Every day we make important financial decisions and more often than not they involve us engaging the services of an expert who we rely on for advice and support in our decision making processes.
Decisions, for example, like how do we fund the purchase of our home or perhaps even an investment or two.
When did you last question how well-qualified that person was to assist you and what protection they have in place to support you if their advice turns out to be substandard?
Think back perhaps to the purchase of your first home. Most likely you went to the bank and you were told what you could have and how it would be provided. Little consideration was given to whether the solution provided was cost-effective or best suited your needs. You were so grateful to have your loan approved that you didn't even consider if it was competitive or not. It was unheard of to regularly review products to make sure they were meeting your needs.
The point I make here relates to the quality of advice we receive. New Zealand is one of the few countries in the OECD where there is no governance to protect the consumer from poor advice and the risks associated with that. In short, anyone can set themselves up as an expert providing advice on all manner of financial matters with little or no recourse for the consumer if the advice they provide is found to be substandard or even fraudulent.
That is about to change with progress being made on regulation of financial intermediaries and any party providing advice about finance or investment matters involving risk. Action was instigated by the Government but has been supported by credible organisations including the New Zealand Mortgage Brokers Association, financial advisers and other professional bodies who have provided valuable input towards the regulatory model.
NZMBA was formed in late 1996 by senior mortgage brokers who recognised the need for some sort of corporate governance, rules and a code of ethics. It now boasts a voluntary membership comprising more than 1000 practising brokers who all subscribe to a set of standards and are accountable for the advice they provide. The NZMBA is well-placed to provide the level of governance required to protect the consumer once regulation becomes effective, expected within 12-18 months. From a consumer's perspective, what I am saying is that not all advisers are created equal. When dealing with an adviser you should reasonably expect them to disclose to you their skill level and experience, who they deal with, how they are remunerated and most importantly why they are making their recommendations. Make sure they are looking after your interest and not just placing the business where it best suits them.
NZMBA-accredited mortgage brokers are the only mortgage brokers who can be held accountable, by virtue of the code of ethics they subscribe to and the recourse available to you as a consumer, for the advice they provide. To find an NZMBA-accredited broker near you, go to www.nzmba.co.nz.
* Geoff Bawden - Chairman, Mortgage Brokers Association.