The Financial Markets Authority (FMA) and the Reserve Bank (RBNZ) yesterday published a joint letter sent to the CEOs of New Zealand's life insurers, asking them to give their assurance that misconduct involving financial advice of the type highlighted in Australia is not taking place in New Zealand.
The joint letter says, “Our objective in this exercise is to understand what work you have undertaken to review your operations to promptly identify and address any conduct and culture issues. We expect you to show us what you have done in order to be comfortable that there are no material conduct issues within your business.”
The ongoing Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has revealed major issues with financial advisory services at banks and wealth management firms. The royal commission has heard evidence of financial advisers charging dead clients for financial service, charging fees when no service was rendered and giving dodgy advice.
Information requested from life insurers
The joint letter says, “The purpose of this exercise is for us to understand how you have obtained assurance that misconduct of the type highlighted in Australia is not taking place here. To clarify, we request a written response from your organisation outlining:
- "The actions you, your board and your senior teams have taken to identify and address conduct risk arising directly or indirectly from your firm’s actions, including product design and distribution, incentives setting, and claims performance. This should include any “gap analysis” work against the expectations set out in the FMA’s Conduct Guide
- "Any specific plans and actions you have taken (or have underway) to respond to the issues and themes arising from the Royal Commission
- "Any other work you have underway or that is planned to proactively identify and address potential conduct and culture risk
- "Any work underway to remediate any identified issues where conduct by your firm has resulted in detrimental outcomes for customers."
The life insurers are to provide the information to the FMA by 22 June 2018. Yesterday’s letter follows a similar one sent to bank CEOs and the Bankers’ Association on 3 May.
The FMA will also continue to focus on areas previously signalled as priorities, including a review on soft commission in life insurance, the Financial Adviser Act reforms and work on incentives in vertically integrated institutions.