrutiny on the finance industry continues following Australia's Royal Commission. Scott called bank targets "behaviour from a bygone era". He added: "The market has moved on. This sort of behaviour is also counter-productive for the banks." 

 

Tags: Kris Faafoi regulation Southern Cross

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Comments from our readers

On 31 March 2019 at 12:46 pm seandnz said:
Terry and Andrew make good points and valid ones. If advisers are squeezed out because of unrealistic lending targets, banks are disadvantaging consumers and anti-competitive. Also when I was an adviser part of being in a group was to not have to meet the minimum target requirements because it was based on group production, how did the banks manage to isolate each adviser, is it a divide and conquer?

We know that the more you deal with a lender the better your understanding of the lenders requirements and the better the quality of the application. However, I think that banks should look more closely at submission settlement ratios. If the adviser fails to meet these requirements then understandably the bank could stop accepting applications because that just wastes everyones time, but don't strike off advisers who have good submission settlement ratios but low volume.

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 ▼7.09 ▲6.95
SBS Bank Special - 7.14 ▼6.49 ▲6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

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