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

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Friday, July 10th, 4:12PM


Latest Headlines

EDRs: Here's how to protect yourself from churn claims

Advisers must keep good records of their interactions with clients to protect themselves against allegations of churning business, dispute resolution services say.

Thursday, July 27th 2017, 8:56PM

by Susan Edmunds

FSCL this week reported that the number of complaints about financial advisers had increased significantly year-on-year, off a low base.

About 10 of the cases FSCL had dealt with over the year had related to replacement business, chief executive Susan Taylor said.

She said, when advisers recommended that insurance policies be replaced, they needed to clearly explain to their clients the reason for the change, whether they were suggesting a change to a new insurer or just a new type of product.

“They need to clearly explain the differences between the types of products and give clear reasons comparing the old with new.”

She recommended as much as possible should be put in writing so it was clear in future what had been discussed.

Taylor said advisers should also make clear to their clients their disclosure obligations. “We sometimes see clients who clearly haven’t understood the importance of disclosure.”

If there were any premium loadings or exclusions applied, they should be explained, she said, and a policy should not be cancelled until the new one was operating.

“Losing cover for pre-existing conditions causes the biggest problems,” Taylor said. “Often the clients hasn’t understood the proposal.”

Insurance and Financial Services Ombudsman Karen Stevens said churn was a major concern for the insurance advice industry.

“It simply means that consumers are being shifted from one policy to another for the financial gain of the adviser. No one would actively encourage such behaviour when it's not in the interests of the customer,” she said.  

“The complaints we see usually relate to non-disclosure; where an insured's health has changed and they fail to inform the new insurer.  A claim that might have been paid under the original policy won't be paid under the new policy if it hasn't been disclosed at commencement of the risk. The IFSO Scheme has heard consumers say, so many times, that if they only knew the risks, they wouldn't have changed policies.

“Changing policies is fine for the right reasons if it's in the customers' best interests and as long as the customer has fully disclosed.”

Tags: Churn

« Kiwi company attracts $200 million global investmentPartners Life profit flat on back of continued growth »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment



Printable version  


Email to a friend
Insurance Briefs

Less stressed during lockdown
New Zealander’s health and wellbeing had surprising benefits from the Covid-19 lockdown.

Southern Cross supports new safe haven for at-risk pets
Southern Cross Pet Insurance has teamed up with Pet Refuge to provide temporary shelter for animals affected by family violence.

nib Foundation supports Lifeline to the tune of $150,000
To support the growing mental health needs of Kiwis emerging from the Covid-19 pandemic, Lifeline Aotearoa has increased its service capacity thanks to a $150,000 grant from nib foundation, the charitable arm of nib New Zealand (nib).

Southern Cross halves staff numbers
Southern Cross Travel Insurance is slashing its staff numbers from 90 to 45 people.

News Bites
Latest Comments
  • Greens want ACC extended to cover sickness
    “Never happen. The Greens are such an aspirational bunch. Must all the weed. They 'want' all sorts of unlikely things...”
    3 hours ago by All hat no cattle
  • Harking back to the old days
    “Really positive news. NZ has been blessed by many successful leaders and it is good that their skills can skill be utilised...”
    8 hours ago by Francis L
  • Harking back to the old days
    “I dare say Cigna just got that extra grunt it's been looking for....”
    10 hours ago by Matron
  • Greens want ACC extended to cover sickness
    “The Greens have no idea The purpose of the Woodhouse report was to remove the "at fault" component of accidents Sickness...”
    1 day ago by LNF
  • Commission disclosure: What's material?
    “The consumer should know that there is at times large amounts of comission involved but it has to be balanced with not confusing...”
    1 day ago by Good Hamish
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
Site by Web Developer and