Caution urged on financial safeguards
Last month, the Commerce and Consumer Affairs Minister Kris Faafoi released an options paper aimed at improving the conduct of financial institutions. The options paper was aimed at banks, but also suggesting including "non-bank deposit takers that provide similar services to banks and insurers" under any new regulation.
The government has begun on a consultation on the financial sector, including possible changes to intermediary pay. Options in the government paper include a ban on soft commission and sales-target based commission, and "parameters around the structure of commission". The government will use "enhanced enforcement tools" to police any new rules.
Luke Jackson, the newly-appointed head of non-bank lender Resimac's New Zealand operations, welcomes additional protections for consumers, but warns sweeping changes to intermediary remuneration may impact competition and damage the broker channel.
He told TMM: "Whilst we support changes to broker commissions to align with customer outcomes, we should ensure the proposed changes do not reduce competition or consumer choice. Customers who don’t fit main bank policy are ultimately the customer segment who require the greatest assistance and maintaining broker incentive to service this market is important."
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