Bond origination: need for regulation
The value that bond originators add to the property industry will be further enhanced if the industry is regulated.
The regulation of bond origination will have a positive impact, as it would add stature to the industry in the eyes of all stakeholders, in particular the banks, the regulatory authorities such as the Financial Services Board (FSB), and most importantly, the bond origination clients.
Our sister industry of estate agents has a code of conduct and is governed by the Estate Agents Affairs Act. The Estate Agents Affairs Board (EAAB), the Institute of Estate Agencies, as well as the National Association of Real Estate Agents (NAREA), ensures the regulation is enforced. These regulatory and industry bodies reflect the maturity of the industry.
However, self-regulation would better demonstrate the remarkable maturity of the bond origination business and the bond origination industry leaders have done some work towards this goal.
What is important to realise is that regulation is not a chore. Not only does it provide stature to the industry but it also provides boundaries within which industry players can operate. When we provide advice regarding a new home loan, fixing a variable rate, or debt consolidation, there are no documents in place to confirm our well-intentioned discussions with the client. This places the client and the originator in a parlous position should the advice be queried at a later stage. Regulation will protect both the client and the home loan adviser.