Scoop has an Ethical Paywall
Work smarter with a Pro licence Learn More

Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

FSCL calls for transparency from financial advisers

FSCL calls for transparency from financial advisers as FMA releases report on insurance churn

Financial Services Complaints Limited (FSCL) is urging the financial services industry to provide clear and comprehensive advice to consumers about replacement insurance cover.

As the Financial Markets Authority today released a report into sales practices in the life insurance industry, FSCL Chief Executive Susan Taylor said it was investigating an increasing number of cases where financial advisers had recommended their client switch insurance provider, and it hadn’t ended well.

“We are working with the FMA to address the potential harms to consumers of insurance ‘churn’ – where an adviser recommends their client change insurer provider, for the adviser’s benefit (more commission), rather than the client’s.”

FSCL was calling for financial advisers to provide clients with a comprehensive written statement when advising on replacement insurance cover, which included:

• the specific reasons for the proposed replacement

• the key differences between the existing policy and the new recommended policy

• the client’s duty of disclosure and the consequences of non-disclosure

• clear and full disclosure of the adviser’s fees or commissions

• how the replacement policy will be implemented.

Ms Taylor said that while the FMA’s report focused on life insurance, FSCL’s experience showed likelihood of churn across the insurance industry, including for health, disability and protection insurance.

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

“A typical case is where the client has failed to disclose a pre-existing medical condition for which they had cover with their existing insurer. Unfortunately, the failure to disclose the pre-existing medical condition to the new insurer has resulted in a declined claim some months or years later.”

While the vast majority of financial advisers provide expert and considered advice to their clients, Ms Taylor said it was a small number of advisers that let the industry down.

“It’s important that the industry works as a whole to lift standards, for the benefit of consumers.”

She reminded consumers that a free, independent ear was always available in the form of the various dispute resolution schemes such as FSCL, for any problems consumers were having with their financial adviser.

ENDS

© Scoop Media

Advertisement - scroll to continue reading
 
 
 
Business Headlines | Sci-Tech Headlines

 
GenPro: General Practices Begin Issuing Clause 14 Notices

GenPro has been copied into a rising number of Clause 14 notices issued since the NZNO lodged its Primary Practice Pay Equity Claim against General Practice employers in December 2023.More

SPADA: Screen Industry Unites For Streaming Platform Regulation & Intellectual Property Protections

In an unprecedented international collaboration, representatives of screen producing organisations from around the world have released a joint statement.More

 
 
 
 
 
 
 
 
 
 
 
 

Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.