It was announced in last Friday's Select Committee report that mortgage brokers and insurance advisers who only advise on category 2 products will no longer have the option to be authorised.

ETITO manager of strategy and corporate relations Michael Frampton says over 3,300 insurance or mortgage advisers have enrolled in training for the National Certificate in Financial Services [Financial Advice] [Level 5] for the purposes of authorisation.

He says ETITO  is seeking clarification from the Securities Commission on the matter.

"We do understand the concern and confusion expressed to us by those mortgage and insurance advisers who have made the commitment to the qualification based upon their intention to become authorised and who are now uncertain about how, or whether, to proceed," he says.

Frampton urges concerned advisers to contact their professional association or seek guidance from the Securities Commission.

The New Zealand Mortgage Brokers Association (NZMBA) chief executive Darren Pratley says he is disappointed by the decision as many advisers may wish to become AFA's by choice.

"The Bill fails to provide the Securities Commission with any power to recognise voluntary compliance with the requirements of authorisation. 

"Consumers are losing all of the protection that AFA status provides, and the investment of many advisers over the last twelve months, is being destroyed."

Pratley says millions of dollars have been committed by insurance and mortgage adviser firms with the intention of enhancing the comprehensive service already provided by industry participants, all in the interests of consumer confidence.

Pratley says the overall aim of the Financial Advisers legislation is to enhance the professionalism of the industry and protect the consumer.

"There should not be any restriction on advisers who voluntarily choose to embrace the regime, and Government must ensure that this provision is made within the Bill before it is passed into law."

Asteron general manager risk distribution Peter Conroy says a cat has been put amongst the pigeons.

"It is likely to be disappointing for risk advisers who were planning on taking the opportunity to develop skills and demonstrate their professional capability to clients," he says.

However an insurance adviser who did not want to be named has said the meaning of becoming an AFA has been blurred.

"Being authorised simply means you are under a supervision structure. It does not mean you are more professional or that you give advice of a higher standard.

"If insurance advisers or mortgage brokers want to get the NCFS-5 qualification they can, just as they can get many other qualifications. There are a lot of ways to be a professional."

He says many insurance companies promoted AFA status as professional because they wanted to get everyone across the line, however, regulation is simply there to supervise investment advisers.