Luke Jackson, CEO of peer-to-peer lender Southern Cross, believes advisers should be open about the “incentives” or “perks” they receive from lenders. Jackson says there is a “reasonable argument” advisers are “clouded by the relationships they have”, as well as free rugby tickets or overseas trips laid on by favoured lenders.
Jackson claims many advisers are “influenced by personal sweeteners”. He adds: “The question that needs to be asked is always ‘is this in the best interests of the borrower? If incentives or perks are involved, then best judgement can be clouded.”
Jackson, who supports the MBIE proposals, believes advisers are often under pressure to refer certain volumes of business to lenders to maintain relationships. He adds: “Some banks expect a certain level of business from an adviser, or that adviser is struck off their books – how is that fair to the borrower or adviser?”
Jackson has expressed concerns about how disclosure of commission charges would be enforced. He argues adviser groups could be in the best position to enforce the rules, if they come into effect. “They already provide various forms of governance for advisers to operate within. Disclosure may be an extension of that.”
The comments contrast with opinions held by advisers including Hamish Patel of Mortgagesonline.co.nz. Patel believes public disclosure of commission would put the industry at a disadvantage, as lenders would not be forced to reveal their own bonus systems.
MBIE is assessing feedback on the commission proposals, which were introduced as part of the review into new financial advice laws. The industry had a May 25 deadline to respond.
