Brokers get a break

Vance Arkinstall. Photo / Supplied

More than 3000 mortgage and insurance brokers are breathing sighs of relief that their studies towards higher qualifications will not go to waste.

An 11th-hour law change last week means the brokers will be allowed to become accredited financial advisers (AFAs) as planned.

Parliament's commerce select committee shocked the financial advisory industry this month when it amended the Financial Service Providers (Pre-Implementation Adjustments) Bill to exclude those offering advice on non-investment products, such as mortgages and insurance.

The move provoked an outcry, with virtually no part of the industry happy with the incoming regulatory regime being loosened.

"Relatively few New Zealanders rely on the services of an investment planner, but most seek advice in relation to the financing of their home and ... insurance," New Zealand Mortgage Brokers Association chairman Darren Pratley said.

Securities Commission director of supervision, Angus Dale-Jones, said over 3000 mortgage and insurance brokers had already enrolled in the programme to become an AFA. "They've engaged with that higher level of professionalism so that's what the focus of the debate was all about."

The Code Committee for Financial Advisers had specifically developed standards for those who wanted to be AFAs dealing only in mortgages or insurance products, Dale-Jones said.

That was wiped out with the surprise amendments to the bill. However, just before the law was passed last week, Parliament made a last-minute change allowing additions to the list of products that the Securities Commission can authorise AFAs on.

The Ministry of Economic Development still had to draw up that list but the mechanism was now there for mortgage and insurance brokers to be included, Dale-Jones said.

Investment Savings and Insurance Association chief executive Vance Arkinstall said it was a pragmatic outcome.

The original proposed rules surrounding financial advisers were too tight and the industry had expected changes, but officials had not realised the unintended consequences of the latest move. "They'd gone from one complete end of the spectrum totally to the other," Arkinstall said.

Pratley said mortgage brokers were relieved they had not missed out. Companies had spent millions changing systems for their teams to enter the new regime. It gave mortgage brokers the option of stepping up to the higher level or simply remaining registered, he said.