NZMBA warns brokers to be careful

Pratley seems to be saying that a client’s perception of a mortgage broker who doesn’t opt to become authorised will be different to one that is registered? Get real! Do we honestly now expect clients to know the difference between AFA vs. RFA status? Most clients enough trouble knowing what a mortgage broker does let alone who the NZMBA are! I have been a broker for 14 years (and a former foundation member of the NZMBA) and I have only ever been asked once if I belonged to the NZMBA in that time.

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.

There are always 2 sides to the story.
First of all we all should start calling what we do a Profession and not an Industry.
There are advisers who have been in the profession for over a decade who think we don't need this extra training and it is all a major cost to them.
There are others like myself (over 12 years in this profession) who think this is long overdue and the costs of becoming AFA will benefit them in the future.
The average cost works out to be $6,000 per adviser, however i live in New Plymouth so the cost for me will be well over $10,000 to become AFA.
The whole reason for this regulation is because there were too many part time or new advisers entering this profession and then leaving a year later because it was a lot harder than they thought.
This of course left the consumer thinking they were not dealing with professionals.
The NZMBA are pushing for most of their members to become AFA so the standards across the board are a lot higher.
In an Industry you earn while you learn and in a Profession you learn then you earn, and that is were we all need to be.
$6,000 for this training can be paid for by writing 1 mortgage and 1 life cover so whats the problem.

Thanks Murray for the simplified look at it. When you have a spare case floating around please feel free to pass it on to me. No problem eh!

Hi Murray. Point taken but my issue is why should established mortgage brokers have to pay out $6,000+ to the likes of ETITO simply to re-learn stuff we already know? This is just (another) unnecessary cost our businesses we can all do without thank you very much!

There have been numerous posts on here from brokers agreeing that AFA status will have no benefit to consumers as it will NOT change bad habits in the industry.

The NZMBA has been more focussed on growing its fee income from members than policing the industry in recent years and only now at the eleventh hour has it started talking about “standards”

With FSCL now on the scene perhaps you could enlighten me and other brokers as to just what NZMBA members get now for their $800+ annual membership fee and just what role the association actually plays?

As I’ve said I was a foundation member but honestly I can see no benefit whatsoever to continuing to belong. The PAA to me represents now far greater value to my business than the NZMBA will going forward.

There is a whole industry in this country built out of red tape and bureaucracy to create jobs with no added value to society. There is no point in paying money to organisations like the ETITO just for the sake of it especially if it will not benefit our clients.

I like John was a foundation member of NZMBA. I also agree that the association has lost its way over the last few years and has moved away from its primary reason for its initial formation - to promote the mortgage broking industry as an ethical and easy way to obtain mortgage finance. Yes in the heady days they got caught up with the hype of unlimited income from memberships, regulation was going to fix everything etc. THEN the world fell apart -lets diversify they said - it is the only way to survive - forget our basic principles sell everything you can to make a buck - and to support you we will become the association of "jack of all trades" - but remember regulation will fix it !!

Frankly if the NZMBA had stuck to its knitting and supported the initial core principles of its establishment more focus could have been spent on supporting the specialist mortgage broker to be a recognised professional and also probably have more influence on regulation. The feeling that increased numbers would have more influence resulted in reduced professionalism in the industry.

What role has the NZMBA to play in the future?? - can someone please tell us !! I would have thought that under the initial principles of establishment, and having followed these, the NZMBA would have been a highly probable acceptable Disputes Resolution body.

I too am struggling with my decision but am still going through with AFA status.

Well said again John. I fully agree - I don't need to add any more. Murray - well done if you can consistantly get re-imbursed from just 1 mortgage and risk case. However spare a thought for those of us where the real estate industry has taken a dive recently due to the earthquake! The ETITO has missed the mark completely. My formal education (degree) gained 15 years ago and updated regularly has far more relevance to my clients and my profession. The national certificate is a major leap backwards for me, and a waste of money. Just like the NZMBA.

ETITO does have a place at the moment and that is to ensure every adviser in NZ meets a certain standard.

After that it should be up to approved bodies such as the NZMBA to monitor these advisers and this is where the NZMBA is ahead of the other approved bodies. (please read the comment below that i previously posted on GoodReturns)

On 17 August 2010 at 7:15 pm Murray Chong said:
Why do they have to try and reinvent the wheel.
All good adviser's for the last 6 years attend as many industry training sessions as they can for 2 reasons.

The first is keep educated and the second is to obtain traning credits.

For example the NZMBA requires you to have 50 industry training points in the 2 years and then obtain 25 new points per year after that and if you dont then your out.
Unfortunatley brokers that don't meet this rule can just use another body that does not have such high training standards.

I work out of New Plymouth and 80% of this training is in Auckland or Wellington and a one day traning session is worth only 3 credits, so I do this at least 9 times per year.
This costs me almost $9,000 per year,

All the regulators have to do is to go to a website (which is already up and running) to make sure advisers have these credits.

The Aussie Mortgage Brokering Association got rid of 1500 brokers over night by using this system

It's really as simple as that

Just thought i should also mention that the others that have commented on this article are John, Billy the broker and Dave.
It is my opinion that if you are a professional and you comment in a public arena like this then its good practice to use your full name so people know who you are (Just my opinion)

I am the General Manager of FSCL and would like to correct and clarify a couple of statements in this article.

1. The FSCL annual fee is $300 – not $800+ as stated by John. This figure applies to all individual advisers or brokers who are in an organisation of 15 or more persons such as the NZMBA, PAA or similar. The benefits of membership are on the FSCL website and include the FSCL Internal Complaint Process Manual and access to complaint handling workshops both of which are free. The initial annual and joining fees total for an individual are between $550 and $1,000 again depending on the organisation an adviser is part of.

