Broker concerns referred to FMA

Wednesday 12 April 2017

Concerns over the activities of brokers at Brilliant Finance Ltd have led Mortgage Express to cut their ties with them and go to the Financial Markets Authority (FMA).

Brilliant Finance is an Auckland-based mortgage brokering company which works with the Chinese community.

Formed in 2015, it was named Mortgage Adviser Emerging Business of the Year for 2016 by ANZ and was signed up to operate as part of the Mortgage Express network.

However, Mortgage Express CEO Sarah Johnstone became aware of some activities of concern at Brilliant Finance last year.

She said she reported her concerns to the FMA in December 2016 and the matter is now in the hands of the FMA.

There is no longer any mention of Brilliant Finance on the Mortgage Express website.

An FMA spokesperson confirmed that Brilliant Finance was brought to their attention by Mortgage Express at the end of December 2016.

“Mortgage Express raised concerns about potential conduct issues with Brilliant Finance and we have been engaging with Mortgage Express about compliance matters arising from this,” he said.

The FMA’s oversight of mortgage advisers (RFAs) is enabled through the Financial Advisers Act, he added.

“We do not licence mortgage advisory firms or RFAs. These firms are not reporting entities to the FMA for the purposes of the AML/CFT Act.”

Neither Mortgage Express or the FMA were able to comment further, including on what the details of the concerns might be.

However, according to sources, the concerns could be related to the standard of documentation provided by mortgage applicants reliant on overseas income to meet their mortgage commitments.

This became a problem for many overseas property buyers last year after banks restricted mortgage lending to those dependent on overseas incomes.

It was particularly problematic for Chinese buyers because, at the same time, Chinese authorities tightened up on the amount of money people could take out of China.

Professional Advisers Association CEO Rod Severn said there has been talk of such activities going on for some time, but no one could point a finger at it.

“If there is something wrong going on, it should be investigated - so good on Mortgage Express for going to the FMA with any concerns.

“If the FMA uncover anything, then the problem needs to be cleaned up.”

Severn added that the PAA has a number of Chinese members and said they are all doing the right thing by everyone.

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