About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Tuesday, October 22nd, 9:27PM
rss
Latest Headlines

CFCC REACTION: Consumers at mercy of advisers

The Commission for Financial Capability aka Retirement Commission says consumers are at the mercy of intermediaries selling life insurance on behalf of companies

Tuesday, January 29th 2019, 10:01PM 2 Comments

A report aiming to improve the culture and conduct of New Zealand’s life insurance industry may require companies to change their entire business model, but the outcome will be better service for their customers, says the Commission for Financial Capability (CFFC).

The Managing Editor of CFFC’s Sorted website, Tom Hartmann, says consumers are at the mercy of intermediaries selling life insurance on behalf of companies who have not invested in their own frontline staff.

“It is often impossible for consumers to know the difference between being told or sold,” says Hartmann. “If a financial advisor is giving you the best options based on your circumstances, and shopping around for the best policy for you, that’s great, but if they’re only working for one company they’re just a sales funnel.”

The report by the Reserve Bank and the Financial Markets Authority (FMA) concluded that life insurance companies put sales and profits ahead of customers. They did not concentrate on selling people the right product, had poor systems and poorly trained staff to handle complaints or oversee risks. Companies had been too slow to clean up their act after being criticised by the FMA last year of paying millions of dollars in commission, as well as lavish holidays and other perks, to third-party agents selling their policies without tackling issues of possible conflict, disclosure, or whether the products sold were appropriate.

“Many insurance companies outsource the selling of their products to agents and shield themselves from risk – they incentivise the agents to sell, but effectively wash their hands of poor customer outcomes,” says Hartmann.

He supports the report’s next steps, providing the 16 life insurers studied with individual feedback and requiring them to report back to regulators by June 30 on how they will remedy the issues raised.

In the meantime, consumers can question an agent regarding whether they are independent or acting for a particular company, whether they receive incentives and whether they will shop around for the best produce for the client’s circumstances.

“This report is an important vehicle for change. It may require the industry to change its entire business model, but I’m hopeful of a better outcome for consumers.”

« Advisers told: Get ready for major changeFINANCIAL ADVICE NZ REACTION: Consumer focus welcome »

Special Offers

Comments from our readers

On 30 January 2019 at 2:47 pm Adviser1 said:
We're going back 30 years to tied agents on salaries with targets, no more independent advice. Sad really.
On 30 January 2019 at 3:17 pm Murray Weatherston said:
A great comment from CFFC “If a financial advisor is giving you the best options based on your circumstances, and shopping around for the best policy for you, that’s great, but if they’re only working for one company they’re just a sales funnel.”

I wonder why CFFC didn't make the same comment during the financial advice review when the issue of sales v advice was being debated.

Bank advisers are just bank salespeople! Why do the FMA, Code Committee, Uncle Tom Cobbley and all tell the gullible public they are not just salespeople.

Did CFFC ever hear of an ANZ mortgage Coach encouraging a mortgage client to go and get a Westpac Mortgage, or an ASB Kiwisaver adviser telling a customer to go and get a Milford Kiwisaver! Yea, nah!

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
Insurance Briefs

AIA adds mental health support
AIA is boosting Vitality members’ donations to the Mental Health Foundation.

Major milestone for Cigna
Cigna, which acquired OnePath Life last year, is on the verge of reaching "a huge milestone".

Fidelity Life gets tick
Fidelity Life has been awarded the Accessibility Tick.

Asteron and Fidelity go head to head for award

News Bites
Latest Comments
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 eyelovedesign.com