Bring in the Experts: Let’s talk Lending: Panel discussion with the experts - Shared screen with speaker view
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Kathleen Wright-St Clair
Financial Advice New Zealand
Good morning everyone. Welcome to our 82nd Bring in the Expert Webinar. You have all been muted and your videos turned off but feel free to ask questions down the side bar in the chatroom and in questions and answers. Katrina Shanks will ask the questions on your behalf. Enjoy the webinar!
It is a pain in the backside - it has taken all common sense out of lending
Yes, becoming aware
Mostly but want more definition
Yes been swatting up on it all…
Yes, all coming to play Oct 1st
Some of it!
yes would like to know the best practice
Yes. good morning everyone.
Yes, Creates a lot of work for advisors. What extra do we get
Aware of the obligations but not clear on what means for advisers
Would be nice to see the banks take the same approach
Yes from a Financial Mentor prespective
Kathleen Wright-St Clair
Yes I think so, looking forward to this info today
Keen to hear more from lenders though
Some of it
these are trying to fix something that is not broken, there has never been high risk lending and these on top of RBNZ will keep regualr Kiwis out of buying their furst home.
There is harm being done from irresponsible lending, we see it at the coal face
But this is mostly from non bank lenders
Is Baden talking providser risk or structure risk?
What is behind this and does non banks and do other places like loan sharks have to do this as well? I want to know why this is needed.
It appears that it has turned advisers in to processors, fill in the tick boxes, and the bank overrides all common sense and counteracts our advice. Where does the buck stop?
that umi calculator is just replacing the actual affordability budgets advisers have actually been doing for years.
In the past a lot of assumptions have been made about peoples living costs, you won't be able to do that any more
But if their costs are low will the banks use their benchmark as that is not fair
Personally, I think advisers should just need to sign a declaration with each transaction confirming to the Bank that we comply with CCCFA reg's. I do not want to share my I.P. with a Bank around my detailed discussions as that's a competitive advantage. Can each bank please share with us all of your trade secrets?
Just more unnecessary paperwork to cover the backsides of the banks. The same law applies to ALL banks. Why can't they STANDARDISE the forms and questionaires?
Don't have to benchmark by default, that is banks choice
Given the amount of extra work Advisers are having to do on behalf of Banks, will they review clawback charges? Giving away less cash back will help fund this.
I am guessing your branch staff will need to be doing the same correct?
If the rules are the same for everyone then why wouldn't they be interpreted the same?
Until we get all the information, we cannot recommend a bank. But every bank needs different information and forms completed, so we either complete ALL forms for all banks, OR decide on a bank at the initial interview, taking away our independent advice process and responsibilities.
Who is responsible for loan document disclosure?
Can each lender put their "interpretation" on the CCCFA requirements on their policy guides or a separate document that can be retrieved from platforms such as mycrm
How is the bank going to capture regular costs that now have to be captured regardless of whether they essential?
How many of the banks are using automatic bank statement analysis
So what will you all classify as "discretionary income" as I need another loan for some land and I spend a lot on many things due to working long hours etc so I would like to know what is consider discretionary income as otherwise no one will be getting a loan. Also how do you think this will effect advisers and banks in conjunction with banks reducing loans to 10% of their books on over 80% lending.
Who uses ILLION?
I use Illion - it's great and well worth it.
Yes Illion is good
we use it as well
I have been testing Illion on my clients, I can still see gaps in it though
Realistically, could we see ANZ, ASB, BNZ & Westpac agreeing on what information is required so that advisers could gather information relevant to all mentioned banks?For example, some banks consider home insurance essential, and not contents, while others consider these as one in the same.
Buy now and pay now, need to see if it is regular or not
some after pay is asset purchases not reg expense
Yeah Illion is good but has some gaps. Yes be good if they could all get on same page.
What are the lenders view if a couple do want to start a family in a couple of years time. How does that affect their affordability if say they are obtaining finance today?
I agree Apa, how long is a piece of string?
If it is in next 12 months, must be taken into account.
Apa - I actually ASK my clients about family plans. But that is against the law.
will proof of contraception suffice?
Will the updated calculators result in reduced approvals?
Already seeing that
That banks are not the real problem - the real problem in the finance industry are the finance companies and after pay providers
Even if you complete the bank calculators, they always seem to come up with a different number anyway
will the lenders decline a loan due to wanting to start a family in say 12-18 months time - this might not even happen! Discrimination ….
First home buyers are generally younger members who will generally have children in the future, if they have a savings plan for maternity leave will this need to be considered in the expenses??
Great idea. Adam..
What if us advisers can come up with a standard form that meets all requirements and give this to the banks?
how are they looking at clients that are in defacto relationships that run their finances separately - not requiring the partners finance info for work that one partner is wanting to do
Not just the aggregators
We are having to provide more and more information for lenders, a lot of it should be completed themselves.
There is ONE law, WHY are there 5 different interpretations of the CCCFA?
the banks calculators is just a guideline for us - its ridicules. going blind with so much
I'm happy to develop a standard form.
