The PAA’s submission on the recent Ministry of Economic Development discussion document argues that while advisers and other intermediaries should disclose there is a commission for any products they recommend, “We do not accept that the benefits of disclosing the amount of commission would outweigh the cost.”
“Life insurance products are still sold rather than bought.
Unlike many financial products, life insurance demand is reliant largely on the number of intermediaries in the market. Reductions in the number of intermediaries could lead to a reduction in new business volumes.
“We already have fewer people insured now than 20 years ago because of decreases in adviser numbers; we don’t want (nor does the New Zealand consumer need) this situation exacerbated by disclosure requirements that will not actually benefit consumers.”
The Institute of Financial Advisers is taking a similar line.
It says too heavy an approach in the insurance area will only serve to scare more people off.
“Only the fact that the financial intermediary is receiving commission needs to be noted,” it argues in its submission. “We are still of the view that disclosure of commissions for risk products might affect overall uptake of risk products and contribute to consumer under-insurance.”
And Butler says the final report of the Task Force on Financial Intermediaries recommended more research on whether a greater level of disclosure by insurance advisers was needed.
“If it becomes clear that consumers would be helped by a greater level of disclosure, we’d find it hard to argue against that. But at the moment that isn’t clear at all.”
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