Mortgage industry leaders, including all three former NZMBA chairmen, are now challenging the NZMBA's windup.

The PAA clearly still wants the plan to proceed but questions both TNP's timing and its move to form another association at a time when the industry is trying to consolidate.

"We're committed to being an impartial, professional association which provides professional benefits and advocacy to government independent of any provider or distribution group," PAA chief executive Edward Richards says.

"TNP is a totally different organisation from a professional association such as the PAA because they're a commercial animal."

Immediate past chairman Geoff Bawden has vowed to rally support to vote against NZMBA's windup - the vote requires 75% of members.

Even before TNP's announcement, Bawden was unhappy with the idea of winding up NZMBA, concerned that it would mean the loss of specialist representation for mortgage specialists - PAA has about 850 advisers as members, about a third of which write mortgages while NZMBA has about 430 members.

But TNP's initiative undermines the goal of having a single industry body. "You cannot have an industry association run by a commercial interest," Bawden says.

Inaugural NZMBA chairman Rob Tucker says he was initially inclined to support the NZMBA/PAA plans for pragmatic reasons.

"But in light of the TNP announcement ... you've got to question virtually everything that's gone on."

TNP's move "is just purely commercial opportunism. I think it's potentially very damaging for the industry," he says.

Like Bawden, Tucker now wants the NZMBA/PAA agreement scrapped and wants to see specialist representation of mortgage advisers maintained.

Brian Berry, who was NZMBA chairman between 2002 and 2004, says the needs of specialist mortgage advisers "can't be looked after properly by a commercial entity."

Because of TNP's plans, "the merger with PAA needs to be challenged. You have to question the bona fides of negotiations with the PAA when this was bubbling away in the background."