by Benn Bathgate
By that date all mortgage brokers must be either AFA or RFA accredited, and Pratley said it was important brokers' acted now to achieve accreditation, taking measures including signing up to a disputes resolution service, undertaking the required training courses and registering with the Companies Office.
Pratley warned brokers that once the new regime goes live government regulators "are going to be looking for some headlines" and may seek to make a publicity-grabbing move to prove regulation is working.
He said when estate agents faced similar regulatory changes there was a spike in complaints as consumers were made more aware of avenues for redress.
The Securities Commission may adopt tactics such as examining Yellow Pages adverts to look for unregistered companies, then targeting those companies.
"Those giving advice outside their area will be a fair target," said Pratley.
The limited resources available for training and assessment of advisers' was one of the factors cited by Pratley for the need for prompt action.
Pratley said the issue of whether to opt for AFA or RFA accreditation was "the biggest dilemma I'm seeing in the industry" and outlined why the NZMBA favoured AFA registration.
He said the government would begin an advertising campaign on December 1 to publicise the new regulatory regime with an emphasis on AFA. He warned that while accreditation was voluntary if that were to change it would likely involve more cost and work to join the scheme at a later date.
Also with the likelihood of the AFA code, with its higher level of compliance, becoming a benchmark he said issues of client perception could come into play for RFA-compliant advisers.
Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to benn@goodreturns.co.nz
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As is always the case a client will opt to use a broker based on his/her professionalism and reputation (frequently having been referred to the broker by a friend who has already used their services) Having a bit of paper hanging over one’s desk from the ETITO saying authorised adviser will mean absolutely “zero” to a client if that broker acts unethically. Nothing in standard set B & C will change the habits of the bad operators among us so this begs the question of just what purpose authorisation was going to serve in the industry??? Oh that’s right...generating fee revenue for the likes of ETITO and jobs for more bureaucrats in Wellington. Pratley says that government regulators are going to be looking for “headlines” to prove that regulation is working. Well with the about of time and money wasted so far on regulation I am sure they will be desperate to try and justify their jobs no doubt.
If the NZMBA had got off its backside and policed the industry of bad brokers in recent years this whole sorry saga of “regulation” would never have been extended to mortgage brokers in the first place. Remember also that the NZMBA was more than happy to see brokers go through the cost of compulsory authorisation (at an estimated $6,000 per broker) in a particularly quiet market and in the end it was the banks themselves who were actually our best friends! They lobbied the govt against authorisation NOT the NZMBA who are supposed to represent our interests!
This then raises the question of just what role the NZMBA serves now that FSCL has been approved by the Government as the recognised Disputes Resolution Service for mortgage brokers? I think the association is on borrowed time given its dwindling membership numbers and most brokers if they do want to belong to an association will opt to join the PAA instead. At least this organisation has been heard of by clients!
Like most mortgage brokers in the industry I have opted to be registered (as opposed to authorised) and will get back to focusing on looking after my client’s best interests rather than the regulatory bodies in this country. As you can probably tell from the tone of my email I elected not to renew my NZMBA membership as I could not see ANY value to my business in continuing to belong to the association.