Do the basics well was one of the key messages from the industry regulator to insurers and advisers during this month’s Generations conference organised by the FSC.
Speaking during an online panel discussion, Clare Bolingford, Director of Banking and Insurance at the FMA said that when issues arise it typically finds there is no intent to drive poor customer outcomes “…but quite often the systems and process aren’t there to achieve them”.
“So if you are thinking about launching a new product, or digitisation of systems – which is accelerating under Covid-19 – then you have to have the systems to make sure the customer outcomes that you expected are actually achieved through the process,” she said.
“So getting the basics right and embedding a culture that is more customer centric is what the FMA expects to see – more focus on the end customer, not just on the distribution channel.”
On the issue of commissions, Bolingford said she is seeing end-commissions at an all time high, “…and we have to ask ourselves who benefits from that”.
“I think there is a question around whether it is the cost of the products or the system itself,” she said.
However, what Bolingford wants addressed is for risk management to be elevated to the same level as financial risk management.
…getting the basics right and embedding a culture that is more customer centric is what the FMA expects to see…
“This is an industry that is all about financial risk management, and that’s from a customer point of view,” she said. “It’s their financial risk that we’re managing as an industry, so what I’d like to see is the customer put at the centre of conduct risk management as well.
“The FMA will hold the industry to the standards that we expect of them, but we do want to focus on more than just compliance, rules, and regulations.
“Ultimately, that is about us working together. It is about looking at some of these challenges and deciding how we can collectively find solutions, and I think the regulator is part of that as much as the industry is.”
Doing the basics well is an important starting point…
Bolingford also said that helping customers understand the value of the products they buy is a part of the solution.
“It is a really important part of demystifying the complexity of some of the products,” she said. “And we know that during Covid people were calling call centres to ask what they are covered for, which means they didn’t know what it was they had bought in the first place.
“And we saw there are different terms being used across the industry for different types of relief that could be provided. That doesn’t help with customer understanding, so I think there is an opportunity for us to come together to think about what are some of the issues we can tackle together. And that will help us achieve good outcomes for customers in the future.
“Doing the basics well is an important starting point.”