RBNZ and FMA Report: Life Insurer Conduct & Culture | Financial Advice New Zealand Commentary
Katrina Shanks, CEO Financial Advice New Zealand
Public confidence and trust in the life insurance sector is essential; life insurance contributes significantly to the financial well-being of New Zealanders. Reports like that released by the FMA and RBNZ today – Life Insurer Conduct & Culture – play a vital role in highlighting areas where the sector can better serve New Zealanders, and importantly, maintain and grow public confidence and trust.
Ensuring good consumer outcomes is the collective responsibility of all participants in the life insurance sector. We welcome the Report’s focus on ensuring good consumer outcomes and the central importance of this in the processes and practises that underpin conduct and culture.
While the Report is focused on insurance providers, certain sections relate to insurance advice and advisers.
The report highlights the benefits of quality advice, stating that: “where a product is sold without advice, there is an increased risk of the consumer making an unsuitable purchase, as the policy document is often long and complex, and doesn’t aid understanding.” This once again evidences the value of advice and the significant contribution made by quality advisers.
The report also addresses soft commissions and intermediary commissions.
We welcome the suggestion that qualifying criteria for soft commissions be reviewed and are focused on improving customer outcomes – whether for internal staff or intermediaries; this further supports consumer interests.
We are supportive of a review of intermediary commissions to ensure the model is relevant and sustainable. It is essential that commission models are in the best interests of consumers, balanced with ensuring that the life insurance advice sector can continue to provide this valuable service to New Zealanders.
Financial advisers add significant value to the customer both at the initial point of advice, through the life of the policy and when a claim needs to be actioned. The relationship between a quality adviser and the customer is based on obtaining the best outcomes for the customer.
Ensuring good consumer outcomes is a core principle of Financial Advice New Zealand and our members. We welcome this Report and look forward to working with our industry partners in supporting the insurance needs of New Zealanders, and building public confidence and trust.
For more information:
Katrina Shanks – firstname.lastname@example.org – 021 474 010