On 15 March 2021 amendments to the government’s Financial Market Conduct Act 2013 (FMC) came into effect. Many mortgage experts, banks, insurers, building societies, credit unions and other providers of financial and risk insurance advice have all experienced big changes.
what is the change?
Throughout the advice process, all assessments and recommendations need to comply with the duties specified in the FMC Act and the Code. When giving financial advice to retail clients, we all must:
- Take reasonable steps to ensure our clients understand the nature and scope of the advice being provided, including any limitations. For example, we must explain if we’re only able to give advice about certain products.
- Where there’s a conflict of interest we must give priority to our client’s interests.
- At all times exercise care, diligence and skill.
- Comply with the new Code of Professional Conduct for financial advice services including competence, knowledge and skill requirements as well as requirements for ethical behaviour, conduct and client care which includes: giving advice that is suitable; taking reasonable steps to ensure our client understands the advice; treating clients fairly; acting with integrity; protecting client’s information.
To us, this has always been the gold standard. FMC changes now legislate what we have always done and requires other providers to lift their client care and level of professionalism.
We are pleased to see many other providers will be called to hold the same standards.
what does it mean for us?
More study and more paperwork! With over 40 years in the banking industry and the kudos of being New Zealand’s youngest bank manager Laurie Wills is arguably one of the industry’s most experienced mortgage experts. He also holds an MBA with distinction—and a black belt in Shushikai Karate!
The new changes, while recognising people come with differing experience, require all professionals to meets new competence, knowledge and skill requirements. This means study. Lots of it. And completing assignments of things we already know well. Again to bring fairness and standardisation to the industry, all financial advisers, regardless of skill, qualifications or experience have to go through the same study and assessment process.
System changes
Enhanced tools, including a Hello Book, new Disclosure guide, new Declaration Form, new Privacy Statement, online Fact Find, and at this stage what is being called a Game Plan or, as we have always provided to our clients, a Statement of Advice.
Clients who have been working with us for over a decade will know we were early adopters of these process and particular of new technology designed to keep our clients informed and their details safe.
We continue to pride ourselves on the quality of our personalised summary of advice for our clients. Providing an awesome client experience is what our brand was founded on. While we didn’t need to wait for legislation to compel us to ensure our client knows who they are dealing with, the extent of what we can offer, anything that may influence the advice we give, and anything our clients may have to pay, it is heartening to see a new professional code adopted by the industry.
For too long, the industry has had few barriers to entry, limited study and skill requirements, and too few teeth to take disciplinary action. Bravo. Finally, clients and advisers together will benefit from increased professionalism. Increasing numbers of mortgage advisors who have enjoyed more lenient times are leaving the industry. We are noticing higher volumes and expect to get busier.
what does it mean for you?
Lots of industry changes regarding huge legislative and regulatory shifts and the adoption of new technology may mean a few teething issues. Luckily we have an enhancement team onboard to ensure ongoing improvements.
A requirement to document every conversation we have with clients as part of our advice process may mean an end to ‘talking turkey’ as some clients like to do when exploring options. We are of course still here to give free, impartial advice—we just don’t want to turn into court stenographers!
Again, all the changes came into effect on 15 March 2021 so things are still be worked through. Buying a house doesn’t need to be risky. With the right professional advice, you won’t just get an average mortgage—you’ll get an awesome mortgage.
Plus, thanks to regulatory changes, you’ll benefit from ongoing peace of mind knowing the mortgage industry is tightening its requirements to always act with your best interests in mind. We are proud to continue to be your trusted adviser.
The post regulatory changes and bye-bye cowboys appeared first on Awesome Mortgages.
