Latest Poll – Soft Commissions

 Loading ...

Our latest poll question follows the FMA publishing the findings of its engagement with insurers on how they manage their customers’ interests during periods of short term sales campaigns and incentives.

While the FMA is addressing insurance in general, we are interested to see if advisers feel the FMA’s concern is justified with regards just to the life insurance market.

As we reported, the regulator wrote to insurers last year “…after observing some insurers offering benefits and campaigns designed to drive business coming from third parties such as financial advisers.”

It noted that these types of incentives “…if not carefully managed, can create conflicts of interest that put the fair treatment of consumers at risk.” (see FMA Raises Concerns Over Soft Commissions).

The FMA says that its Insurer benefits and campaigns insights outlines observations of current industry practices and reinforces expectations under the COFI regime, which requires insurers to treat consumers fairly.

…These benefits and campaigns, or soft commissions, have a place but insurers should actively consider these risks…

Michael Hewes, Director of Deposit-taking Insurance and Advice, says that while practices have moved on since FMA work in this area in 2018 and the introduction of the CoFI regime, it’s important insurers manage the risks appropriately.

“These benefits and campaigns, or soft commissions, have a place but insurers should actively consider these risks to ensure their fair conduct programmes are designed to support fair treatment of consumers.”

He says the FMA wants these insights “…to support insurers to take consumers’ interests into account when designing, offering and managing benefits and campaigns.”

So, do you think the FMA concern is justified with regards to the life insurance market in particular? We are keen to know your views and will report back next week…