“We want to focus on the key issues facing the industry rather than what’s said in a single report,” Chief Marketing and Strategy officer Chris Lamers says.
The two big issues around life insurance are under-insurance and replacement business.
Sovereign has commissioned its own report from NZIER on issues facing the life insurance industry. Lamers says it is based on “facts and data.”
“We believe now is the time for us to lead the discussion around regulation, rather than just hoping for the best.”
The Sovereign report is not based on “tradition or urban myth.” Also it looks across all channels to address the issues facing the industry.
“The key issue we see from industry data is the impact of replacement business that disadvantages the customer.”
In its submission on the review of the Financial Advisers Act Sovereign cautioned against wholesale changes and proposed “simple incremental enhancements to the regulatory regime.”
Any changes “should only be pursued if justified by evidence.”
Sovereign said it “does not condone inappropriate churn” and said “switching for the right reasons encourages product innovation and competition and supports a healthy insurance industry.”
It said it had seen “no evidence of a systemic problem”.
The FAA has adequate measures to address the aberrant behaviour by a minority of advisers, it says and this would come under a breach of the provision for an adviser to provide duty of care, diligence and skill as required under the act
“Sovereign believes that greater enforcement of the current regulatory tools will significantly reduce, if not eliminate,...inappropriate churn.”
It does support a level playing field on the disclosure of commissions.
Because registered financial advisers don’t have to disclose commissions this could encourage inappropriate churn.
Sovereign resigned its membership of the FSC last year, and will officially leave the council next month.
Lamers says Sovereign will respect the FSC’s embargo on the MJW report and talk about it next week after it is released.
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