The Financial Services Council (FSC) has welcomed the FMA report on soft commissions (see: FMA Targets Soft Dollar Commissions), which has fuelled discussion on how incentives should be used in the life insurance industry.
FSC CEO, Richard Klipin, says the report is a valuable step in driving transparency in the advice process.
“Every day thousands of financial advisers do great work for improving Kiwis’ financial security and protecting them and their families when things go wrong – but there is an absolute obligation to be transparent in the way they do this,” said Klipin.
He added that it is up to everyone within the industry to lift their game to make sure that policies are driving the best outcomes for clients.
“Ultimately, the way companies choose to structure their remuneration packages is a commercial decision and one that will differ from company to company,” he said.
“However, the FSC strongly supports the request from the FMA for insurers to consider the nature and value of the soft commissions they provide to ensure that their use of them is supporting good outcomes for consumers.”
He said the changes in progress through the Financial Services Legislation Amendment Bill, the Financial Advice Code Working Group, and also the FSC’s code of conduct demonstrate the sector is lifting its standards.
“When fully implemented these initiatives will mean a much higher standard of transparency and disclosure across the industry and that’s a good thing,” said Klipin.