The FMA has released the letter it has sent to the chief executives of New Zealand’s licensed life insurers, asking them to prove themselves in a similar manner as they recently requested of the banking sector (see: Aussie Royal Commission…).
“We consider that the window for you to demonstrate to consumers, regulators and other stakeholders that they can have full confidence in the financial services industry in New Zealand is narrow, and you will have seen we have encouraged proactive leadership from the retail Banking sector,” the FMA stated in the letter.
“Given the breadth of your business activities here in New Zealand we would like to ask you for the same information that we have requested from the Banking sector.”
Specifically, the FMA has asked insurers to provide a written response on the following:
- The actions you, your Board and your senior teams have taken to identify and address conduct risk arising directly or indirectly from your firm’s actions, including product design and distribution, incentives setting, and claims performance. This should include any “gap analysis” work against the expectations set out in the FMA’s Conduct Guide
- Any specific plans and actions you have taken (or have underway) to respond to the issues and themes arising from the Royal Commission
- Any other work you have underway or that is planned to proactively identify and address potential conduct and culture risk
- Any work underway to remediate any identified issues where conduct by your firm has resulted in detrimental outcomes for customers.
It continued: “Our objective in this exercise is to understand what work you have undertaken to review your operations to promptly identify and address any conduct and culture issues. We expect you to show us what you have done in order to be comfortable that there are no material conduct issues within your business.”
The FMA and RBNZ have also met with Finance Minister, Grant Robertson, and Commerce and Consumer Affairs Minister, Kris Faafoi, to discuss the review of the conduct and operations of the financial sector.
Robertson said they are pleased the regulators have taken this step of undertaking a review.
“We are watching the situation closely as New Zealanders needs continued reassurance that what we have seen uncovered in Australia does not happen here,” he said.
“I am encouraged by the process they are undertaking in asking for assurances and evidence and I reiterated that that this is a matter I regard to be of serious importance for New Zealanders,” Robertson added.
“We have seen no evidence to date of the systemic problems that prompted the Australian inquiry…”
Faafoi added: “We have seen no evidence to date of the systemic problems that prompted the Australian inquiry but we are happy the FMA and RBNZ have a continuing programme of work.”
The RBNZ and FMA will appear before Parliament’s Finance and Expenditure Committee at 2pm on Wednesday to brief the committee on their understanding of the implications for New Zealand of the Australian Royal Commission into Misconduct in Banking, Superannuation and Financial Services Industry.
The FSC has welcomed the regulators joint conduct letter and said they will engage in a transparent and constructive manner in providing the requested information.
“Like the FMA and the RBNZ we take the issues arising from the Royal Commission in Australia very seriously and are committed to working closely with them to demonstrate that consumers can have confidence in the New Zealand financial services industry”, said FSC CEO, Richard Klipin.
“We will provide a full and comprehensive response to the letter shortly and will engage with the regulators throughout this process,” he added.
Insurers have until 22 June 2018 to provide their overview to the FMA.
Click here to read the FMA’s letter in full.