Mortgage adviser obligations: compliant files and loan applications

Good conduct is vital to fair, efficient and transparent markets, and ensures businesses, investors and consumers can participate confidently.

Mortgage advisers have key obligations under legislation and codes such as:

  • Financial Advisers Act 2008
  • Financial Service Providers Act 2008
  • Fair Trading Act 1986
  • Consumer Guarantees Act 1993
  • Responsible Lending Code
  • Lending Code of Conduct for Mortgage Advisers

These requirements are also reflected in the standard expected of candidates for the Residential Property Lending Strand of the New Zealand Certificate in Financial Services Level 5.

In addition advisers must also meet any conditions or requirements imposed by lenders, and comply with the terms and conditions of their contractual arrangement with their head group.

The primary focus of mortgage advisers is the provision of mortgage advice (note the word ‘advice’ is not the same as ‘sales’ or ‘transactions’). Advisers have a duty of care to consider their clients’ circumstances in a holistic manner, focusing on what is best for the client, rather than the mortgage transaction. This is not just important for the client, it is also critical for the adviser to protect themselves and ensure they can justify their advice at a later date. (It can also help identify other business/cross-selling opportunities.)

If an application can meet all the compliant file and application requirements, then it is highly likely the mortgage adviser will be meeting their legislative, regulatory, code and contractual obligations, and will demonstrate good conduct as a mortgage adviser.

Adhering to these requirements also means that in the event of a dispute or complaint, it is more likely that the adviser will be able to prove that best practices were followed.

If you are uncertain whether your client files and loan applications meet all your legislative, regulatory and code obligations, see our Mortgage application vetting service, or contact us for assistance.