Insurance report to hurt mortgage advisers: Newpark

Andrew Scott

Last month, the central bank and financial regulator slammed life insurers for the mis-selling and over-charging customers, and took aim at remuneration relationships between insurers and advisers. The FMA and RBNZ said high upfront commissions for advisers were "not acceptable", and they "expect" insurers to “review their commission structures and volume bonuses for intermediaries” to ensure they’re delivering “good customer outcomes”. With regard to soft commission, the regulators “expect insurers to change their qualifying criteria" to "ensure they mitigate conflicts of interest and incentivise advisers to improve customer outcomes”.

Andrew Scott, general manager of Newpark Home Loans, formed last year after a breakaway from Mortgage Link, believes the FMA and RBNZ comments "will clearly have an impact on mortgage brokers". He believes the pressure on intermediaries will be felt across product lines, rather than being isolated to insurance. "The FMA and RBNZ approach will not just cover one product line. They won't make that differentiation, it will be one size fits all. I haven't seen any evidence the FMA is working in partnership with advisers, they're just wielding a big stick."

Scott, whose group encourages members to place insurance and mortgage products, was "disappointed" by the FMA and RBNZ report. "It has really taken the spotlight off what a good job advisers do, providing people with products in times of need and putting a roof over people's heads when they can't get funding. 

The insurance report followed a review of banking conduct published by the FMA and RBNZ in November. The report highlighted a series of "conduct risks" between lenders and intermediaries, and questioned whether intermediary pay incentives were "aligned with good customer outcomes".