Information gap as advisers and insurers struggle to comply with COFI
A recently released Cabinet paper on the progress of the Financial Markets (Conduct of Institutions) Bill, now awaiting its second reading, reveals that while the government has dropped the idea that financial institutions such as insurers should train, manage or supervise the intermediaries selling their products, the requirements won’t be clear until the SOP is released.
But the government says it has responded to industry concerns that the proposed obligations on insurers and intermediaries were too broad, unworkable and duplicate the new regulatory regime for financial advisers.
Many of these intermediaries are independent businesses and insurers have raised concerns about how they might be expected to manage independent third parties.
The government has conceded that this obligation might lead to “undesirable structural changes in the market”, such as intermediaries reducing the number of institutions they work with in order to avoid having to comply with multiple conduct programs. This could reduce competition and choice for consumers which would undermine the intent of the legislation.
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