Customer service in banks is under the spotlight. Photo/Getty Images
Mortgage advisers have criticized some banks for their “terrible” customer service and the time it takes to process home loans.
An adviser said that a bank had not taken out a mortgage for
Banks surveyed by NZME say the Credit Agreements and Consumer Finance Act, introduced on December 1, which requires more financial information, has caused delays. Most had employed additional staff to combat the problem.
The New Zealand Bankers Association also warned that tighter regulations meant there was far less room for lenders’ discretion and more applications could be turned down.
Consumer NZ revealed last year that banks reported 100,067 customer complaints to the Banking Ombudsman and nearly one in five Kiwis had a problem with their bank in the year to June.
Poor customer service was the most common complaint.
Harry van der Merwe, of Hello Mortgage and Insurance Advisers in Rotorua, said it took 31 days for a bank to get back to him for a mortgage top-up for their client.
Another did not receive a mortgage application for 27 days.
“It’s just ridiculous…and it’s a real frustration for us.”
Assessment rates and income calculations had also changed, and van der Merwe said some of his clients who now had pre-approval would not meet the new criteria.
“So we tell them [clients] to find a home as quickly as possible before your pre-approval ends.”
For example, van der Merwe said the amount of uncommitted net monthly income in some cases increased from $700 to $1,100.
A bank lender told him that he turned down 65-70% of applications.
“It’s huge. A lot of people who were previously approved don’t fit the mold anymore.”
First-time home buyers would struggle, van der Merwe said.
“I would hate to be a first-time home buyer in this market; it will be very difficult for them. »
Rapson Loans and Finance owner Chris Rapson said in his experience some banks had difficulty processing loans and did not have enough experienced staff.
“They’re very difficult for us to deal with…it’s probably worse now than it’s ever been. I don’t think they care that much, the days when the client was going into first is long gone.
“I think they placed more value on shareholder wealth than on fulfilling their underlying mission, which is to provide banking services.”
Some banks have reported big profits despite Covid and the shutdowns, he said.
Rapson said in his opinion, “So they’re not upset about things. They’re actually quite relaxed because they make more money with closed doors than open doors. ”
Rapson said he was told by some banks that once a loan application was made, it could take 15 working days “before you hear from us”.
Ownit Rotorua’s director and registered financial adviser, Hayley Hubbard, said there was no consistency from some banks – “it’s actually all over the place”.
“I think it really depends on the deal and who gets it.”
She acknowledged that it had been difficult for banks to implement all the changes in the CCCFA.
Consumer NZ chief executive Jon Duffy said ultimately banks were responsible to their customers.
“If the service is poor, customers vote with their feet and turn to other providers.”
He acknowledged that banks were closing branches across the country and there would be fewer face-to-face interactions.
“We believe that banks can provide satisfactory customer service to their customers remotely, but they must ensure that their services are accessible and suitable for all customers.”
A spokesperson for one bank said it encouraged customers to contact them directly if their experience fell short of their expectations.
Detailed home loan and staffing data was commercially sensitive “but we can say that the number of our home loan teams has increased.”
Another bank spokesperson said it had improved its response time to customers in recent weeks and now took an average of three to five days to process a loan application.
“We continue to focus on balancing customers’ interest in receiving a quick response with the need to work through their application in detail in order to accurately understand their financial situation,” a spokesperson said.
Another bank said that under changes made by the CCCFA, customers may need to provide more information.
“This includes proof of income, debt and expenses. While the changes are designed to prevent customers from taking on unaffordable debt, it also means that requests to borrow money may take longer to process. “said a spokesperson.
New Zealand Bankers’ Association chief executive Roger Beaumont said the banks were responsible lenders and took their obligations under the law very seriously.
“New [CCCFA] the rules are quite strict and there is much less flexibility or wiggle room for the lender than before.
“For example, you may need to provide proof of recent transactions so your bank can get a clear idea of your debts and expenses. This means it will take longer to get a loan and more applications will be turned down because the more you dive into your finances could show that you are less able to repay the loan.”
According to the Banking Ombudsman’s 2020/2021 annual report, he received 4813 complaints, an increase of 5% compared to the previous report.
Denied home loan applications and changes to branch services were among the top complaints.
To increase transparency in August 2020, the mediation program was launched and banks were required to register and forward each complaint.
Over 100,000 complaints filed with banks in fiscal year 2020-2021
“Previously, our own data was the only source of insight into complaints, but we knew that this data was just the tip of the iceberg,” the report said.