The New Zealand Mortgage Brokers' Association (NZMBA) plans to apply to become an official regulator for its industry under the regime outlined in the Financial Advisers Bill, which was introduced to Parliament earlier this month. There is expected to be competition among industry organisations with overlapping interests to attract members.
Mortgage brokers and other financial advisers risk fines of up to $100,000 if they do not become members of an appropriate Approved Professional Body (APB). These organisations will be appointed and overseen by the Securities Commission.
The NZMBA expects the bill to be passed before next year's election and for the APBs to be operating by 2010.
Megan Salt, chief executive of the NZMBA said that brokers who were active members of the organisation were well prepared for the introduction of Government regulation in their industry.
She told members in a recent communication: "If you are active members of the NZMBA and adhering to the membership rules and code of standards and ethics, including the mandatory practice of giving clients the NZMBA personal disclosure statement you are already complying with almost all the legislation."
She explained that as well as being compelled to belong to an APB, financial advisers would have to make a number of disclosures to clients including details of their qualifications; the approved dispute resolution system they belonged to; court proceedings in the last five years; bankruptcy; the nature and level of fees charged and conflicts of interest. They would also have to disclose the amount or rate of remuneration from commissions, fees or other sources.
It would be an offence to give financial advice to the public without being a member of an APB and to fail to disclose information as required by the legislation. The maximum fine for either offence was $100,000.
