Industry delighted with voluntary authorisation
Industry associations are happy and relieved to hear that voluntary authorisation will be allowed after a mammoth effort since June to lobby Government over the issue.
Wednesday, September 22nd 2010, 4:27PM 
8 Comments
by Jenha White
Cabinet today agreed for regulations to be developed to allow voluntary authorisation for mortgage brokers and insurance advisers under the Financial Advisers Act (FAA).
Commerce Minister Simon Power says the regulation is likely to be passed before December.
This came about after changes to the Financial Advisers Act in June gave no authority to the Securities Commission to grant authorisation to mortgage and insurance providers, providing no clear pathway for those industries under regulation.
Many insurance and mortgage adviser firms had committed millions of dollars to the authorisation process and ETITO said over 3,300 insurance or mortgage advisers had enrolled in training for the National Certificate in Financial Services [Financial Advice] [Level 5] for the purposes of authorisation at the time.
As a result many category two advisers postponed courses while they waited for further information about the prospect of voluntary authorisation.
New Zealand Mortgage Brokers Association (NZMBA) chairman and chief executive Darren Pratley says today's announcement to allow voluntary authorisation has made the association "very happy".
"The association has put a lot of resources into this issue and it is relieved and encouraged that the Government has listened to the industry and made changes that are realistic."
He says a pathway is now available for mortgage and insurance advisers to go forward with personal continued development of service.
Life Brokers Association (LBA) president Ron Flood says he welcomes the commitment by Government to enact the regulation before December so mortgage and insurance advisers that have commenced with education can be well placed to be authorised early in 2011.
Professional Advisers Association (PAA) chief executive Edward Richards says it is great news that the associations have finally been listened to.
"The whole question mark has been taken out of the regime - there is now a voluntary option and clarity."
ETITO manager of strategy and corporate relations Michael Frampton says ETITO is "absolutely delighted" with the decision which can only be good for advisers, for industry and for New Zealand consumers.
He says there has never been a better time for category two advisers to access the training and assessment they need to become authorised and he urges advisers to get involved in the process.
Jenha is a TPL staff reporter. jenha@tarawera.co.nz
| « Advisers have 38 days to make assessment reservations | Thinking behind voluntary authorisation explained » |
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Insurance companies being the slow moving organisations that they are followed what they “thought” the Government would decide and blindly committed their advisers to training courses even before the Government had made up its mind whether to include insurance and mortgage advisers within the scope of regulation. The banks themselves being less willing to be sheep than the insurance companies looked at the logistics of having ALL of their front line staff who deal with mortgages and insurance authorised and lobbied the Government against regulation.
The Government recognised that it would be hypocritical to say to the banks “your staff advise on mortgages and insurance but don’t need to be authorised” and then say the exact opposite to mortgage brokers and insurance advisers. This is why the Government has said that it is not compulsory for insurance advisers and mortgage brokers to become authorised, they simply need to be registered instead.
Whilst the banks would have paid for the training of their staff to go through regulation mortgage brokers would in most cases had to have worn that cost themselves. This was also recognised by the Government as being detrimental to consumers as many brokers would have simply left the industry meaning their experience on advising on mortgages would have been lost.
I applaud the Government for looking at the big picture and not making authorisation of mortgage brokers and insurance advisers compulsory.
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I never held back from doing the exams to become an AFA.
Now that it is voluntary it makes it all worth while.
For those that choose not to become an AFA i feel it will always be an uphill battle for them in the market place once the consumer is educated on the differences.
So the second part of all this regulation process is for the industry to inform and educate the general consumer or this will all be a waste time.