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Mortage advisers get the ear of Com Com

Mortgage adviser Jeff Royle’s sounding-off about the Commerce Commission dropping a “bombshell” on the industry has got its attention.

Tuesday, March 26th 2024, 5:43AM 4 Comments

by Sally Lindsay

After being accused of being out of touch with reality and having a poor understanding of the industry, the commission is arranging a meeting with Royle and industry body Financial Advice New Zealand (FANZ).

Australia’s newly established rival body Finance & Mortgage Advisers Association NZ (FAMNZ) is also seeking a meeting with the commission to air its views, although it does not have any members yet.  

The ComCom dropped the “bombshell” by saying mortgage brokers are at risk of being “unduly influenced” by the commissions that the banks pay them for placing mortgages.

This prompted Royle and other advisers to make scathing remarks that the commission and chairman John Small had been asleep for the past five years when major industry changes had been made.

These include that mortgage brokers are now mortgage or financial advisers, banks pay much the same commissions across the board so there is no “incentive”, advisers have to disclose to clients the banks and other lenders they deal with, and all income derived from the transactions has to be disclosed to clients.

Royle was contacted by the commission last Friday for a meeting but he decided the industry as a whole needed to respond, handing over the arrangements to new FANZ chief executive Nick Hakes. He hopes it will cover off the clear lack of understanding the commission has “about what actually goes on in the real world”.

“It’s opening statement was enough. We're not mortgage brokers, we haven't been for years. Although the use of ‘mortgage brokers’ is in the public domain, people at the commission or the Financial Markets Authority (FMA) should at least be aware we are mortgage or financial advisers.”

Royle believes the meeting will have far more impact if FANZ convenes and controls it.

“I feel strongly that somebody needs to fly the flag and actually educate these people because clearly they are clueless as to what goes in our disclosure requirements to clients, how we give people greater choice and the fact that consumers, in droves, are ditching going to banks directly.

“Banks are closing branches. It's quite difficult for people to actually talk to somebody at the bank these days, which is one of the drivers for going to an adviser.”

Adviser penetration into banks, for example the ANZ, is more than 60% and even higher in other countries.

“If that isn’t choice, I don’t know what is,” says Royle.

He believes the ComCom’s remarks will galvanise the entire mortgage advice industry, just as the 2019 Royal Commission on Australia’s banking industry did.

Commissioner Kenneth Hayne recommended five changes to the mortgage broking sector.

The most contentious was that the borrower, not the lender, paid the broker the fee for arranging a loan. Hayne also argued that consumers were in the dark over arrangements between brokers and banks and this led to dishonest conduct.

“The Hayne report was so damning it actually galvanised advisers, lenders, and aggregators to come together and have a meaningful conversation. And it worked,” Royle says. “If the government of the day had hit the go button on the report, there would be no mortgage advisers in Australia. It would have wiped out the industry. So, fortunately, common sense prevailed.”

The ComCom is keen for the meeting to go ahead sooner rather than later.

Tags: commerce commission

« ComCom accused of being out of touch with the reality of mortgage advicePotential FAMNZ members in waiting game »

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Comments from our readers

On 26 March 2024 at 2:22 pm Bruce Cortesi said:
Here we go again. I am surprised that the Commerce Commission has spoken out of turn against Mortgage Advisers in the Profession without even obtaining an update of the framework that the FMA and all the financial services sector has worked so hard to put in place. It has been a long road to get to where the profession is at this point in time. I would expect that the FMA would be feeling offended with these comments given the work that has been done. The profession across all advice strands is working so hard to achieve better outcomes for New Zealanders across all walks of life. That the Commerce Commission is so out of touch with the profession and the work the FMA and everyone else has done is absolutely astounding. It is however rewarding to see our National Professional Body being asked to represent feedback on this matter.
On 26 March 2024 at 2:25 pm ddzt said:
Good on you Jeff - you're a fantastic advocate for advisers in NZ & in fairness good on the Comcom for reaching out to you to have that conversation.


On 27 March 2024 at 9:41 am Andy the adviser said:
Well said, Bruce, and thank you Jeff for standing up.

Unfortunately this is happening a little too late for many advisers. I believe there have been many good advisers leave the industry over the last few years, as we have become not much more than data collectors and pre-qualifiers for banks. Those words actually came from a BDM and were reiterated from a senior mending manager at another major bank.
On 27 March 2024 at 9:45 am Veteran Charles said:
Yes Jeff, you make us proud, thank you for stepping into this thing for us all.

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AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 ▼6.75 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 ▼6.75 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
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Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 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 7.84 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 - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 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 6.69 6.45 6.19
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 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
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 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.35 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.75 6.65
Median 8.64 7.29 7.32 6.65

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