Advisers question whether churn still an issue

Advisers say the Financial Markets Authority is right to take action on any cases where policies are being replaced irresponsibly – but it’s unlikely to be widespread.

Thursday, February 19th 2026, 9:33AM

At the recent Booster conference, FMA head of financial advice Romil Ghelani said the FMA expected that any situations where insurance policies were being replaced would include a thorough comparison of existing cover.

“You just must exercise care, diligence and skill and this simply means robust advice process and documentation. The duties and obligations under the FMC Act and Code are simply heightened when a policy is being replaced.

“Good examples we have seen include robust comparisons, using research tools and balancing the pros and cons so the client understands the trade-offs of replacement, and not just the pros.”

Ghelani said the FMA still had some concerns about potential churn.

“We are seeing, in a small number of cases, very reckless conduct for replacing policies. We will prioritise these cases, while most of what we receive are allegations, our internal risk assessment and evidence on hand usually determines our immediate next step.”

Mark Sheehan, chair of the Independent Financial Advisers Association, said he did not think there was a systemic problem.

“It’s a pretty small industry… I think it would become very apparent if there was systemic churning going on and I just don’t think it is.

There might be the odd example but it doesn’t seem to be as big a thing as it was 20 years ago.”

He said it was not bad that it was on the FMA’s radar. “Maybe there are some rogues out there. Distribution is so different now. You don’t have the bank channels as such, we have quite a lot of direct online stuff so perhaps that’s something going on in that space. But I think in terms of the independent adviser, the vast majority feels like they’re running pretty good operations.”

Tim Fairbrother, of Rival Wealth, said if there was any reckless replacement happening, it was a problem.

“With oversight from the insurers, there shouldn’t be anyone that feels they can do it or an insurer that allows it. The insurer should be acting as the gate keeper for inappropriate advice.

“It also needs to be taken with a grain of salt, as these are stated allegations. Advisers are very protective of their clients, as they should be as they put their heart and soul into helping them, and then when a new adviser comes along and makes changes to the advice that was supposed to be sound and fit for purpose, then that can hurt the ego if the client chooses new advice.

“I believe the FMA should be coming down exceptionally hard on the small number of cases they are seeing as this is where the problem lies.”

Tags: Churn FMA