Our latest poll asks whether you are in agreement with the Government’s announcement to regulate the conduct of financial institutions.
Commerce and Consumer Affairs Minister, Kris Faafoi, announced the new regime last week and said the move intends to ensure the fairer treatment of consumers from banks, insurers and other financial service providers (see: Government Announces Conduct Licensing Regime for Insurers and Banks…).
“Under this new regime we are aiming to ban things like target-based sales incentives, which put profits ahead of people, as has been identified in recent reviews,” Faafoi said.
The Government stated the new financial conduct regime will:
- Create a conduct licensing regime for banks, insurers and non-bank deposit takers regarding their general conduct. These institutions will be licensed by the Financial Markets Authority.
- Require licensed institutions to meet a fair treatment standard (for example, to pay due regard to the needs and interests of customers and treat them fairly)
- Require licensed institutions to implement effective policies, processes, systems and controls to meet the fair treatment standard.
- Create obligations for financial institutions in relation to how they design their remuneration and any other sales incentives, and how they must manage the risks those incentives create.
- Prohibit sales incentives based on volume or value targets (e.g. soft commissions such as overseas trips, bonuses for selling a certain number of financial products, leader boards, and performance management based on the volume of sales). This prohibition will apply to banks, insurers, non-bank deposit takers and their intermediaries.
- Make licensed entities accountable for sales to consumers by the entities’ contracted intermediaries who are not financial advice providers (non-adviser intermediaries include car dealers, retailers selling add-on finance and insurance, and travel agents or airlines selling travel insurance).
Do you think this move from the Government will be a win for consumers? Do you believe it will help to build public confidence in the financial services sector?
Place your vote in the poll above and we’ll report back to you next week…