[Weekly wrap] Passing judgment
This week saw two important court rulings affecting the financial services sector, but while one made headlines the other one has passed largely unnoticed (except by Good Returns).
Friday, April 27th 2012, 10:40AM
by Niko Kloeten
The high-profile decision involved one of New Zealand's most hated men, former Bridgecorp managing director Rod Petricevic, who was yesterday sentenced to six and a half years in jail for lying to investors about the state of the company before its collapse.
An interesting wrinkle to the decision by Justice Geoffrey Venning is that Petricevic received a discount relating to the "vigilante justice" he received in an Auckland restaurant by a fellow patron. It's unlikely the attacker realised his actions would end up sparing Petricevic some jail time.
Lost amid the hype over the Petricevic sentencing, another important court judgment emerged this week, with the Wellington District Court upholding the FMA's decision to decline PropertyTutors director Sean Wood's application to become an authorised financial adviser (AFA).
This sets a precedent not just for the court but for the FMA, which will need to apply its criteria consistently or risk being accused of unequal treatment. The case serves as a warning for other advisers as to what the FMA expects from them when applying for AFA status.
It has also prompted a call for the same 'good character' test to be applied to all advisers regardless of designation (as it is for lawyers). However, not everyone is in a rush to change the current rules.
Meanwhile, those who have voluntarily become authorised financial advisers have been commended, with the message that their decision will probably be forced on those who haven't yet done so, when regulations are eventually tightened.
There was some big news in the mortgage market this week, not because Reserve Bank governor Alan Bollard left the OCR at 2.5% as expected, but because there is now a possibility that the next OCR move could be down rather than up.
With the New Zealand dollar still high, and inflation expected to remain low, Dr Bollard has more room to move, and he has expressed his concern about the exchange rate. The debate on whether to float or fix your mortgage has become even murkier, with Kiwibank slashing its one-year fixed rate to 4.99%.
In insurance news, Sovereign has announced it will withdraw its participation from the Beaton Benchmarks survey, which asks advisers to rate the service and support given by life insurance providers.
The decision was made "in order to establish an alternative, local programme that will provide real insight and drive positive change for all advisers who come into contact with Sovereign." It comes despite Sovereign's consistently strong performance in the survey.
Also in insurance news, advisers have been called on to lead the way in helping fix New Zealand's under-insurance problem.
Finally, NBR Rich Lister George Kerr has taken over the running of Pyne Gould Corporation following the immediate resignation of its chief executive John Duncan.
Niko Kloeten can be contacted at firstname.lastname@example.org
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