The Financial Services Council (FSC) of New Zealand has launched a new set of standards and guidance for its members, the FSC Code of Conduct.
Developed over two years by FSC members, the Code of Conduct is designed to build the professionalism of the industry by reinforcing the need for good conduct and a strong consumer focussed culture. Launched last month, it will come into force on 1 January 2019.
Companies represented in the FSC include major insurers in life, disability, income, and trauma insurance, and some fund managers and KiwiSaver providers. KiwiSaver is a voluntary, work-based savings initiative.
The Code, which is designed to sit alongside and complement existing regulation and laws, has nine standards which fall into three core objectives covering ethical, communication and consumer outcomes. If there is a material breach of the code, there are a number of sanctions and penalties that an Independent Disciplinary Committee can impose on a member, including fines of up to NZ$100,000 and termination of FSC membership.
Mr Rob Flannagan, FSC chairman, said, “This is a milestone for the financial services industry. As financial providers we know we have a responsibility to serve New Zealanders in a transparent and honourable way. The Code is a big step forward and it’s about the industry committing to high standards and continuous improvement.”
FSC’s members make up 95% of New Zealand’s life insurance market, manage funds of around NZ$50bn ($33bn), and include many professional services, and technology providers to the financial services sector.
Mr Richard Klipin, FSC CEO, said, “We expect and welcome a high level of regulatory scrutiny as part and parcel of how we operate. We are clear that we need to take the lead in lifting standards to deliver better outcomes for New Zealanders. We know that we don’t always get it right and we know that we cannot be complacent.”
He said that the Code is first and foremost about putting consumers first.
However, consumer advocates say the new code of conduct lacks teeth and adds little to protect customers, according to a report by Newroom.
Ms Jessica Wilson, Consumer New Zealand’s head of research, says there are far too many gaps in the new code.
“Overall it’s pretty light. It doesn’t set particularly high standards and it doesn’t address the issue of commissions. It doesn’t say how it going to be monitored, and it doesn’t make a commitment to publish names of people in breach. Consumers could be none the wiser about who has breached the Code.”
Mr Klipin said, “We’ll be asking members for evidence they are abiding by the Code and if there are breaches going on in the marketplace, we’ll know because we are a well-connected community.”