I think Adams comments are fair but banks have never got on the same page in the past and it has been tried several times.
because no one can understand the one law Andy
Katrina, a Standard from would be similar to the Sales & Purchase Agreements v10 on house purchases.
True affordability should be consistent through each application
Adding to Elise question what about siblings and friends that have or ant to buy a home together, what are the banks thoughts on their future needs that will be outside the other parties?
Previously the NZMBA had a standard loan application form. Why can't this be done again?
it must be a nightmare for the assessors looking at all our different application forms. A standard industry wide one like the old NZMBA but digital one would be awesome but it'll never happen.
Half our appt is disclosures
Actually we don't want all the banks on the same page. We need and want those differences at times because that provides us with alternatives when we need them.
I agree Brenda its a shocka
OK...… so fixed term rollovers. Half of the banks don't even pay a commission for us providers having a quality conversation with our clients and advising on their best options. With the amount of time involved, $150 doesn't even cover your time.
I agree Jonathan. There needs to be points of difference.
100% agree $150 is nothing for our time and effort for retaining one of their clients
Also big difference in the expectation from Advisers as opposed to their own employees or direct channels
The issue with just using rates on their app is that
With the new requirements, it is only making sense to use a bank that gives trail commission. Otherwise any advice simply becomes transactional and further advice requires charging a fee. This is disadvantageous to the clients.
Which disclosure documents are required for fixed rate rollovers?
What about time and work going into interest only extension applications.
what if they lock in rate themselves, but this may not have been the most appropriate for their current position/known plans??
The banks should remove the ability for customers to re-fix via internet banking/phone app without having sought advice first? Given how serious they are with the responsibility advisors must take with the re-fix process it seems unconscionable that they would continue with this no advice practise.
And most lenders don't even pay that. Quality brokers wear this cost because the other alternative is asking our clients to contact the bank themselves, and they get put through to an 0800 number and get people who have never owned a home before :-(
What's required when a new client to the adviser comes to ask for a fixed rate rollover?
The issue with just using the rates on the app is that we aren't privy to that information and we are relying on having the client tell us, so can undermine the benefit of using an adviser. The other issue is when the client can go direct to the bank and get paid cashback again to re-fix, when we as advisers can't offer the same - not a level playing field.
Well said Steve
I agree Darren, this is the banks passing the buck and having all care and no responsibility.
The $150 fee for helping a refix hasn't changed in over 15 years!
Do banks need to review the auto refix with seeking financial advice first?
Several of my clients are bank staff themselves. They give advice to clients. But from what I have seen, they know absolutely nothing about reality.
with my own mortgage the bank just puts the rates up on line and I can pick one and there is no conversation with me by the Bank !!!!
Absolutely Maria, it is antiquated
There seems to be so much double handling and recording under new regime, is an email trail stored to client file sufficient record without a duplicating diary note, which often just records what has been agreed in email.
yes - definitely not a level playing field at all.. I went direct recently for my own mortgage and was amazed at what little advice and minimal documentation was required - there is a massive gap from what we do and what happens bank direct - so very wrong
Do we need to mention anything our current disclosures about CCCFA, despite of getting additional declaration from different banks.
Our costs are now exceeding $1000 a month just to stay in the industry. This has to stop.
I agree Andy, it is getting ridiculous.
The fixed rate process is a shambles across the board. High in admin and advice with very little in return for advice that banks don't want to provide . So it lands on the advisers lap which essentially is free advice (non-trail) but a lot of liability.
How about offering customers reasonable fixed rates for the entire term like the US?
I agree with Darren. It is interesting that an adviser needs to go through a full disclosure process and declaration + diary notes for every re-fix conversation. This makes more work for the client and adviser. The online re-fix process has become so easy/thoughtless but in my experience does not result in best customer outcomes.
Agree more costs for us more time on disclosures I am feeling really frustrated as no one can go First home loans anymore as caps too low and now banks reducing over 80% to 10% of their book, we will feel it big time.
I am currently researching new CCCFA and how lenders are responding to it and looking to develop a standard method for assessing affordability. If anyone is interested in this email me on firstname.lastname@example.org
WIth banks closing branches faster than growth, they are relying on advisers to cover the shortfall in client service obligations. Why can't the banks acknowledge this and work WITH GOOD advisers, and make life easier?
Well said Andy
Fixed price contracts are never fixed price contracts due to the PC Sums. If banks want true fixed price contracts they need to work with Certified Builders or Master Builders Association. However risk with fixed price contract is that if you remove PC sums clients could end up paying more for a build as not all PC Sums are fully utilised.
as advocates of third party id like the panel to give us some comfort that these compliance/regulatory requirements are being applied equally to direct channels within their bank. additionally, can I ask why third party turnaround times can be up to 10 times longer than direct channels?
Unfortunately, we will never get that Andy
Shula - I have tried this, but the banks are not interested at all. They want their own paper. I suspect it is because they want to tie advisers to them to streamline the application process. I know MANY advisers who only use one bank.
