Commerce Commission proposal is “bureaucracy gone mad” – FAMNZ

The Finance and Mortgage Advisers Association of New Zealand (FAMNZ) has revealed that the Commerce Commission wants mortgage advisers to submit three “actual offers” to every applicant, or it will “recommend government intervention”.

The stunning request was included in a letter outlining wide ranging recommendations “that mortgage advisers & banks should make….to promote price competition & choice for home loans.”

FAMNZ country manager Leigh Hodgetts said any such move would hurt consumers by driving up costs, blowing out application times, and affecting their credit ratings.

“This is a classic case of a solution looking for a problem. Nothing is broken.”

The ComCom letter has requested advisers to “(provide) clients with a least three actual offers to consider” and “to submit multiple applications on behalf of their clients”.

FAMNZ managing director Peter White AM called the recommendations “crazy”.

“Even in Australia, which ComCom has referred to throughout their study, advisers (called brokers there) don’t submit multiple applications.

“Three applications means lenders will be spending time and resources processing applications they know they will likely never get, and other applications will be pushed aside.”

He said despite FAMNZ attempting to educate the commission on the way advisers worked for the past year, “they clearly still have no idea and now want to make things worse.

“Furthermore, the requirement for three formal applications potentially puts at risk clients’ credit records, which is simply unacceptable.”

Mr White has called on commerce and consumer affairs minister Andrew Bayly to immediately intervene and said FAMNZ is seeking an urgent meeting with him.

Advisers could provide three choices of lender where possible, but only one application should be submitted at once according to the customer’s needs, Ms Hodgetts said.

“And in some circumstances, for example with self-employed people, there may only be one option.”

“Advisers already promote competition, consumers are increasingly choosing to use advisers, and complaints are almost non-existent,” she said.

“FAMNZ wants to work with ComCom to continually improve our industry and work in the best interests of Kiwi consumers, but unnecessary regulations and bureaucracy isn’t in anyone’s interest.