It was very pleasing to hear from the Ministry of Economic Development last week that it was combining a lot of its financial sector reform work into one package.

I could never understand why it kicked off the adviser regulation taskforce, then started the review of financial products as a seperate piece of work.

To me it always felt like it adviser regulations were started in haste, then there was some catch up with all this other work.
The key upshot of the announcement is that adviser regulation, and the start of Approved Professional Bodies (APB), is going to be longer in the making than originally planned.

It now looks like APBs are unlikely to start before 2009 – if at all.

In some ways I think that is OK – there isn’t a catastrophic failure which requires fixing. Indeed I struggle to see there is a major consumer problem. The biggest problem is that not enough consumers seek financial advice!

Also I’m not convinced the associations are ready yet.

The risk with the delay though is that these changes could never see the light of day. Being pushed out lessens their imperative from a political stance (you may recall the former Commerce Minister Margaret Wilson, who kicked off the changes, put quite a high priority on them). And if there is a change of government next year then who knows what will happen?

While there is a delay in the implementation of these changes, there are others which are happening this year.

Advisers need to be aware that the Securities Legislation Act comes into force in 2007 and this piece of legislation will force advisers to change the way they operate.

One of the good things is that the Securities Commission is preparing a guidelines booklet, (which I understand will be at least 70 pages long!)

The first Blog for the year is a little different to what I had planned. But when I saw the Bank of New Zealand announcement last week about the departure of its current managing director I changed plans.

Peter Thodey is leaving the bank after 27 years to take up a role with BNZ’s parent company, National Australia Bank.

Ho-hum you may think. Well I suspect many people in the mortgage industry will be watching with interest and possibly a little glee.

Thodey has been credited, rightly or wrongly, as the man behind BNZ’s aggressive home loan marketing strategy which has included chopping out brokers and also “discounting” rates.

There has been a view held that once he leaves BNZ the strategy may change. That would clearly find favour with other banks as they argue BNZ’s strategy has cut margins on home loans to unsustainable levels.

Sure the BNZ’s strategy is good for consumers, but not shareholders of banks, nor I suspect, the Reserve Bank which wants to see things, particularly in the housing market, slow down a little.

As the cliché goes, the jury is still out on the strategy. BNZ says it has worked for them, however it doesn’t appear to have made huge change to their market share. Also there is still much conjecture over which is the cheaper distribution channel; mortgage brokers or mobile managers who are essentially bank employees.

I don’t know the answer to the latter question, but I am sure the banks do. While that is a point which gets a lot of air time in the mortgage industry, it is fair to say that running both channels can be expensive, especially for smaller banks. That is part of the reason HSBC no longer use brokers and others like Kiwibank stick to their one channel approach.

Here at Good Returns we have been told about Thodey’s alleged dislike for the broker channel, however attempts over the years to interview him on the subject have been unsuccessful. Maybe an exit interview will be granted?

For the record Thodey is taking up a role as executive general manager National Australia Bank’s head office in Melbourne. He will be replaced by Cameron Clyne, who is currently executive general manager group development, NAB, and a BNZ director.