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The FMA has released an information sheet detailing how it has dealt with the Covid-19 crisis so far.
It said the information was designed to help financial services entities understand its approach and consider ways to improve their own response.
“The FMA’s overall objective throughout this period has been to ensure continuity of markets and services in a way that is fair, efficient and maintains confidence in the financial sector. We have worked in conjunction with other regulators to actively engage with market participants across a broad range of sectors.”
The FMA had been making weekly calls to key market participants, it said, including KiwiSaver and fund managers, DIMS providers, advisers, smaller banks and dispute resolution schemes.
It said it had seen most entities handle the shift to remote working during lockdown well although some found their business continuity plans were not fit for purpose because they had not considered a lockdown environment.
Most entities FMA dealt with were dealing with call volumes twice or three times the normal rate during lockdown.
Many insurers dealt with a spike of customers trying to work out what cover they had and how the pandemic would affect it. “This raises the question of how much customers truly understand their policies.”
Financial advisers provided additional client reporting, and increased customer contact, with video calls replacing face-to-face meetings.
There was a surge in KiwiSaver fund switching when markets wobbled in March. The FMA said many were not open to advice. But it said an adviser who sent a bulk email urging clients to switch needed to be acted upon.
“The adviser failed to clarify that the email provided ‘class’ financial advice, had limitations, and may not be appropriate for all clients. The adviser also failed to recommend that clients first discuss their personal circumstances and goals with an adviser before acting on the advice. Our decision to issue a warning recognised the need to urgently deal with the matter and send a message to the industry about our expectations for providing suitable advice in extreme market conditions.”
Non-English speakers had been a target of misconduct during the crisis, the FMA said.
“In April we successfully requested the removal of two advertorials a financial adviser had posted on Chinese-language social media platform WeChat. These articles cited the cost of Covid-19 hospitalisations in China (in New Zealand dollars) and recommended people living in New Zealand, especially young children and the elderly, get health insurance to avoid the same financial risk. The advertorials failed to mention that in New Zealand, emergency treatment and testing for Covid-19 is free, as it is covered by the public health system. Regardless of the target audience, financial market participants should not be using Covid-19 as a marketing tool.”
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