About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Saturday, August 24th, 1:23PM
rss
Latest Headlines

Everett tells insurance companies time's up and regulatory change is coming

FMA chief executive Rob Everrett says he finds it hard to comprehend that life insurance companies in New Zealand haven't responded to the "forest fires" going on in the industry.

Tuesday, June 11th 2019, 6:00AM 9 Comments

Everett says the insurance industry has been warned for many years to improve its conduct and how it treats customers, but little has changed in that time.

As a consequence the Government is going to fill the regulatory gap "comprehensively".

"I’m not one to want to regulate the life out of any business but the industry had years to prepare itself and was found to not have been paying sufficient attention. Given the forest fire going on in Australia over the last five years or so, and certainly well before the Royal Commission was established, I find that hard to comprehend."

Everett, speaking at a Transparency International event, said that ever since his first speech as FMA chief executive in 2014, he has been trying to get the industry to focus on the behaviours it rewarded and how it monitored conduct.

It was a message repeated over the years. Last year the FMA and Reserve Bank presented conduct review reports into bank and life insurers and it showed little to no engagement by the sector with the FMA's conduct guide.

“I would love to think that, given we found relatively few signs of any systemic misconduct in our two reviews, we could assume that the industry here had learned from the lessons of the UK, US, Australia and a host of other countries,” Everett said.

“Sadly, our review told us that whilst much of the industry was confident that it had not happened here - and wasn’t going to - there wasn’t as much evidence as we would have expected of institutions having done all of the hard yards necessary to make that a realistic assessment.”

He said the regulators had told the Government that they did not believe enough had been done to address the risk to consumers.

"We recommended that the government level the playing field that exists between core retail banking and insurance and the FMC Act authorised sectors such as retail funds management, derivatives and the regulated parts of financial advice," Everett said.

He said it now looked as though the Government was going to fill the regulatory gap "comprehensively".

“We can debate endlessly as to what ‘fair’ means and how a regulator is going to determine that. Nonetheless, I strongly support the inclusion of a high-level statutory obligation in any new legislation demanding that providers of financial services prioritise serving their customers’ needs in a fair way. The AFA code of conduct talks about acting in the customer's interests and notwithstanding semantics I think these have been important and worthwhile principles to lay out for advisers.”

Tags: conduct FMA

« Insurers welcome mental health boostNew Zealanders not protecting themselves »

Special Offers

Comments from our readers

On 11 June 2019 at 10:33 am Skeptical said:
I think the reason for that Rob is insurers probably don't want to make rules that negatively impact the majority of good advisers out there in order to attempt to stamp out the handful of bad actors.

In the FMA's report earlier this year that shocked the industry it talked about customer outcomes being important and how good claims are in New Zealand's life industry. One would think that besides all else the best way you can measure the success of the industry is based on claims - not the theoretical impacts of how advisers are paid.

Also, I hardly think the UK and Australia are perfect models to try and copy.
On 11 June 2019 at 11:36 am First Time Caller said:
The conduct that needs to change is the organisations that contract out of advice and require the client to compare their existing insurance with the new insurance they can provide. If not all then a majority of advisers are doing this
On 11 June 2019 at 2:39 pm RWAW said:
Nice one Rob. That AFA conduct thingy has worked out well in Dunedin from all accounts. While we are at it how about naming the Insurance Companies and Banks that you have a real concern about.
Advisers might find that helpful when considering where to place their business. Just a thought.

Rohan Welsh
On 12 June 2019 at 9:08 am Keith Walter said:
I thought the insurance companies were given until the end of this month to respond to their individual reports. I must have got it wrong as Mr Everrett must have already received them in order to justify regulatory change.
On 12 June 2019 at 10:13 am Elephant1 said:
The Reserve Bank's review was totally unprofessional. In their summary of the commissions they failed to put in the margin of error , which meant the figures were incorrect. This is basic stuff. How do you compare countries with huge internet sales or salaried staff. Also professionals , look at both sides of discussion. Again the RB failed to do this.
On 12 June 2019 at 11:23 am Tash said:
We should all be unsatified with this affair as far as I can tell.

