The Financial Services Council (FSC) has launched its new Code of Conduct, containing a new set of standards and guidance for its members.
Developed by FSC members, the Code will come into effect on 1 January 2019.
The FSC’s members make up 95% of New Zealand’s life insurance market and manage funds of around $50 billion.
FSC Chairman, Rob Flannagan, says the new Code is “a milestone” for the financial services industry.
“As financial providers we know we have a responsibility to serve New Zealanders in a transparent and honourable way,” he said.
“The Code is a big step forward and it’s about the industry committing to high standards and continuous improvement.”
“The Code is a big step forward…”
It stated the Code is designed to complement existing regulation and laws, and has nine standards within three core objectives covering ethical, communication and consumer outcomes:
The three core objectives and standards within include:
- Principal ethical standard, ensuring business is carried out professionally and with due care
- Members must carry out business professionally, with due care, competence and skill, and act with integrity. They must behave in a way that promotes public confidence in the financial services industry
- Customer perspective standards, ensuring effective two-way customer communications
2. Members must communicate with customers clearly and effectively
3. Members must make reasonable efforts to ensure that customers are provided with sufficient information to enable them to make informed decisions about product and services
- Delivering good customer outcomes, ensuring effective products and distribution, training, risk management, management of conflict and fair treatment of customers
4. Members must seek and consider customer feedback
5. Members must design and distribute products responsibly
6. Members must provide employees and distribution channel personnel with appropriate training
7. Members must maintain appropriate internal processes for explaining the risks to a customer of replacing or retaining an existing product or service
8. Members must manage conflicts of interest fairly and in a way that promotes good customer outcomes
9. Members must treat customers fairly
If there is a material breach of the code, there are a number of sanctions and penalties that an Independent Disciplinary Committee can impose on a Member, including fines of up to $100,000 and termination of FSC membership.
FSC Chief Executive, Richard Klipin, says the Code is firstly about putting consumers first.
“We want to ensure our members are putting the interests of consumers front and centre and delivering the best outcomes for New Zealanders,” he said.
“While we recognise there is still plenty of work to do, with the launch of this Code of Conduct the industry is putting a stake in the ground.
“We are clear that we need to take the lead in lifting standards to deliver better outcomes for New Zealanders. We know that we don’t always get it right and we know that we cannot be complacent,” he added.