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06 September 2004

Resisting the “Program” Pitch

If only more consumers could be as careful.

It is a rule in our home that we refuse to purchase anything via tele-marketing or cold calling.

However, on this occasion, my wife booked an in-home appointment. The company was Westpoint Finance. The consultant arrived and produced a booklet that was designed to gather information about our financial circumstances.

The actual product being sold is an “Education Program”. The presentation was very property focussed in its approach.

Since we already have two investment properties, we were not interested in purchasing more property. Our focus is on investing in other asset classes at this stage.

I told the consultant that we wouldn’t be interested in the “Education Program” and thanked him for his time. He became almost abusive and accused me of thinking I know more than their “experts”. He said Westpoint Finance is not just involved in property, but other asset classes as well. He even reduced the cost of their program from $295.00 to $50.00.

I figured for $50.00 I had nothing to lose and I might pick up some useful information.

So we completed the booklet and made an appointment.

It was clear in the first 15 minutes of the “program” that this company had nothing to offer us. The sales pitch is that they want to “recruit” clients for life and be a “one stop shop” for all retirement financial products.

If you have sufficient equity in your home or other investments they will sell you a property. We were offered a property off-the-plan, however my policy is never to buy under such circumstances.

If you do not have the standard line of credit or mortgage offset account set-up for your mortgage they will re-finance you into one. The sales pitch is that they know the best deals currently available and will offer you the best available. Their fee, which is added into the re-financing, is $2,500.00. I mentioned that mortgage brokers receive a fee paid by the financial institution, but was assured that Westpoint Finance are not mortgage brokers and therefore don’t receive a fee. That is one reason why they must charge you $2,500.00. I do not believe that statement.

If you are not re-financing, you can purchase their budgeting service for $850.00 for a year.

I have to draw some conclusions from my involvement with Westpoint Finance, and pass them on as warnings to other people who may be targeted by this company.

The information from the Westpoint Finance Education Program can be obtained elsewhere for free, or minimal cost via the purchase of books. The $295.00 program should be free, because it is for their purpose to determine if you have the capacity to be one of their clients.

Westpoint Finance is associated with construction companies under the Westpoint Corporation banner. There is good reason to question the independent advice that is claimed to be offered by Westpoint Finance. Some of the investments should be approached with the greatest scrutiny.

The advice offered by Westpoint Finance was inferior to that provided in a one hour introductory meeting at my Westpac Bank branch. I will be going back to the bank in the future.

All this ‘consultation’ stuff is a front for Westpoint to flog property developments. By charging people for a ‘program’ it creates the impression that something independent and worthwhile is being offered. Suddenly, people find themselves being stitched into a Westpoint development. In a recent case, one couple lost more than $100,000 after dealing with Westpoint.

Westpoint are also involved in mezzanine lending – a particularly risky method where consumers are asked to invest money in developments.

In reading your story I felt so relieved that you managed to resist their spiel. If only more people could do what you did!

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