Over 3,300 mortgage & insurance brokers can’t voluntarily become AFA’s
Mortgage brokers and insurance advisers are being excluded from the opportunity to become authorised financial advisers (AFA's) after last minute changes to the Financial Service Providers (Pre-Implementation Adjustments) Bill.
Tuesday, June 15th 2010, 5:19PM 
7 Comments
by Jenha White
It was announced in last Friday's Select Committee report that mortgage brokers and insurance advisers who only advise on category 2 products will no longer have the option to be authorised.
ETITO manager of strategy and corporate relations Michael Frampton says over 3,300 insurance or mortgage advisers have enrolled in training for the National Certificate in Financial Services [Financial Advice] [Level 5] for the purposes of authorisation.
He says ETITO is seeking clarification from the Securities Commission on the matter.
"We do understand the concern and confusion expressed to us by those mortgage and insurance advisers who have made the commitment to the qualification based upon their intention to become authorised and who are now uncertain about how, or whether, to proceed," he says.
Frampton urges concerned advisers to contact their professional association or seek guidance from the Securities Commission.
The New Zealand Mortgage Brokers Association (NZMBA) chief executive Darren Pratley says he is disappointed by the decision as many advisers may wish to become AFA's by choice.
"The Bill fails to provide the Securities Commission with any power to recognise voluntary compliance with the requirements of authorisation.
"Consumers are losing all of the protection that AFA status provides, and the investment of many advisers over the last twelve months, is being destroyed."
Pratley says millions of dollars have been committed by insurance and mortgage adviser firms with the intention of enhancing the comprehensive service already provided by industry participants, all in the interests of consumer confidence.
Pratley says the overall aim of the Financial Advisers legislation is to enhance the professionalism of the industry and protect the consumer.
"There should not be any restriction on advisers who voluntarily choose to embrace the regime, and Government must ensure that this provision is made within the Bill before it is passed into law."
Asteron general manager risk distribution Peter Conroy says a cat has been put amongst the pigeons.
"It is likely to be disappointing for risk advisers who were planning on taking the opportunity to develop skills and demonstrate their professional capability to clients," he says.
However an insurance adviser who did not want to be named has said the meaning of becoming an AFA has been blurred.
"Being authorised simply means you are under a supervision structure. It does not mean you are more professional or that you give advice of a higher standard.
"If insurance advisers or mortgage brokers want to get the NCFS-5 qualification they can, just as they can get many other qualifications. There are a lot of ways to be a professional."
He says many insurance companies promoted AFA status as professional because they wanted to get everyone across the line, however, regulation is simply there to supervise investment advisers.
Jenha is a TPL staff reporter. jenha@tarawera.co.nz
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Comments from our readers
A registered adviser is also required to adhere to the Conduct requirements as outlined in the amendments.
The changes have also given the Securities Commission far wider powers to monitor and inforce the act.It matters not whether you are an AFA,registered or operate under a QFE, consumers are the big winners from this legislation.
The fact consumers will now have a disputes resolution body to lodge complaints with should be a warning to any errant adviser to tidy up their act and start operating in a more professional manner.
No amount of legislation will make us more professional if we continue to allow a small minority to remain in the business whose actions are less than professional.
All advisers should complete their study even if they are not required to be authorised. Their level 5 qualification will be an external confirmation of their knowledge and competence. It is a pity that advisers only started to study with a 'legislative gun' to their heads. It is something they should have started years ago.
Read s13B of teh Financial Services Provider Pre Implementation etc Bill that amends s55 of the Financial Advisers Act.
That new section says who the Sec Comm can authorise - and teh list does not included anybody involved with only category 2 products and not involved in investment planning services.
If I may say, we, the mentioned practioners, just want to provide our respective services or sell the respective products. Why not just tell us, if you want to just sell life & health insurance, these are the things you need to do, or if you want to do mortgages and investment products, this is want you must do, or if you want to do the whole of lot including financial planning, this is what has to be done. It is actually that simple.
From the feedback I've read, I am not sure if all the advisors understood what the Set A - E and the Category 1 & 2 represents or mean. If you cannot get even the experienced advisors to understand it, there must be something very wrong with it. Is there not someone competent enough to come up with a simple and concise piece of regulation?
What the current piece of proposed regulation is telling you how the clock works, but what we need to know the time.
The big question is - Who will clean up the mess, and who will foot the bill? I do feel for the insurance companies who have already outlaid ridiculous sums already to assist in compliance of something that may just not be compliable...
In the end, it will be the clients who will pay - the very people that we are supposed to be protecting! How's that for irony?
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