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Quota’s, incentives, and Moneyworks withdrawal from offering mortgage advice


In 1997 when I set up Moneyworks, there were very few options to operate in an ‘independent’ manner.  After a lot of research, I selected AXA (for insurance) and Armstrong Jones (for investment) as the two key providers for our clients.  The respective decisions were made on their competitiveness for our target clients, and their low cost, high returning innovative investment solutions.

Both of these agreements had ‘quota’s associated with them.  We had no difficulty fulfilling these quota’s as their solutions were a great fit for our clients.  Over time, their offerings changed, their ownership changed, and we exited our quota agreement with Armstrong Jones (then ING) in 2004 and with AXA around 2005/2006 when their agreements changed.

Moneyworks, no quotas or ties

Since that time, we have had the pleasure of being able to provide the best financial solutions for our clients based on those available at the time in the market, without any rules or requirements to support any particular organisation or provider.

We are continuously assessing the financial solutions and reviewing alternatives as they get better, or more cost effective.  I had a long discussion about an alternative investment platform provider last week, and will continue to assess the main two options to OneAnswer to ensure that OneAnswer is the most relevant solution for our clients.

Enter mortgage advice

In 2014, we decided to add mortgage brokering to the services we provide to our clients.  We have always analysed our clients mortgage arrangements and steered them in the right direction with questions for their banks.  We have never believed in advising clients to move banks if they were happy with their bank, as the mortgage offerings of the main lenders are very similar.  If the relationship is good, our clients should stick with their lender.

With Paul Swarbrick joining our team and becoming an Authorised Financial Adviser, we felt it was a good time for Carey and Peter to increase their knowledge and education around mortgages and provide more hands on service for our clients.

Because of the type of clients we work with, 99% of the mortgage advice was associated with the four main banks.  However, much of our advice was about how to structure mortgage fixed terms and repayments to achieve our clients goals.

For the last three years, we have had a continuous battle with ANZ about our ‘quota’s.  Each six months they would contact us and tell us they were going to terminate our mortgage agreement because we hadn’t put new business with them.  We got senior management at ANZ involved, we wrote and explained that our obligation is to put the interests of our clients first as AFA’s (under Code Standard one and that this is a paramount ethical obligation) and that we couldn’t move (churn) clients mortgages to ANZ just to fulfil their quota.  We required no support from ANZ, just their regular emails and information when we were helping a client out.

Over the years, we have managed to argue enough to retain an ANZ Mortgage agreement, but at the end of 2017 it was made clear to us that it would be better for us to resign and not be ‘fired’.

At the start of May we received an email from Westpac informing us (with no notice, no communication – we hadn’t heard from anyone from Westpac for three years), that because we hadn’t fulfilled a quota of $1 million of mortgages from them in the last 12 months, our mortgage broking agreement with them was terminated immediately, despite us not moving any clients away from Westpac. This means that we can no longer assist our clients directly with Westpac either.

ASB have been wonderful to deal with, but ethically, we can’t retain a mortgage broking licence and only have one bank to deal with – we have to put our clients interests first, so if you are with ANZ or Westpac, and happy there, we will recommend that you remain there.

As a consequence, we have decided to terminate our mortgage broking agreements with all providers, - we can still deal with ASB for the next three months – our notice period.

We have put in place a formal agreement with Edge Mortgages, Glen and Jon, who are specialist mortgage advisers.  We have had a relationship with them for some time, they have referred some investment clients to us.  We will work closely with them to look after our clients needs.  If we refer our clients to them for a new mortgage, we will receive 30% of the commission that they receive for a new mortgage.

However, the reason that we are sharing this information with you, is that we do question how the banks in New Zealand can assert that ‘our behaviour is different’ to what we have seen in the Financial Services Royal Commission in Australia, when they put their targets and quota’s well ahead of the law – that for an Authorised Financial Adviser (AFA) we have a legal obligation to ‘put our clients interests first’.

Our clients interests are paramount. We work extremely hard to make sure that our advice is the best thing for them, and as a privately owned profitable small business, we have the ability to be ruled by our ethics and our conscious.  That is how have worked since the start, and the way that we will continue to work.

We have written articles on the Australian Royal Commission and what that means for New Zealand in these blog articles.

The Financial Services Royal Commission in Australia   

What does the Australian Financial Services Royal Commission mean for New Zealand?

If you have any thoughts or opinions that you would like to share, visit us at our Twitter, Facebook or Linked In pages, and comment.

By Carey Church


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