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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."
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