Finax Mortgages and its high-profile founder Lucia Xiao have had their accreditation to broker home loans withdrawn, after concerns were raised
Lucia Xiao tells how she went from a state home in Panmure, to build a $17 million property portfolio. According to the preface to her self-published financial advice book: "Xiao is testimony to the fact that anyone can become a homeowner, build a property portfolio, and gain complete financial freedom."
Now, the foundations of that carefully constructed business edifice have been undermined: last week, Finax Mortgages' accreditation as a loans broker was withdrawn by ANZ and Westpac.
A furious Xiao tells Newsroom she has been "bullied" by the establishment, the Kiwi Adviser Network that she belonged to. "We do everything we can to ensure all documentation is authentic and we would never tell a customer their loan was approved until it was confirmed by the lender."
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Kiwi Adviser Network is what is known as an 'aggregator'. It helps provide efficiencies of scale for independent mortgage brokers: helping them contract to lenders, providing them customer management software, offering professional development resources, and reviewing and auditing their businesses.
Chief executive Chuck Slogrove wouldn't say much this weekend: "Ending a contractual agreement is not a decision that is taken lightly," he said.
Newsroom asked whether Kiwi Adviser Network should have provided greater scrutiny, through its review, compliance assurance plan and external audit processes – but Slogrove wouldn't directly address that question.
"Having followed all processes and performed due diligence, Kiwi Adviser Network is confident in its position and decision to end its contractual agreement with Finax. Due to confidentiality, Kiwi Adviser Network is not able to provide any further details at this stage."
It's understood that at a meeting last week, Kiwi Adviser Network expressed concerns about ANZ loan applications lodged by Finax. It terminated Finax's membership.
On that basis, ANZ and Westpac withdrew accreditation for Finax, Xiao and her team of mortgage advisers. "I can confirm Finax’s accreditation with ANZ was withdrawn," said ANZ external communications manager Briar McCormack in an email.
Xiao remains officially registered as a financial services provider, under the name Yuxi Xiao Ambler. So too are her company Finax Ltd and six advisers who work for her.
“Our purpose is to encourage and help ordinary Kiwis achieve their homeownership dreams. Our clients are predominantly long-term renters, solo parents and young people on single incomes – we are immensely proud of the work we do for them.” – Lucia Xiao, Finax Mortgages
When Newsroom visited the company's modern offices on the first floor of a building in Auckland's Greenlane, there were only four staff on-site. They expressed surprise at being told the company's bank accreditations had been withdrawn, and said they would be asking Xiao to explain what was going on.
"At Finax, our purpose is to encourage and help ordinary Kiwis achieve their homeownership dreams," Xiao tells Newsroom. "Our clients are predominantly long-term renters, solo parents and young people on single incomes – we are immensely proud of the work we do for them.
"We regularly receive fantastic feedback, including more than 200 five-star reviews on Google."
In a recent full-page branded article in the glossy Property Investor magazine, Xiao promises she can help new property investors achieve more than 5 percent yield on rental properties.
She told potential investors that Auckland Council shouldn't "have all the fun", profiting from a growing population. "You, too, can join in Auckland's future of housing developments, and you don't have to spend too much money," she wrote.
Last week, in a post on LinkedIn, she said high interest rates were a "massive blessing in disguise" for first homebuyers: "Now it is the best time to buy in the next 10 years especially if you are a first home buyer!!"
This weekend, Xiao expressed confidence her business would regain accreditation with the banks, once it was able to sign up with a new adviser group.
"There are more than a dozen head groups for advisers in New Zealand," she said. "Last week we agreed to end our contract with Kiwi Adviser Network and we are currently in the process of partnering with a new head group. We expect this to be confirmed soon."
She told Newsroom her company's problem was with Kiwi Adviser Network, not with the banks. "We have no problem with the banker, it's actually the head group. To be honest, I feel I've been bullied.
"We have a great relationship with all the lenders," she insisted. "If our accreditation has been temporarily paused this should be resolved when we sign with a new head group."
She added: "Neither the Financial Markets Authority or the Financial Services Providers Register has reached out with any concerns."
A spokesperson for the Financial Markets Authority said the authority generally did not comment on whether it was making inquiries into an individual or a specific entity.
