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Advisers inundated with policy changes by banks

Changes in bank procedures are coming through thick and fast as banks scramble to keep up with a flood of regulatory changes.

Wednesday, January 19th 2022, 12:46PM 1 Comment

by Eric Frykberg

One mortgage adviser says one bank alone has had 37 policy changes in the past three months.

Some of these stem from the Credit Contracts and Consumer Finance Act, which has been widely accused of smothering borrowers and brokers in red tape.

But others come from changing rules such as tight restrictions on low deposit loans, which were imposed on banks by the Reserve Bank (RBNZ) as an inflation fighting tool.

The CCCFA is up for an enquiry and advisers are hoping it will be thorough, though there are early indications that it might be limited in scope.

But whatever eventuates, it will take some time, and in the interim, brokers are coping with a bewildering array of changes from the banks they deal with.

“One bank alone had 37 policy changes in the last quarter,” Mortgage Labfounder and chief executive, Rupert Gough said.

“Other banks were in the low 30s for the number of policy changes. Changes included splitting a few expense categories into many, and new rules for low deposit lending.”

Gough found banks were varying quickly between red and green traffic lights for low deposit loans, and at present, most have a red light.

But Gough was careful about allocating blame, insisting the flood of new rules was not the fault of the banks, who were simply responding to new laws and new requirements from Governments and regulators as best they can.

In a comment on this, the New Zealand Bankers Association (NZBA) attributed the rush of changes to the detailed nature of regulations stemming from the CCCFA law change.

“They require banks to gather and verify information about the loan applicant’s income, outgoings and expenses,” the NZBA said.

“The list is long, and includes things like accommodation, insurance, school fees, child support, debt repayments, utilities, food, clothing and personal care, medical and transport expenses, savings and investment contributions, entertainment, and tithing.”

The NZBA said all this complexity required banks to design and implement changes and train their staff to apply them properly so they are sure they comply with the new rules.

Some advisers have also complained of too many different systems from different banks, meaning the multiple changes come in many different forms, depending on which bank they are dealing with. But the NZBA says there cannot be a uniform approach across the banking sector for competition reasons.

“Banks are very much in the business of lending. They are also responsible lenders and take requirements to comply with the law very seriously.”

« Mortgage advisers closely watching CCCFA enquiryLow key CCCFA enquiry starts »

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Comments from our readers

On 19 January 2022 at 5:56 pm Andy the adviser said:
I disagree with the comment from NZBA saying "there cannot be a uniform approach across the banking sector for competition reasons"

ALL lending is subject to exactly the same law, and all loans MUST be assessed according to that law. So a standard set of questions and debt servicing parameters should be used. One bank should not be able to agree to a loan when another has declined it based on a legal requirement.

Certainly, some banks may be happier to take on proposals with slightly lower profit margins, BUT THE SOURCE DATA CAPTURE NEEDS TO BE THE SAME. One application for all, and one set of questionnaires and declarations for all.

Likewise, ALL banks must have to ask the same questions. Or is the NZBA telling us that all the banks have got together to design questionnaires that deliberately DO NOT have the same questions, just to ensure competition?

Woe betide any bank that asks the same question as another bank???

Make the gathering of data consistent and easy, and we can speed up the process for all customers, adviser, and banks accordingly.

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AIA 5.95 4.85 5.35 5.65
ANZ 5.94 ▲5.95 ▲6.40 ▲6.59
ANZ Blueprint to Build - - - -
ANZ Special - ▲5.35 ▲5.80 ▲5.99
ASB Bank 5.85 ▲5.35 ▲5.80 ▲5.99
Avanti Finance 5.95 - - -
Basecorp Finance 6.95 - - -
Bluestone 5.89 7.49 8.09 8.19
BNZ - Classic - ▲5.35 ▲5.69 ▲5.99
BNZ - Mortgage One 5.94 - - -
BNZ - Rapid Repay 5.94 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.94 ▲5.95 ▲6.29 ▲6.59
BNZ - TotalMoney 5.94 - - -
CFML Loans 6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Co-operative Bank - First Home Special - ▲4.75 - -
Co-operative Bank - Owner Occ 5.85 ▲4.85 ▲5.35 ▲5.65
Co-operative Bank - Standard 5.85 ▲5.35 ▲5.85 ▲6.15
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.95 5.45 -
Heartland Bank - Online 4.10 ▲4.40 ▲4.90 ▲5.10
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 6.10 5.00 5.75 -
HSBC Premier 5.89 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.25 4.39 5.09 5.45
Kainga Ora 5.43 4.57 5.58 5.85
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 5.50 5.85 6.19 6.39
Kiwibank - Offset 5.50 - - -
Kiwibank Special 5.00 4.85 5.19 5.39
Liberty 4.84 - - -
Lender Flt 1yr 2yr 3yr
Nelson Building Society 6.45 ▲5.55 ▲6.15 -
Pepper Money 4.49 - - -
Resimac 6.19 5.60 6.16 6.29
SBS Bank 5.79 5.05 5.69 5.89
SBS Bank Special - 4.55 5.19 5.39
Select Home Loans 4.09 4.29 4.86 5.09
TSB Bank 5.59 5.14 5.79 6.15
TSB Special 4.79 4.34 4.99 5.35
Unity 5.65 4.95 5.55 -
Wairarapa Building Society 5.74 4.95 5.75 -
Westpac 5.94 ▲5.95 ▲6.29 ▲6.59
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.94 - - -
Westpac Special - ▲5.35 ▲5.69 ▲5.99
Median 5.85 5.00 5.69 5.99

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