|        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Sunday, August 14th, 5:29PM


Latest Headlines

ISI says it will now consult on its new anti-churning policy

The Insurance Savings and Investment Association says it is prepared to consider making "improvements" to its new anti-churning policy after hearing feedback from advisers.  

Tuesday, July 6th 2010, 8:57PM 12 Comments

Its new Business Replacement Rules and Reinstatement policy came into effect on July 1 and there has been considerable comment since Good Returns ran a story on the changes last week.

ISI chief executive Vance Arkinstall says the new standard replaces one that was introduced more than a decade ago.

He  acknowledges that the new Standard has raised some concerns, most of it focused on the new consumer information brochure.

"As a result ISI will engage in consultation with adviser group representatives to identify immediate improvements that can be made."

ISI Chairman Sean Carroll says "we are committed to raising industry standards around the level of consumer disclosure, and we are equally committed to working with stakeholders to make sure the needs of consumers, advisers and the industry are met."

"That is why we will consider the issues raised by adviser groups and, where appropriate, address them."

Arkisntall says the key purpose of the new standard is to ensure people know what they may be giving up when they replace a policy with a new one.

"There have been a number of unfortunate cases where benefits under a replaced policy would have triggered a successful claim, but the new one did not. People have the right to replace their policies, but we want to be sure they are basing those decisions on all the facts."

Arkinstall believes the updated ISI policy addresses this issue by strengthening the consumer disclosure guidelines that member companies follow and creating a process that supports the adviser should questions arise in the future.

"Our only objective has been to create an environment where the consumer receives all the information they need to make an informed decision," Arkinstall says.

"Our commitment in this regard remains unchanged, and we are keen to work with other industry groups to review the current policy and make improvements. As a result we will be consulting with industry representative groups and interested parties to identify where changes could be made."

« Fraud attempts at AXAAIG nabs Pru man to lead float of AIA business »

Special Offers

Comments from our readers

On 7 July 2010 at 8:50 am old git said:
ISI Chairman Sean Carroll says "we are committed to raising industry standards around the level of consumer disclosure, - the Securities Commission may feel the ISI is imposing on their role and maybe the ISI should leave it to the government legislators and regulators to do their job.
With a diminishing membership the role of the ISI in today's environment seems to be getting less relevent.
On 7 July 2010 at 10:00 am Majella said:
There is one statement in particular on the new form with which I have an issue:
"7. I/We acknowledge that the Adviser/Intermediary explained the amount of remuneration payable from this change".
As far as I know, there is not requirement to disclose commissions - at least, not YET - and that this clause therefore is outside current requirements. A statement saying that the Adviser has explained thats/he will receive remuneration should be sufficient, and is in fact already stated on the illustration.
On 7 July 2010 at 10:06 am David Whyte said:
Consultation is indeed an appropriate course of action - perhaps it might have been advisable to contemplate this before releasing the new form. However, I'm sure there will be plenty submissions from various parties whch will hit ISI's desk. For what it's worth, I believe the form is superfluous. The Code is quite specific regarding Adviser responsibilities to act in the clients' best interests in all aspects of dealing, which must include the replacement of existing business. "Churning" defined as inappropriately replacing existing cover purely for the adviser's financial gain" cannot be condoned, but surely the Code covers this. If and ISI member is aware of inappropriate adviser practices - including churning - then the Securities Commission should be notified and this body will surely have the power to revoke adviser authorisation/registration.In order for the practices and behaviours embodied in the Code to be legitimised and have force, all industry participants need to subscribe to the principles involved. It appears to me that ISI members, by even retaining the need for a replacement form, are diluting the validity of the Code. There are also questions about relationship management, client privacy, and the validity of repeating statements/questions already contained in the standard application form, but I shall leave these issues for others to address.
However, the establishment of a New Zealand principles-based regulatory environment is far better than the rules-based regimes of Australia and the UK - believe me, I've operated in both! So the ISI form, inadvertantly I'm sure, erodes the concept of the principles-based regime and should be consigned to the recycle bin. If ISI members wish to see disclosure, transparency, and elevated industry standards, they need to pay more than just lip-service to the Code.
On 7 July 2010 at 10:36 am old git said:
Well said David - we can but wait and see if the Code does have some real teeth. I am sure it will.
On 7 July 2010 at 12:15 pm Ron Flood said:
Regarding disclosure of commissions on Category 2 products, the Financial Service Providers (Pre-Implementation Adjustments) Bill specifically requires that there will be a regulations requiring "the compulsory disclosure of commissions, fees and other personal gain obtained by an adviser by selling category 2 products".
This requirement is just around the corner so we should prepare for it now in our disclosure statements.
On 7 July 2010 at 12:15 pm Geoff said:
David's comments seem to be what Advisors are discussing between themselves.

