Mortgage brokers avoid regulation

Mortgage brokers will avoid the burden of most financial adviser regulation provided they stick to their main line of business.

Friday, June 11th 2010, 2:43PM 4 Comments

Parliament's Commerce Committee has recommended excluding advice "in respect of an estate or interest in land" in its report on the Financial Service Providers (Pre-Implementation Adjustments) Bill, which amends part of the legislation covering the regulation of financial advice, to avoid "capturing the wide range of people involved in giving advice on land" for purposes other than investment.

The report singles out mortgage brokers in respect to advising on mortgages, which is says "should be treated as advice on credit rather than investment."

That means it will be classified as a category two product, allowing mortgage brokers to avoid the burden of retaining to meet minimum standards to be an Authorised Financial Adviser, though they will still have to register with the Companies Office.

Still, mortgage brokers who have been extending their services into other activities, such as selling KiwiSaver or providing wider financial advice will be caught by the new regime, though the carving out of insurance advisers also means that it is safe for brokers to diversify in that area if they want to skip around becoming an authorised adviser.

 

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Comments from our readers

On 11 June 2010 at 4:06 pm Luke canton said:
Just how it should have been from the get go, and exactly what the industry has been saying.
On 11 June 2010 at 4:24 pm Jeff Royle said:
A sad moment indeed, a lost opportunity to give the public the professional image of mortgage broking they need. Only in New Zealand as they say!
On 14 June 2010 at 9:23 am John said:
Interesting that the banks themselves have actually been the best advocate of mortgage brokers on this subject (with their lobbying of the Government). The NZMBA sure as hell didn’t want to go into bat for us. The NZMBA in partnership with AdviserLink was more than happy to have brokers go through the expense of regulation just to try and justify their own existence (again). Guess what folks? Now that the FSCL has been approved by the government as the disputes resolution body for brokers the days of the NZMBA are numbered. No point being a member anymore as they do absolutely nothing for mortgage brokers. If you want to belong to an association that adds value to your business far better off being part of the PAA.
On 14 June 2010 at 12:13 pm Sarah said:
How ironic that this whole process was triggered to protect people from clowns acting recklessly and having a detrimental effect on peoples lives. How many advisers in the market place have made career and life changing decisions over the last year based on this circus of events. No wonder the world thinks we still run around in grass skirts when we demonstrate hillbilly backwater behaviour like this from the top. for crying out loud can someone make a definitive bloody decision so we can all get on lives.
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