Whats happening with factory built houses, surely this is the future , enquiries for these houses growing, but cant do anything.
I mitigate ALL of my applications BUT I find the banks very rarely even look at a full diary note.
In years gone by banks would not include the women's income in debt servicing are we going back to this again.
Same here Steve
I agree too Andy & Steve
When you ask them to read the diary note to answer all of their questions, all it dies is get their back up and I feel the bank then loses interest in tour application.
It is all about box-ticking. It appears that all common sense has been taken away from the advice and application process. The lending managers simply fill in the numbers and wait for the algorithm to spit out an answer.
Why don't banks use the ACTUAL budget that we supply, and look at age versus stage, and what assets have been accumulated compared to income? The UMI calculators are a farce - they have no bearing on reality.
DTI - will this also be countered with actual rent being paid by clients vs their proposed mortgage lending payments?
Exactly, especially when they are already mitigating EVERY application, with servicing and sensibility rates being utilised between 6-7%
Is there any plans to reduce your test rates to make DSR more affordable in the current market
I have had clients approach me to try and increase their directly sourced loan offer, only to find that it’s significantly short of servicing what they can afford already.Are the benchmark expenses used for adviser calculators not required for non-adviser applications?
With prices being high in Auckland more young people are looking to buy with siblings etc to be able to pool deposits and income instead of just flatting together, and the solicitors draw up agreements in behind to protect them all, but I find some Banks do not look at the total income coming in to service the application, they expect both parties to be able to cover the whole lot
Is the problem with the pre-fab house due to the fact that the lender can't rely on the improved value until the house is on the site?
Why are banks only accepting 60% of rental income now? We already take into account additional future costs associated with rental properties, and don't take into account any tax advantages. And none of the rental properties my clients have ever had less than 90% occupancy. It appears the banks are double-dipping now.
Why do banks charge an recovering cost in a falling fixed rate market, but when rates are increasing (currently), why do banks retain the benefit when a fixed loan is broken by client and not disclosed to clients. It seems banks recover with one hand and retain with the other with client taking on risk. Is this working in clients best interest as its an recovering cost not a fee - does this meet CCCFA?
I don't believe that Adam - I have had applications turned down, but the clients got an approval when they approached the bank directly.
I have too Andy
Particularly via mobiles!
One bank has even poached my clients following a decline (on 2 occasions)
I have had that to , but to the Banks credit they have apologised and paid me, but the problem was the damage caused because the client thinks you are an idiot
Good explanation adam
Adam I disagree, it happens quite often
Branches actually assess more harshly I have found
As an ex MMM for two mainstream banks, I know that there is far more flexibility provided
Agree Susan - have had it several times and been paid by the banks.. but it’s credibility that is the main issue for us
I agree with braches assessing more aggresively
How are you meeting the advice process in bank when clients are directly re-fixing online without advice?
Baden M - internal UMI calc is different and openly stated as that from your team. You adopt an additional scoring element that means the UMI form we advisers are given is a best guess...
Is anyone left at the branches?
Are any of the banks considering any changes to adviser commission structures IE: down?
What are the three key things that a good broker does v's not so good broker.....
I have been told by ANZ that their internal servicing calculator differs from what advisers have, is that correct??
good session - thanks heaps
I have also had on several occasions been told that ANZ's interna servicing calculator is different to what we are provided and expected to use
It is great to have you four on line as we get to let you know what is happening out there directly Thank you
What are the chances of one standard debt servicing calculator used by all banks, that meets the CCCFA requirements?
the calculator used by the banks differ from the one we have, does not make a fair playing field
informative - thank you all for coming on the web
Thank you Ben RESIMAC
the internal servicing calc differ from the ones we use
Thank you very interesting. Good luck all!
Can we establish a forum where all bank BDMS and a group of mortgage advisers can work together to streamline the process for everyone - clients, advisers, and banks?
Great session all…. Thanks.. Hi to Remy too
Thanks for your time and the information :)
Thank you everyone for the commentary
thanks - this has been the most useful webinar in a long time.
In my view point -all of you on the panel are doing a wonderful job in enabling people to move in to their dream home with changing regulatory environment.
Great webinar. Paul SHARE
Good session , Thanks
Thank you. Been really great to hear from you all.
Good discussion around unpleasant and unwarranted changes in CCCFA. I expect to see some non bank lenders drop personal lending completely.
Thank you to each of the panellists - informative and helpful.
Thanks, an hour well spent :-)
Thanks heaps!Super handy ☺️
Great to have all 3 banks on one platform, and get their perspective, thanks
Thank you all
Extremely valuable, thanks!
Thank you all!
Amazing from everyone. Thank you so so much
Thanks panelists great discussion
Thanks to all
Great session. Thanks to all panelists and you, Katrina
Thank you. Bring on the same forms across all lenders :-)
Thank you all take care
`Thank-you Adam, Liz, Baden and Amanda that was a very useful discussion.
Thanks heaps and is a most useful one with a lot of valid points.
Very useful - thanks to all for your time
Thank you very informative