2. FSCL is an independent external dispute resolution scheme approved by the Minister of Consumer Affairs. Any financial service provider can join FSCL and not just mortgage brokers.

3. One of FSCL’s philosophies is that a dispute resolution scheme can only be successful in its role if it has the confidence of the participants in the scheme and consumers. We do this by listening to all stakeholders. The NZMBA like other industry associations, such as the PAA, is a stakeholder in FSCL and as such is one of the groups we consult with on industry matters and dispute resolution.

4. In relation to Dave’s comment on the NZMBA being a potential dispute resolution body, I would like to say that I agree on the surface it would have appeared it could have fulfilled such a role. However, in reality the legislative requirements to be an approved dispute resolution scheme are such that it would have been virtually impossible and certainly commercially challenging to become a dispute scheme. For example, one of the requirements is ‘independence’. As an association representing a particular group of FSPs the NZMBA would not have been able to meet this requirement without major changes to its structure.

Hello All

I normally read but do not contribute to these comments as, like Murray, I cannot stand comments made in anonimity.

Below is an e-mail I sent following attendance at this years NZMBA Conference

Please understand, these comments are along the lines of "Here is what I think" not, those who think differently are wrong. Like Murray, I aspire to be the best, its a daily challenge and one of my biggest issues with being a Mortgage Broker has been the incredibly low barriers to entry. This is about to change and the Market itself will also become a barrier to entry. Getting out of your comfort zone is usually always incredibly good for you (and with AFA status good for your clients and the value of your business in the long run)

Mortgage Brokers, in regulation are very very much in the minority in terms of numbers, but we seem to punch above our weight with passion and ethics in general. We are specialists and we must ensure our special needs are addressed and understood.

Hi Darren and Stephen and Cheryl (cc to Bronwyn Shanks from SHARE and Peter Leitch of the PAA as possibly interested parties)



I am tidying up my notes from the Conference



I found myself scribbling madly after Darren’s Fri am presentation



First things first



Well done on a Great Conference !



I must admit to wondering if it was going to be worth my time and money (but temper this with me being heavily involved in the “Year of Being Unwell” and this also being “The Year of my worst Settlements – EVER”)



So it was with a certain amount of scepticism that I showed up on Thursday…despite how it might have appeared from the outside



Summary – I learned new things, I feel reinvigorated and I realise we need the NZMBA perhaps now more than ever





Background



I am going through a lot of change (for me) as I slowly learn how to become an excellent Risk Adviser…I use this term because I could have started to be a poor one already but have chosen to have higher aspirations for the sake of my business and my clients



I am, therefore, now with an (OUTSTANDING) aggregator who is predominantly Risk focussed and is very largely populated by PAA members (as far as I know)…and I get asked why I bother being a member of the NZMBA





My Conclusions



In my opinion, two types of Broker/Adviser are now emerging.



Those who do “just enough” to win and those who want to “break the record”. Those whose catch cry will be “mediocrity is good enough for me and my clients” and those who aspire to excellence as the only bench mark



Life and Business and Things in general are complex right now as we grapple with Regulation and Learning New Skills



When I got asked why I was still a member of the NZMBA I had no immediate answer (I am embarrassed to admit)



Now I have an answer



Simple messages need to be reinforced and repeated so the current membership get a mantra going so we can continue to improve our membership (Quality and Quantity) and effectively defend our position



I wrote these notes and prioritised the issues as I see them





1) Regulation Transition and Implementation – Mortgage Brokers need their own voice. The sheer numbers and talent still evident (from my perspective) within our membership must be represented by people who know our role intimately



2) Brand – We have a great brand and the foundations are in place already…keep it clean and simple and keep it out there



3) Strategic Communication – Both with Both Lenders, Groups (kind of like Neville Chamberlain in 1938 but more successful) and Sec Com no doubt to ensure we don’t get forgotton



4) CPT Records and Specialised Education - (not sure how discipline will fall here in a couple of years time) – Mortgage Brokers have specific needs that only Lender specialists can understand (include Annual Conference in this)



5) Broker of the Year – Despite how selfish this may appear…This competition constantly researches and encourages excellence. I still think Winners and Participants are a resource for the Membership which can be used more. The BOTY is hard work for all, but it must must be retained and will drag out the best of participants and members AND it’s the kind of positive behaviour which sets a tone amongst the membership. For new members its inspirational and for the public, it’s a sign of maturity as well as recognition





So, another long winded way of expressing my profound gratitude for a job being extremely well done



And suggesting we all keep working on marketing…a clean simple message repeated to the membership to remind them who we all are and why we are here



Kind Regards



Finlay Abbot

Thanks Andy & Dave for your comments and support about what I have said here regarding the NZMBA and regulation. Good to know I am not the only broker out there who is in the dark as to what role the association actually has now.

Trevor Slater (from FSCL) you’ve misread my post from the 9th Nov. I was asking what mortgage brokers get for their $800+ NZMBA membership fee each year? NOT their FSCL membership. I am well aware of what it costs to belong to FSCL as I am already a member. You’ve nicely explained for us here though FSCL’s role and why the NZMBA was (not) approved by the Government instead as a disputes resolution body for the industry. So again, I am at a loss to understand just what role the NZMBA actually has going forward?

NZMBA membership seems like an expense we can all do without quite frankly and I would much rather spend that money instead on my clients rewarding them for their business and referrals. It would be great to see someone in authority from the NZMBA post on here what purpose the association serves and how it adds value to broker’s businesses?

Trevor - are you saying then that NZX brokers are part of the NZX organisation, and therefore should be charged as part of that organisation - not of their own separate broking firms?

If you delay to do everything until finally you're positive it's right, you'll most likely never accomplish much of anything at all