As part of its Financial Stability Report, the Reserve Bank said New Zealand’s commission rates were out of step with the rest of the world.
At 20% of revenue, they were significantly higher than the second-placed market, Mexico, at about 13%.
The FSC responded in a statement, saying that the sector was going through significant regulatory, technology and market change.
It said the industry was listening, responding and evolving in reaction to changing consumer needs and public expectations.
The FSC said the fact that insurers had put a stop to offshore conferences showed that the sector was aware it had to adapt to remain relevant.
“Removing overseas incentive conferences is just one example of how industry is working to deliver improved and more transparent outcomes for consumers,” said chief executive Richard Klipin.
“Our members support New Zealanders by paying out $3.3 million in claims every day and are there for consumers when things don’t go to plan. The people who work in the sector help consumers get the best protection and support them during good and tough times. We take this responsibility seriously and we welcome and expect a high level of scrutiny from regulators.”
The FSC also launched its code of conduct earlier in the year which provides members with a conduct framework that focusses on ethical practices and better consumer outcomes.
“We aren’t being complacent, and the financial services sector takes its responsibilities seriously. It is a work in progress and with the launch of the FSC code of conduct in September, our members have the framework to raise the bar,” Klipin said.
The code requires members to sign-up and agree to nine standards covering ethics, communication and ensuring great consumer outcomes. It has a number of sanctions and penalties that an independent disciplinary board can impose, including fines of up to $100,000 and termination of membership.
“We are an industry that is entrusted to grow, manage and protect wealth, a key pillar to wellbeing,” Klipin said.
“We’re committed to good conduct and culture and to serving New Zealanders in a transparent and honourable way.
“We know there’s always more work to do and the sector is committed to continual improvement and committed to delivering great outcomes for consumers. We await the findings of the FMA and RBNZ report in January.”
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