The Financial Services Council, Financial Advice NZ and Commission for Financial Capability (CFFC) have each responded to the Life Insurer Conduct and Culture Report released by the regulators today.
FSC CEO, Richard Klipin, says the industry accepts there are improvements to be made in a range of areas highlighted in the report.
“Conduct, culture and ensuring great consumer outcomes is paramount,” he said. “We also accept that action in some areas was not taken as quickly as desired and that has been a source of frustration for the FMA and RBNZ.”
He added: “We are encouraged that the report did not find evidence of systemic customer harm, and that the regulators highlighted the good work of the many thousands of front line and claims staff and their strong focus on delivering good consumer outcomes.”
The Financial Services Council stated it will work with its members in the sector (ten of the 16 insurers in the Review are FSC members) to act on the recommendations from the regulators.
Financial Advice New Zealand Chief Executive, Katrina Shanks, says the report is integral in highlighting areas of improvement in order to maintain and grow public confidence and trust.
“We welcome the suggestion that qualifying criteria for soft commissions be reviewed and are focused on improving customer outcomes – whether for internal staff or intermediaries; this further supports consumer interests,” said Shanks.
“We are supportive of a review of intermediary commissions to ensure the model is relevant and sustainable.”
“We are supportive of a review of intermediary commissions to ensure the model is relevant and sustainable. It is essential that commission models are in the best interests of consumers, but also ensure that the life insurance advice sector can continue to provide this valuable service to New Zealanders,” she cautioned.
The CFFC has also expressed its support of the report’s scrutiny on the sector.
CFFC Managing Editor of website Sorted, Tom Hartmann, says consumers are at the mercy of intermediaries selling life insurance on behalf of companies who have not invested in their own frontline staff.
“It is often impossible for consumers to know the difference between being told or sold,” said Hartmann. “If a financial adviser is giving you the best options based on your circumstances, and shopping around for the best policy for you, that’s great, but if they’re only working for one company they’re just a sales funnel.”
“This report is an important vehicle for change. It may require the industry to change its entire business model…”
Hartmann continued: “Many insurance companies outsource the selling of their products to agents and shield themselves from risk – they incentivise the agents to sell, but effectively wash their hands of poor customer outcomes.
“This report is an important vehicle for change. It may require the industry to change its entire business model, but I’m hopeful of a better outcome for consumers,” he said.