Regulation of advisers already increasing confidence

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Trust and confidence in financial advisers, investment managers and deposit taking institutions has increased in the last six months, however confidence in insurers has declined according to a survey of current customers by RaboPlus.

Thursday, April 8th 2010, 5:00AM 3 Comments

by Jenha White

The proportion of customers saying their financial adviser acted ‘fairly and with integrity' increased from 64% in September 2009 to 69% last month with confidence in advice also increasing from 66% to 69%.

Fund managers acting fairly and with integrity increased from 50% to 58% with confidence in advice also increasing from 53% to 62%. Trust in share brokers remained at 54%.

Institute of Financial Advisers (IFA) president Lyn McMorran says the increase in trust and confidence reflects where the industry is heading with regulation.

"It means people have a better perception of financial advisers now that it is becoming a regulated profession with advisers working towards competence and authorisation.

"I think it's great that financial advisers are getting credit for a change rather than being blamed for everything that went wrong."

She says surveys have shown that people who use a financial adviser are financially better off which reinforces what financial advisers already know but what the public often does not recognise.

Credit unions and building societies are still seen to act with the most fairness and integrity with the most marked increase from 71% to 87%, banks also increased from 53% to 56%.

Finance companies also saw an increase in acting ‘fairly and with integrity' from 29% to 35% regardless of the moratoriums and receiverships going on, however even with the increase finance companies are well below other service providers which are all rated over 50%.

There was also an increase in current customers who feel confident their money will be safe with a finance company from 27% to 34%.

RaboPlus general manager Mike Heath says he believes there has been an increase in confidence because while some finance companies have fallen, those left in good finance companies are feeling confident about their money there.

Life insurers have gone from being the fourth most fair service providers with integrity to the eighth with a decrease from 55% to 51%, there was also a decrease for house contents and car insurers as well as health insurance providers. Confidence that valid claims would be covered also saw decreases from 67% to 65% from life insurers and 75 to 73% for house, contents and car insurance.

Investment Savings & Insurance Association (ISI) chief executive Vance Arkinstall says a survey by the ISI found that 97% of life insurance claims get paid without any further questions needing to be asked.

He says in cases where there have been elements of non-disclosure and where insurance companies have questioned claims, media publicity has been out of proportion with the nature of the problem.

"I think if people who had actually made a claim were surveyed the response of satisfaction would be very high," says Arkinstall.

The survey is the result of a random sample of 1,000 New Zealanders surveyed online.

Jenha is a TPL staff reporter. jenha@tarawera.co.nz

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