Insurers are collectively being hammered by a report based on nothing more it seems to me than anecdotal reports by insurer's staff.

Can Mr Everett confirm:
His staff who interviewed the insurance companies staff members were, actuaries, lawyers or other suitably qualified experts in insurance matters and that they were exerienced in interrogation/questioning/evidence and evidence gathering techniques in order to get the truth?
Were those interviewed under oath?
What actual corroborating evidence was obtained?
Did the insurance company staff have assistance or someone able to correct, rebuff or otherwise expand, challenge or qualify their resonses?
Did insurance companies have a right of response to allegations made by their employees?

Without the above, I can't see how these very damaging reports can have any integrity at all.
On 12 June 2019 at 11:48 am Ron Flood said:
"forest fires'? Really. How about less hyperbole and more facts. It looks like the FMA is adding accelerant to the problem, without giving examples of what the problem is.
After stating that they found very few signs of systemic problems they now continue to "crack a nut with a sledge hammer"
I am unsure if this is just an effort to make a stand, after being asleep at the wheel, considering the number of "missed'oportunities to protect clients interests. We have had Ponzi Schemes missed, clients investments pilfered etc, all during this CEO's tenure.

I guess they have decided that it is too hard to police the 'small guy', who has done most of the damage in the past, and easier to have a go at the bigger end of town.

On 15 June 2019 at 12:31 pm JPHale said:
While agreeing with the comments about lack of evidence, chicken little isn't looking so wrong on the back of this...

But then as has been my experience in this industry, you can say plenty, until someone in power follows through, no one is listening.

We’ve had the noise for years, and no one has moved. RFA’s have been relatively unregulated and the insurers have been afraid to move because they don't want to be punished while the others stand still.

A dangerous case of Russian Roulette with the regulator holding the gun and not the players.

In saying that, while my points about Kiwisaver in another article are a more minor aspect of the situation, it shows that the FMA has a similar level of apathy to doing the right thing for consumers while it follows the current rules.

If the FMA wants different they need to lead with different. The response I got, and Susan too, of its fine we have disclaimers, is part of the issue.

Do it right and you don't need disclaimers, and this has been the core focus of FSLAA and the code, no wriggle room with disclaimers and indemnity. Do the right thing and keep clients informed is the expected behaviour.

It starts with the FMA and its leadership and examples, not standing up and beating the drum and pointing fingers without substance to back it up.
On 19 June 2019 at 7:59 am Backstage said:
Is that a real quote from Mr Everrett? Reading the article I am confused about what he is making reference to (or the author). Times up? Most committed advisers i know are embracing change. Which Insurers are not? I also wish when we have a conversation with any employee of the FMA and we ask for clear direction or comment on a proposed change we may be looking to make in our practice that they would give a clear response. It seems the words maybe and possibly are as clear as they want to get. Most advisers once clear on any rules will implement. The FMA seem to create confusion at times that raises anxiety.My advice to Mr Everrett is be as clear as you can... dont make fuzzy references to AUS and the UK or dick swingy comments like times up!

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
Insurance Briefs

AIA's shot at a TV ad
AIA New Zealand joins forces with Dame Valerie Adams to help Kiwis live healthier, longer, better lives.

Southern Cross recognised
Southern Cross Health Society has been recognised as one of Australasia’s top 10 ‘Most Innovative Companies’ for BeingWell, its corporate health and wellness programme.

OnePath to disappear
Cigna is intending to combine its two businesses by transferring the OnePath Life insurance business to Cigna Life Insurance New Zealand.

AIA celebrates gender diversity
AIA were among the winners for the first ever Women in Insurance Awards with chief customer officer, Sharron Botica amongst the winners.

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