Having just been to an Industry Body meeting today, this was one topic being discussed openly by Advisors, in particular the nature of the wording which from a Consumer's view points the finger at the Advisor as being questionable in their advice.

Surely the existing form in all insurer's applications covers the main issues, with the exception being that it is not compulsory to complete it, which it should be in my view.

Having a standard form for the industry is a positive, as long as the entire industry (including all Non ISI members)are subject to using this as a minimum requirement.

On 7 July 2010 at 12:24 pm Alan Burns said:
I totally agree with David the ISI seems to be joining a number of other organisations rushing out with ill thought out regulations and then having to backtrack. Its the ISI own members who are responsible for the majority of churning, when they show that they can put their own house in order rather than trying to wave a big stick they will gain more respect from us who are at the forefront of our industry.
On 7 July 2010 at 2:48 pm Jon Turnbull said:
David Whyte and others have correctly identified the short commings of the new intended Replacement Advice form. Thie new initiative has received wide spread condemnation from the Advisory community. That being said I fear that the concern goes even deeper as most advisers as too busy advising to take the time to put thought to paper (important as it is). I suspect that for every public comment there will be more than 10 silent advisors. I am abosolutely opposed to a previous company contacting a past client and undermining the advice provided. That will only cause further confusion and distrust in an already fragile environment. I have no problem however with the previous company contacting the adviser and if they think the advice is poor then there are remedies for them to follow - such as a Disputes resolution process. It is also not the time to be forcing disclosure of commissions. Instead the ISI would be better employed making submissions to the regulators to avoid this imposition. It is hard enough as it is to get good kiwis to insure their financial risks without mudying the waters further by having clients thinking about commission levels rather than the real issues of what they need to be doing to protect their situations. If life companies recognised the work that advisers do to up grade policies and make sure that their clients are adequately protected then maybe there would not be such an issue around the replacement of one companies contract with another. I couldn't agree more that the ISI needs to clean up it's own back yard before it waves the stick at the advisers. A lot more thought and initiative needs to go into the Replacement Advice disclosure documnent and brochure before it is released to the public or becomes an industry standard. It is encouraging to see that the ISI are prepared to consult regarding this matter.
On 8 July 2010 at 1:15 pm Mac said:
"If ISI members wish to see disclosure, transparency, and elevated industry standards" maybe they should have looked into the dealings of their own chief executive.
On 9 July 2010 at 6:21 pm Paul Burns said:
What problems are ISI trying to address with this form? Is it to prevent a perceived plague of clients being ripped off by inappropriate replacement policies? Or perhaps could it be that the ISI is trying to pass the buck & foist problems they have created onto the public. Moreover what regard has the ISI given to the public's right to their buying decisions remaining confidential from a FORMER insurer who is no longer on risk?
On 14 July 2010 at 1:49 pm Steve said:
Interesting, I just been to see a client to conserve some business only to find it had been rewritten by a family member. Nothing wrong with that I hear you say except he harassed them for months and to get the business he paid the first 6 months premiums. Bet he didn't complete the ISI form correctly!
On 19 July 2010 at 4:49 pm john q said:
i have just had a policy knocked over on me?? with no replacement form, where do i go to complain?? help please.
Commenting is closed



Printable version  


Email to a friend
Insurance Briefs

Fidelity backs two non-profits

Auckland-based InsurTech firm aims for ASX listing
New Zealand-based InsurTech firm raises $7.4 million to fund expansion.

UniMed picks up book of business
After 40 years a friendly society has decided to exit the health insurance sector.

OnePath and Cigna pinged by FMA
OnePath Life (NZ) and Cigna Life Insurance have agreed to pay the Financial Markets Authority $180,000 after admitting breaches of the fair dealing provisions of the Financial Markets Conduct Act 2013 (FMCA).

News Bites
Latest Comments
Subscribe Now

Cover Notes - Specific news aimed at risk advisers

Previous News
Most Commented On
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
Site by Web Developer and