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Group FAPs could limit choice of suppliers: Newpark

Mortgage advisers could find their selection of available lenders limited by their financial advice provider under the new regulatory regime, Newpark’s Andrew Scott has warned.

Wednesday, October 30th 2019, 5:27PM 4 Comments

Newpark Home Loans general manager Andrew Scott believes group FAPs, with responsibility for diligence on lenders, are likely to have an “approved product list” for their advisers, controlling who they can place business with.

“Advisers may join a group thinking they have open access to every lender, but they might be in for a shock, and there could be restrictions on what they can and cannot do,” Scott says.

Scott believes group FAPs will be cautious about which lenders and insurers they deal with, and will “determine criteria for which products make it onto approved supplier lists”.

He adds group FAPs may not be able to approve smaller second tier lenders due to a lack of publicly-disclosed information, and are likely to stick with retail banks and large second tier lenders.

“That could change the landscape somewhat for second tier lenders, for owners of a FAP, and advisers underneath that licence, and ultimately for customers, as there will be restricted choice, not getting access to a solution,” Scott says.

“It’s something to think about for an adviser who thinks they are just going to join another FAP, and come under someone else’s licence” Scott says. “You have to know what you are getting yourself in for.

“You should ask your group, before you commit pen to paper, ‘what’s your approved supplier list?' That should determine whether you want to join a particular FAP. I wonder whether advisers have thought about these scenarios, or are blindly signing up to an umbrella FAP where they think it will be business as usual. There are a lot of subtleties to play out.”

Newpark Home Loans wants adviser businesses to take their own FAP licence under the new regime, rather than operating underneath its FAP.

The model is in contrast to bigger groups, including NZFSG and Astute, where most adviser members are expected to operate directly under the group’s FAP licence.

Tags: FAP FSLAA licensing Mortgage Advisers Newpark regulation

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Comments from our readers

On 31 October 2019 at 1:30 pm Amused said:
Great to see a dealer group actually demonstrating value to its members. Newpark Home Loans have also come out and openly communicated to their members ANZ’s announcement on the 17th October regarding the bank’s stance on licensing i.e. ANZ will agree to hold agreements with mortgage advisers who operate their own FAP. Newpark Home Loans clearly have their members best interests at heart.

This brings us then to the elephant in the room….why have other dealer groups like NZFSG failed to communicate to their members the contents of ANZ’s October 17th letter addressed to mortgage advisers? This is an important announcement made by the largest lender in the country sent to all mortgage advisers and we are entitled to be made fully aware of it.

The failure of certain dealer groups to share with their own members ANZ’s announcement seems to be a deliberate attempt to deceive advisers of the full options available to them when it comes to licensing i.e. the ability going forward for an adviser to hold direct agreements with the various lenders (and insurers) if the adviser chooses to become their own FAP. Clearly though these dealer groups only want their members operating under their own group FAP.

TMM – can I recommend that you contact the various dealer groups around the country who have openly stated that they want members operating under their group FAP and ask them to confirm that the contents of the ANZ’s letter sent to mortgage advisers dated 17th October have now been communicated to their members? If not why not?

On 31 October 2019 at 2:28 pm valkyrie6 said:
Yes I think Amused has raised a good point, I think advisers need to seriously think about their businesses ,what actually are you ?.
We all know we work in a very time consuming industry and a lot of advisers will default to the new regulation requirements as being in the "just to hard "basket and "we are just ""to busy ""But this is the perfect time to define yourself, are you a self employed financial advice business or are you just an employee /contractor to a group, not owning your client or your data base as most groups CRM systems are cloud based and owned by oversea's owners ( not yours ) , when you leave these groups don''t expect to get your client data back and do expect your customers to get marketed too by the franchise/ group in the future. Having control of your own business will not only benefit you but your clients as well .
On 1 November 2019 at 3:49 pm Veteran Charles said:
The aforegoing are valid comments if we reflect on ourselves in a sort of academic way, but at the end of the day do we have time or energy for the niceties? The Banks are big players and there must be a measure of safety in being with the big aggregator groups, doing things the easy way. Yea, I am paranoid when it comes to the banks.
On 5 November 2019 at 2:22 pm JPHale said:
Well said @Amused. Having worked with Andrew at Sovereign and discussed many of the challenges raised here in my articles it's nice to finally see more than a few lonely voices saying the same things.

Adviser independence comes from independent access to providers. Past behaviour with various groups and businesses has shown they have little compunction in restricting access when it suits them and their back pocket.

It is this aspect that can be justified under the new rules that may not be to everyone's liking. And it is this behaviour that the "too busy" adviser is going to find out about too late.

A case of buyer beware and look before you leap for advisers, as the implications are far more serious than hitching your wagon to a dealer group's coat tails.

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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 ▼7.45 ▼7.09 ▼6.95
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - ▼6.85 ▼6.49 ▼6.35
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 - - -
SBS Bank 8.74 7.74 7.09 6.95
Lender Flt 1yr 2yr 3yr
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
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 -
Lender Flt 1yr 2yr 3yr
Westpac 8.64 ▼7.49 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - ▼6.89 6.75 6.39
Median 8.64 7.14 6.82 6.65

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