The Financial Markets Authority has stated it is now up to insurers and banks to rebuild public trust, as it releases its 2019 Annual Report.
Referring to the FMA and Reserve Bank’s joint Conduct and Culture review of Banks and Insurers, the annual report recapped the findings from the insurance sector review, stating, “Our January 2019 report showed that life insurers’ processes and practices were materially worse than those in the banking sector”.
“We identified instances of potential misconduct where customers were misled or sold inappropriate products, or were not treated in accordance with the terms of their policy. There were also deeper problems in the same risk areas identified for banks, showing insurers had a much less mature approach to serving the needs of customers,” the regulator stated.
Noting the requirement for banks and insurers to provide the regulators with plans to address the issues identified by the reviews, the report stated:
“It is now up to the firms to rebuild public trust by doing the work to bring their plans to life. While we will be monitoring progress and taking action where necessary, it is ultimately the responsibility of the banks and insurers to assure the public that they can offer a fair, transparent and mutually beneficial relationship to their customers.”
“It is now up to the firms to rebuild public trust by doing the work to bring their plans to life.”
It added the high-level recommendations, listed below, from its Conduct and Culture reports apply to all financial market participants:
- Greater board and senior management ownership and accountability
- Prioritise issue identification and remediation
- Prioritise investment in systems and frameworks
- Focus on longer-term customer outcomes
- Strengthen staff reporting channels
- Remove all incentives linked to sales measures, or take steps to manage the risks associated with incentives
“We want to see sales and advice practices designed to meet the needs of customers, and boards and senior management of regulated firms leading organisational culture and placing customer interests at the centre of their business strategies,” the regulator stated.
Commenting on the upcoming new regime for financial advice, FMA Chief Executive, Rob Everett said, “The Act and the new Code of Conduct will level the regulatory playing field for everyone giving financial advice.”
He added: “This will be a big shift for many advisers, but supports a broader effort to ensure access to high-quality financial advice for all New Zealanders.”
Click here to view the FMA’s 2019 Annual Report.