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AMP: No more overseas trips

[UPDATED] AMP is putting a stop to its overseas trip incentives for advisers.

Thursday, April 5th 2018, 9:42AM 10 Comments

In a statement released today, AMP said the recent FMA report into life insurance replacement business highlighted that there were improvements that could be made in the industry.

Last month, the regulator took action against 11 advisers in its investigation into life insurance replacement business.  It found that half the 24 advisers it dealt as part of its review work either were not aware of their obligation to exercise care, diligence and skill or were in breach of it. Many did not recognise that incentives such as overseas trips and upfront commission could create conflicts of interest with their clients.

AMP said it stood behind recommendations that sought to address public perceptions of the industry and improve transparency, and had decided to conclude its offshore development programme.

“AMP is committed to promoting and supporting appropriate and transparent practices across our industry and as part of this we recognise that it is vital for providers to continue to review and evolve their sales and advice practices, including the provision of incentives like overseas programmes,” said Blair Vernon, AMP managing director.

"Since 2012, AMP has included a core focus on professional development as part of our offshore programme, with qualification based on a rigorous qualitative assessment of advice processes as well as sales activity. The programme, which has provided unique educational opportunities and continuing professional development points for select high-performing advisers, has been offered through centres of educational excellence, including Wharton Business School, Said Business School at Oxford and the Melbourne Business School. In 2016, 13 advisers qualified and in 2018 only 12 advisers are invited to participate in the final programme.

"While there has been significant value in offering this programme given its principal focus on professional development, we believe programmes of this type, where qualification is still influenced in part by volume performance, are no longer appropriate. We will continue to offer quality professional development opportunities to complement our focus on building adviser and practice capability as we face into a changing advice and regulatory landscape.

"It is clear that as an industry we must continually look for opportunities to raise levels of professionalism and transparency to ensure the best possible outcomes for all New Zealanders, and we believe this is another positive step in the right direction."

Financial Markets Authority chief executive Rob Everett welcomed the response, which he said showed a part of the industry stepping up to focus their efforts on improving outcomes for consumers, and removing the potential for conflicted conduct connected with overseas trips.

"We are completing a report into our review of the structure of soft commissions and incentives offered by insurance providers, for publication next month.

"Further to that work, as we signalled in our Annual Corporate Plan, we have commenced a thematic review of insurance replacement business practices at qualifying financial entities and an upcoming review of bank incentive structures that we will report on later this year.”

Industry sources said AMP was not a provider that offered a large number of trips, anyway.

Sovereign chief executive Nick Stanhope said it would not be following AMP's lead.

"Sovereign has carefully considered the findings within the FMA report and at this stage we are not proposing to make changes to our distribution arrangements," he said.

"Sovereign is actively participating in the regulatory reform process with the Financial Services Legislation Amendment Bill and supports the continued focus on good customer outcomes and access to quality advice.

"We are listening carefully to the views of our partners and customers and we encourage the wider industry to participate in the regulatory reform process."

Tags: AMP Churn conduct

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Comments from our readers

On 5 April 2018 at 2:09 pm rosconz said:
The most sensible thing AMP have done for a long time. Pleased to see them take a lead on something for once.
On 6 April 2018 at 9:41 am Tash said:
Seriously..... AMP have mainly tied agents who can only really sell their own products. Have you seen how their products stack up? Is this best for clients? If Mr Everett thinks so I dispair.
On 6 April 2018 at 12:00 pm Davet said:
Tash, I think your understanding of how AMP Advisers work is quite outdated. Good on AMP for taking a lead.
On 6 April 2018 at 3:06 pm rosconz said:
Tash - I think you'll find if you talk to any AMP 'tied agents' that they access a range of insurers from an approved panel with AMP product recommendations probably forming a reducing part of their new business placements.
On 6 April 2018 at 9:15 pm I was wondering said:
I think AMP are only taking 12 advisers away as they represent the 12 remaining Advisers writing business for AMP. I don’t believe that AMP premiums will reduce as a result nor will their offering become any better. AMP were drivers of the commission cutbacks in Australia but I don’t believe that any of their clients have enjoyed reduced premiums as a result.
On 7 April 2018 at 2:42 pm JMa said:
Tash - I suppose you believe that the "best" product is the one that has the most features. Even if (in the long run) it will provide benefits that don't meet a true insurance need and will ultimately cost your clients much much more? This kind of game leads to no-one winning. Look across the ditch to see how badly that can work out.
On 8 April 2018 at 2:50 pm nakipride said:
The adviser community is rightly held to high standards. There are conflicts all over the place and yet some with these conflicts instead focus just on advisers. University boffins receive subsidies and benefits from tax payers but not sure these are under the spotlight. Actuarials want to target advisers with their reports but what about their conferences and other benefits they have from reinsurers. Pot calling the kettle comes to mind. Do regulators focus on the conduct of these groups.
On 8 April 2018 at 5:08 pm Dirty Harry said:
Tash is pretty much right. Yes, AMP agents can sell "other companies products. Subject to AMP approving them. And they (others that can be used) can change at any time. And AMP clip the ticket. And AMP get to say how much 'other' is too much.

If you want to be an AMP "adviser" and have AMP on your business card and let AMP be your master and commander then yes, you pretty much have to mostly sell AMP stuff.

JMa I believe the best product for my client is the best product for my client. Some want strong cover, or a particular issue, such as cancer, due to an awareness or family history. AMP don't rate well on that.

Some want reasonable cover, and are a little more sensitive to price. AMP don't rate well on that either.

Because when companies have a toed agent force, they don't have to.
On 11 April 2018 at 2:21 pm MAX62 said:
Just a badly kept secret but AMP are currently doing due diligence with ? to dump their operation in NZ on to some one else so incentive trips no longer being offered does seem a little ironic
On 20 April 2018 at 11:06 am Jonny Good Guy said:
This is crap
the banks do this every day and no one picks on them
Too many lawyers for the chickens to take on

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