EDITORIAL

Time for a payrise

Ireckon it’s time lenders, particularly banks, gave mortgage advisers a payrise. Yes, it is time to increase commissions.

There are many valid reasons for this. The cost of running an advice business has increased significantly over the years and much of that has been brought on by banks and regulators.

We regularly hear stories about other industries passing on cost increases. Think airlines. Air Chathams recently implemented a 20% surcharge to cover fuel price rises.

Air New Zealand’s pricing certainly seems to change with the changing costs it faces.

Distribution companies are another industry which has increased prices.

Mortgage advisers have faced significant cost increases, some from regulation and moving into a new licensing regime.

These new regulations have flow-on effects. A great example is professional indemnity insurance.

The insurers have come up with a new model to reflect the changes to Financial Advice Providers, consequently premium rates have ballooned.

Banks have massively increased burdens on advisers. What’s worse is when they can wind things back, they do not make changes.

One example many advisers have given to TMM is that when the new CCCFA changes came in, banks reacted and made things much harder to submit a successful application.

The Government has, belatedly, acknowledged the CCCFA regulations went too far, and is now winding them back. Have banks wound back their requirements? From everything we hear, no.

While the Financial Markets Authority has a strong dislike for commissions, it needs to suck it up on this one. Someone has to pay for advice and, in New Zealand, it is not the consumers.

It seems the regulator likes the idea that consumers have choice when it comes to buying a financial services product or service.

Frankly, the only way to get advice is to have a strong, vibrant and thriving third-party distribution market. Going to a bank and being offered just one brand is not consumer choice.

Consumers have clearly shown they want to use advisers, and that is why loan originations at all the banks is now well over 50%.

New Zealand is following Australia and other countries, and I predict that advisers will be writing two-thirds of bank home loans in a couple more years.

While that number is changing it’s been a long, long time since we saw any significant changes to commission rates.

This is all at a time when there is a cost of living crisis, and Statistics NZ reported annual wage inflation for the 12 months to March 31 came in just under 5%.

If there is one sector in New Zealand which can afford to adequately reward key stakeholders, then it is banks.

Philip Macalister Publisher

Head office and Advertising

1448A Hinemoa Street, Rotorua PO Box 2011, Rotorua P: 07 349 1920 F: 07 349 1926 E: philip@tmmonline.nz Publisher

Philip Macalister Staff writers Contributors

Steve Wright, Paul Watkins Design

Samantha Garnier

Subscriptions

Jing Tao P: 07 349 1920 E: subscriptions@tarawera.co.nz

TMM is published by Tarawera Publishing Ltd (TPL). TPL also publishes online money management magazine Good Returns www. goodreturns.co.nz and ASSET magazine. All contents of TMM are copyright Tarawera Publishing Ltd. Any reproduction without prior written permission is strictly prohibited. TMM welcomes opinions from all readers on its editorial. If you would like to comment on articles, columns, or regularly appearing pieces in TMM, or on other issues, please send your comments to: editor@tmmonline.nz

Moved offices?

Make sure you don't miss an issue by changing your address. Go to: tarawera.co.nz/coa

Made for Resimac

If one of these customers walks through your door, you can be confident that Resimac has a solution suitable for their unique needs.

The Suburban Aspirer

“We have good savings and a high household income, but the housing market is extremely competitive and the banks won’t lend us enough for the type of home we deserve."

The Self-employed

“I run a successful business and have navigated all the recent challenges. I’ve come out stronger and now there are lots of opportunities I want to capitalise on.”

The Credit Impaired

“I’m on the road to recovery after some life events that set me back. I know I’m a good candidate for finance and I want to go with a reputable lender, but the banks won’t consider me.”

The International

“I’m just as at home in Australia as I am in New Zealand. Whilst I live and work in Australia, I want to buy in New Zealand and take advantage of all the benefits that has to offer.”

The Residential Property Investor

“I know the real value of an asset and I know a good investment opportunity when I see it. I’m not deterred by all the restrictions being imposed on me.”