David Hayward | The Money Institute | November 10, 2010

Mr Brokerage Company has just been fined $220,000 for a breach of the NCCP rules. Currently fiction, don’t let it become fact.

That would be a pretty shocking heading wouldn’t it? What sort of impact would this have on your business viability, income and future? Pretty disastrous I would have thought.

So we were wondering who will be the first to be fined for breaching the new requirements of the NCCP to ensure clients can adequately fund their debts. We doubt if it will be a bank as they are so wrapped up in the compliance environment that they would appear to have this covered.

So it is likely to be a broker, which then begs the question under what circumstances will this occur. Of course you can speculate and argue about whose responsibility really is it, and as some others have said  ‘its not our job to nanny the clients concerning their money management’ .

But we wonder how many people have really thought this through. Now, it is just my opinion but it would seem clear to me that once new regulation comes in, someone always will have a go. Perhaps it will be a disgruntled client who falls on hard times due to rising interest rates, poor financial literacy and lack of care. So of course a scapegoat will be chosen and that is more than likely going to be a broker. It could b argued that is why you have professional indemnity insurance to cover such a situation.

But will you be covered? Have you checked? And under what circumstances will the insurer refuse cover. Interesting times, with interesting questions.

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