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Should advisers have to disclose who they don't work with?

The Commerce Commission has asked whether advisers should have to tell clients which lenders they were not accredited with, as is mandated in Australia.

Friday, May 17th 2024, 8:40AM 7 Comments

The Australian Securities and Investments Commission (ASIC) requires mortgage advisers to disclose which lenders they did not deal with.

Speaking at the the Commerce Commission's three day conference on competition in banking mortgage adviser Sarah Curtis spoke in favour of "negative disclosure" - that is disclosing lenders an adviser does not deal with.

Leigh Hodgetts, country manager for the newly formed Finance and Mortgage Advisers Association of New Zealand, said she had worked in Australia before coming to New Zealand 13 years ago and that “I would hate us to go down that road.”

ASIC's rules are “very prescribed and over-prescriptive.””

“You're trying to fix something that I don't see as broken at all,” Hodgetts said.

Other speakers noted that there are about 40 lenders in New Zealand but that most lending was done by the five largest banks.

Commerce Commission chairman John Small said that the commission had been surprised that interest rates and pricing doesn't appear to be the focal point of competition for mortgage advisers “which strikes us as unusual for a service that's all about comparing” rates and pricing.

Mortgage adviser Patricia Marsden and several other advisers noted that the conversation with a client may begin with interest rates but that pricing between the banks is usually much the same and that the banks move quickly to match sharp new offers from a competitor.

“Once you've shown that to a client, it takes rates out of the equation.”

Adviser Hamish Patel, who is also chairman of the Financial Advice NZ mortgage member advisory committee, said that the Credit Contracts and Consumer Finance Act can complicate matters and that often advisers face time constraints, such as a client needing to refix within two weeks.

'Mortgages advisers usually operate in small businesses. “We're in competition with each other. The free market drives us,” Patel said, noting that a client can walk out of a deal at any point before settlement, which means the adviser gets paid nothing, so it isn't in an adviser's interests to do anything but try to get the best interest rate.

Adviser Sarah Curtis said that advisers know what the rates in the market are and can look for banks to match any particular rate.

A number of advisers noted that other factors can be more important or more suitable to a particular client and that sometimes is non-interest policies of lenders that determine where a particular loan is best placed.

Tags: ASIC

« [UPDATED] ComCom told clawback periods need to be reducedNo celebrations just yet »

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Comments from our readers

On 17 May 2024 at 10:24 am Aggressively_passive said:
John Small never fails to fail.
He really doesn't know what Advisers do.
On 17 May 2024 at 11:34 am Amused said:
Reading these new comments above from Commerce Commission chairman John Small only someone currently employed in the Wellington bureaucracy would think it appropriate mortgage advisers should be disclosing every single lender in the country that they were not accredited with and that this would then somehow benefit consumers. I honestly just despair.

I know someone who recently had the pleasure of attending a Commerce Commission webinar for a different industry. He couldn't believe his eyes - 40 staffers on Zoom.

First 15 minutes was pleasantries, and introductions followed by a Karakia. Actual content started at the 16 minute mark.

Someone asked the Commission what they were doing with all the data they were collecting at the conclusion. They got a blank stare. One of his colleagues looked at him and immediately responded with "yep, they are in for a major downsizing".

As I said yesterday if the Commerce Commission were the right organisation to conduct this inquiry into competition in the banking industry, they would've done it years ago when it mattered.

On 17 May 2024 at 11:47 am w k said:
i only represent a, b & c company. which part do you not understand? comprends tu l'anglais?

are regulators nuts or are they trying to drive advisers nuts?

comcom / regulators, please don't be "cut and paste" experts, ie. blind followers. experts create their own ideas for others to follow.

imagine a supermarket having to display a list of food / brands they don't sell.
On 17 May 2024 at 11:47 am Amused said:
@ Aggressively_passive

100 percent agree. Not even close to understanding what role mortgage advisers play in helping Kiwi consumers.

Appointed to his current job at the Commission by none other than Labour's then Dr David Clark. We all remember him i.e. CCCFA changes....

On 17 May 2024 at 12:28 pm valkyrie6 said:
WK love it, regulation gone mad, most current mortgage advisers list around 15 to 20 lenders they have contracts with, one would presume that any lender not listed on the adviser’s disclosure they don’t have a contract with? make sense?
But oh no, regulators and ComCom who’s latest report on personal banking competition, their opening statement is ,
“The overriding aim of this study is the same as the purpose of the Commerce Act – to
promote competition in markets for the long-term benefit of consumers within New
But their overall recommendation at the end is that the Government (tax payer) provide more capital funding to Kiwi bank ( currently government owned) so that Kiwi bank can provide race based loans to Māori land owners even if these loans have a higher risk , essentially a loan with a much risker profile , with a legal mortgage over the house but not the land ,only accessible by a certain race , funded by a taxpayer owned bank.
Current Government needs to sell Kiwi bank as fast as it can.
Also Just listened to Sam Stubbs telling heather Du Pessis Allan that mortgage advisers need more regulation and that need to confirm the lender they don’t deal with just like in Australia , thanks Sam I hope you confirm to your clients where your income comes from and where their personal data goes.
On 18 May 2024 at 11:04 am w k said:
thanks valkyrie6.

i mentioned in a post about qualifying your prospects. if a prospect ask question like who do you not represent after telling him/her who you represent, then he/she is most likely a suspect, not a prospect. this is the type of questions that should raise a red flag - a possible short-term gain, long-term pain type of client. i would say go elsewhere.
On 20 May 2024 at 10:36 am JeffQV said:
ComCom have come a fair way along the road from their original stance in their disgraceful initial report a month or so ago. they have also apologised for not engaging with Advisers earlier.

They still have their head in the clouds around interest rates despite many of us saying that whilst they are important they often play second fiddle to criteria and policy.

This is not Australia where consumers have a greater choice and whilst we remain a small nation this will continue.

Sam Stubbs comments were unhelpful and self serving.

Those of us who have engaged with ComCom over several weeks have made great headway and the conversation continues.

As to negative disclosure I personally am against simply because of the nature of my practice. Clients can read who I do business with and make their own minds up. Clawback disclosure as an obligation to lenders should be sored sooner rather than later.

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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

Last updated: 19 June 2024 3:59pm

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