New Zealand: Insurers urged to learn lessons from Australia
Source: Asia Insurance Review | Jun 2019
The core message of the findings of the Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry also applies to New Zealand, that is, the primary responsibility for misconduct lies with the entities concerned, which requires a close look at the culture, governance, and remuneration of financial services firms, according to New Zealand’s Financial Markets Authority (FMA) regulation director Liam Mason.
Speaking at the Insurance and Financial Services Ombudsman (IFSO) conference in May, he said, “Conduct and culture are critical topics for financial services. To appreciate this, we only need to look at what has happened abroad, the mis-selling of payment protection insurance in the UK, the sales-reward driven misconduct at Wells Fargo in the United States, to closer to home, all the cases we’ve seen emerge in the Australian Royal Commission.
“Our focus is on conduct and culture because what matters the most is how people within our financial services firms actually behave – how their actions affect New Zealanders and serve to promote confident participation in financial services by New Zealanders.”
He urged financial firms, including insurers, in New Zealand to look at the specific recommendations made by the Royal Commission. He highlighted the four observations that the Commissioner made in his final report:
There is a strong connection between conduct and reward
- When individuals are rewarded for behaviour that is not in customers’ interests, that behaviour is likely to follow;
- Firms and individuals acted the ways they did because they could;
- In many cases, intermediaries acted solely in the interests of product providers, or themselves, not in the interests of their customers.
- The law should be as simple and clear as possible, and those who break the law should compensate those harmed and must also be held to account. A