Advisor mistake costs couple dearly
A couple missed out on a 2.55% interest rate and had to fix their mortgage at 4.1% due to an error by their mortgage advisor.
The couple’s loan came up for refixing in mid-2021, when rates were near historic lows.
They selected a 2.55% rate and informed their advisor, who failed to relay the instructions to the lender, resulting in the loan being on a floating rate by November, when rates had risen significantly, RNZ reported.
Compensation agreement
Financial Services Complaints (FSCL) handled the case. The advisor acknowledged his mistake and agreed to compensate the couple with $12,000, representing the interest rate difference.
Payments were set at $500 per month for 24 months. However, the advisor made only 10 payments, totaling $5,500, and then stopped. FSCL intervened, deeming it reasonable for the advisor to pay the remaining $6,500.
Industry perspective
Nick Hakes (pictured above), CEO of Financial Advice NZ, stressed the importance of clients doing research before engaging a mortgage advisor. He suggested using resources like the association’s “find an advisor” function and preparing questions.
“It’s a two-way relationship when you’re sitting down, having to talk about something that can be quite scary initially,” Hakes told RNZ.
The FANZ chief recommended asking about the advisor’s process and experience to ensure a good relationship and positive financial outcomes.
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