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Faafoi reassures advisers about the future

Commerce Minister Kris Faafoi has promised the financial services sector there will be no more big announcements this year.

Tuesday, February 11th 2020, 8:48AM 6 Comments

He acknowledged, at the Get in Shape Advice Summit, that he had heard "loud and clear" that a lot of change had been forced on the sector.

Faafoi says he wants to "finish and tidy up" the FSLAA this year along with some tweaks to the CCCFA. The other big issue was to get proposed new conduct legislation through Parliament by the end of the year. The CoFI bill is expected to have its first reading in Parliament later this week.

The conduct regulations were about bringing banks and insurers up to the same standards that financial advisers already have to adhere to. 

Faafoi says if he is the Minister of Commerce after the election later this year he plans to focus on financial literacy.

He says the appointment of Jane Wrightson as the new Retirement Commissioner was about improving financial literacy.

"The new commissioner will be a real force," Faafoi said.

Kapiti Coast adviser Liz Koh says the Retirement Commission should be spending more time educating the middle class rather than its focus on low income earners as there is only so much which can be done with this demographic. Such as helping them to stay out of debt.

There is "huge untapped potential" if there was a focus on the middle class as they had more resources.

There is "a big disconnect between the commissioner and financial advisers," she said.

DISCLOSURE DUE DATE

Sharon Corbett says MBIE is "working through niggles and concerns" raised about new disclosure regulations.

She says this related to things like repeating the same information in certain conversations and record keeping. MBIE was also cognisant that there had to be sufficient time allowed to prepare new disclosure material.

Corbett says MBIE hopes the new disclosure regulations will be released in March.

Faafoi says the other piece of legislation in the pipeline was changes to the Insurance contracts act. He said issues like having a claim for a heart attack denied because of non-disclosure of an old ankle injury.

One adviser challenged Faafoi and said statements like that were more about perception rather than reality. "I've never seen anything like that in my career".

Faafoi says he comments were made on "overwhelming feedback" from consultation around changes to the existing act. He believed it was the reality that claims were being denied for non-disclosure.

Tags: CoFI conduct Disclosure financial literacy FSLAA Kris Faafoi MoBIE regulation

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Comments from our readers

On 11 February 2020 at 12:05 pm w k said:
"Faafoi says if he is the Minister of Commerce after the election later this year he plans to focus on financial literacy."

"On funding how much does FMA need and what should industry levies being set at ..... "

i think there's some co-relation to the 2 above comments. financial literacy begins right here, and right now. just my thoughts.
On 11 February 2020 at 1:51 pm Tony Walker said:
>>Faafoi says the other piece of legislation in the pipeline was changes to the Insurance contracts act. He said issues like having a claim for a heart attack denied because of non-disclosure of an old ankle injury.

One adviser challenged Faafoi and said statements like that were more about perception rather than reality. "I've never seen anything like that in my career".

Faafoi says he comments were made on "overwhelming feedback" from consultation around changes to the existing act. He believed it was the reality that claims were being denied for non-disclosure.<<
If this is accurately and correctly reported then I would like to think that the Minister may be able to back this up with evidence.
Non disclosure is certainly an issue and my experience tells me that if there has been a material non disclosure which would have resulted in a different underwriting decision had the insurer been made aware then they would be within their rights to adjust or decline the claim. I can't see any New Zealand insurer doing this or indeed getting away with it even if they tried.

It is true that claims are being denied for non disclosure, and rightly so. the insurer is entitled to have all facts from which to make an underwriting decision. To taint the industry however with suggestions such as this does nobody any good at all.

If he, or somebody else can show me evidence that a claim (probably trauma) was declined for heart attack for simple non disclosure of an old ankle injury I will reconsider my thoughts.
On 11 February 2020 at 2:32 pm Pragmatic said:
Excuse my cynicism with Faafoi's comments, although it appears that the financial services industry hasn't really featured as a propriety portfolio since the elections on 27 Sept 17 - despite various associated Working Groups. Adding to my cynicism, I suspect that it will be all hands to the pump for politicians of all denominations ahead of the forthcoming elections...

If the polls are correct, and Labour has the misfortune of being re-elected, I suspect that it will be business-as-usual for Minister Faafoi, with no real motivation (despite the rhetoric) to achieve anything further than his current term.
On 12 February 2020 at 2:27 pm Doggy said:
Easy enough to say. He seems to have conveniently overlooked the pending increase to levies to fund, guess what, the FMA.
On 12 February 2020 at 3:40 pm LNF said:
Doesn’t know what he’s talking about. Pure waffle. Proximate cause is the phrase
Should stick to RNZ
On 13 February 2020 at 2:43 pm MikeBeuvink said:
Can only assume that means there'll be a raft of announcements next year (assuming they get back in), because there's so many holes in this rushed through legislation. He suggested in his rhetoric that the legislation was about providing financial advice clarification for consumers, but my interpretation of the legislation is that it sets the NZ Financial Advise industry back 10 years to when a bus driver could register as an insurance salesman and start calling themselves a Financial Adviser.
Oh and as an observation (and I'd be interested to hear other adviser's views) the FSC's Get In Shape 2020 Summit this week was one of the poorest quality seminars I've attended in ages, with the "Masterclass" being a total waste of time.

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