The Task Force on Adviser regulation is going to generate a lot of comment over the next few months. Well put it this way, I hope it will engage minds.

Clearly its inception caused a bit of an orgy of interest with more than 90 people (including myself) putting their names forward to be part of the exercise.
I’m supportive of the exercise, but once again wonder where it’s heading.

Here’s three points which make me wonder.

First up, as we reported in Good Returns an issues paper has been produced. This paper isn’t particularly long or complex. Upon reading it you are left with the impression what’s the issue they are trying to solve?

Clearly the task force doesn’t know. (“The purpose of this paper is to seek information about the issues the Task Force should focus on.”)

Secondly, the timing of the issues paper is a little ominous. As any seasoned political operator knows governments release all their bad news, or things they don’t want people to know about, at this time of the year when you and I are focussed on holidays and Christmas shopping. Reports which are produced around now – think of the last two Periodic Review Group reports on superannuation – become door stops. (At 20 pages the issues paper isn’t going to hold many doors open).

Thirdly, we have had a change of Commerce Minister. A question which has been posed to me is to understand where the group goes you have to ask who the chairman – a legal eagle – thinks is his client. If it is the minister and we have a new one where will this go?

While you’re likely to have plenty of food over the next few days this provides some food for thought.

The news that Andrea Pettett is resigning as executive director of the Health Funds Association is a pretty big hit on that organisation.
Pettett is highly regarded for her mix of skills and the work she has done at the HFA. It’s a bit of a cliche, but filling her shoes will be quite a hard job.
The obvious question which comes up is will one of the other associations representing industry sectors try and take over the HFA?
The Investment Savings and Insurance Association is the most obvious suitor. The ISI and HFA share office space in Wellington and ISI ceo Vance Arkinstall has said previously that he would like to see some of the associations get together.
His logic back then still stands now and there is a reasonable cross-over in membership.
An added sweetener is that HFA has a not insignificant bank balance.

Supplying readers with home loan news and mortgage rates is something that has become a core element of what Good Returns does.

Consequently we have been keeping a pretty close eye on what has been happening in the current round of mortgage rate wars.

BNZ’s campaign to undercut everyone else has been fascinating to watch, as its margins on two year rates are so tiny they are almost invisible, plus its “Unbeatable” campaign has meant that the other banks can set the BNZ’s rates.

A core part of the BNZ’s campaign is that by cutting out brokers it can lower its costs to lenders.

This argument is an “interesting” one as BNZ disenfranchised brokers years ago when it refused to allow them to sell its popular Global Plus home loan. Hence brokers wrote very little business for the bank and the bank finally turned around and officially cut the ties.

As we reported the other day the claim has been challenged through a complaint to the Advertising Standards Complaints Board.

BNZ put up an argument, and illustrated it with numbers, to prove its case, that by not paying commissions it could offer cheaper mortgages. The majority of the board accepted its argument, consequently the complaint was dismissed.

I think on the whole the ASCB does a reasonably good job, but in this case it has been duped as BNZ hasn’t shown any of the costs it incurs to sell mortgages through its mobile manager network.

For instance it took out the commission cost of brokers, but didn’t include the salary cost of its staff.

If you add those costs into the argument then the ASCB decision may be quite different.

Does the board think that people walk into a branch, pick up a home loan off the counter and then walk out?

It is remiss of the board not to see through, or at least question, the bank’s argument.

The redeeming factor is that a minority of the board did question the bank’s argument – but not enough to make a majority.
Story: BNZ escapes censure – just

It is clear the Stobo tax report has created a huge amount of interest amongst investors, advisers and fund managers.
My earlier Blog on the subject has drawn out a few questions – some of these I have run past Craig Stobo. Craig has kindly offered to answer these questions.
The Blog, the questions and the answers are here.

The other topic is adviser regulation. Someone posed the question today: Has the taskforce been set up to fail?
Time will tell the answer. What is clear is that there is still some major upset at the make-up of the taskforce. I understand that there is still some fierce lobbying going on behind the scenes to have a certain group represented on the taskforce.
For my money I was slightly surprised at the make up of the taskforce. But it is far better than some of the names which were bandied around while officials put the group together.
To date I have been totally underwhelmed with the taskforce’s comms, and events this week showed MED have little idea about key players in the industry. This isn’t a new theme. It surfaced during the establishment of the taskforce too.
Coming back to the question I posed at the start. No. I don’t believe Margaret Wilson set the taskforce up to fail. However she is not the only stakeholder in this event.