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Insurers next for regulatory scrutiny

[UPDATED] New Zealand's life insurers are now being asked to show what they are doing to identify issues of misconduct within their organisations.

Thursday, May 24th 2018, 12:28PM 1 Comment

The Financial Markets Authority and Reserve Bank are scrutinising the industry in response to the Australian Royal Commission.

They have already asked for information from banks and are now turning to insurers.

A meeting has already been held with the Financial Services Council.

In a letter to insurers, the two regulators said they had reiterated to the FSC that the nature and extent of the issues within financial services in Australia and the obvious cross-over in terms of entities, people and practices into New Zealand demanded a strong response from the industry here, and from the regulators.

The FMA and RBNZ told insurers they wanted to understand what work they had undertaken to review their operations to promptly identify and address any conduct and culture issues.

"We expect you to show us what you have done in order to be comfortable that there are no material conduct issues within your business.  We anticipate that you will be familiar with our Conduct Guide (published in February 2017) and may be extending or enhancing your work in response to the guide as it intersects with issues raised at the Royal Commission. There may also be issues you are looking at more broadly as a result of that inquiry.”

The regulators said the window to demonstrate that consumers, regulators and other stakeholders could have full confidence in the industry was narrow.

“You will have seen we have encouraged proactive leadership from the retail banking sector. Given the breadth of your business activities here in New Zealand we would like to ask you for the same information that we have requested from the banking sector.”

That means the insurers will have to provide details of any actions taken to address conduct risk, specific plans and action planned or under way to respond to the themes arising from the Royal Commission, work to proactively address conduct and culture risk and work to remediate identified issues that have resulted in detrimental outcomes for consumers.

The FMA and RBNZ said they wanted to know who was involved and any findings to date.

The information is required to be submitted to the FMA by June 22.

In a statement, the Financial Services Council said it welcomed the letter.

“Like the FMA and the RBNZ we take the issues arising from the Royal Commission in Australia very seriously and are committed to working closely with them to demonstrate that consumers can have confidence in the New Zealand financial services industry," said chief executive Richard Klipin.

“The FSC board had a positive meeting with the FMA and RBNZ last week and following that we look forward to having an open conversation about conduct in the sector and  the steps that we are taking to ensure that we are always acting in the best interests of consumers.

“We will provide a full and comprehensive response to the letter shortly and will engage with the regulators throughout this process.

Tags: FMA Life insurance Reserve Bank

« Royal Commission triggers letter to insurers from FMA and RBNZMinisters meet regulators as banks, insurers asked for information »

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Comments from our readers

On 1 June 2018 at 11:06 am Davet said:
A client of mine this morning expressed the view that in the absence of an open Public Enquiry such as is happening in Australia why would he accept the word of bureaucrats with close personal links to the banks and insurers and/or policitians who are wined and dined by the industry
that all is well in NZ. So if his view is shared by most NZ Consumers then the FMA, RNBZ and Govt Ministers are not actually in tune with what might be needed to give consumers confidence in the industry in NZ.

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