Parliament

Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 

New financial conduct regime for fairness

Hon Kris Faafoi
Minister of Commerce and Consumer Affairs

25 September 2019

PANUI PĀPĀHO
MEDIA STATEMENT
New financial conduct regime makes banks and insurers treat their customers fairly

Customers can expect fairer treatment from banks, insurers and other financial service providers as the Government moves to introduce a new regime to regulate financial conduct, Commerce and Consumer Affairs Minister Kris Faafoi said today.

“Under this new regime we are aiming to ban things like target-based sales incentives, which put profits ahead of people, as has been identified in recent reviews,” Kris Faafoi said.

“Those reviews by the Reserve Bank of New Zealand and the Financial Markets Authority (FMA) have also highlighted other problems in the banking and insurance sectors, which include weak systems for managing conduct risks and ensuring good conduct is a priority in their business,” Mr Faafoi said.

“We will soon introduce new legislation to Parliament which will require banks, insurers and other financial service providers to put systems in place to make sure they treat their customers fairly,” he said.

The measures the Government is introducing include:

• a new conduct licensing system for banks, insurers and non-bank deposit takers such as credit unions.
• the new regime requiring these entities to meet high standards of customer treatment.
• a ban on incentives which are based on meeting sales targets.
“Incentives such as overseas trips or bonuses for selling a certain amount of insurance policies can lead to sales staff pressuring customers into buying unsuitable products, like policies they can never claim on. Removing these types of incentives will provide better protections for consumers from misconduct.

“New Zealanders need to be confident that the financial advice, products and services they are buying will be appropriate to their circumstances and meet their needs,” Minister Faafoi said.

The new regime will be backed by strong enforcement tools, including giving the FMA the ability to direct licensed institutions to change behaviour, improve their systems and processes, as well as suspend or vary the conditions of a licence.
Financial institutions will face strong financial penalties for breaching their obligations under the regime.

“By taking action to improve conduct, we’re putting the consumer at the centre and helping banks and insurers to restore confidence in their industry. We all benefit from a well-functioning financial sector that’s focussed on the interests and needs of customers,” Mr Faafoi said.


The new financial conduct regime will:

1. Create a conduct licensing regime for banks, insurers and non-bank deposit takers regarding their general conduct. These institutions will be licensed by the Financial Markets Authority.
2. Require licensed institutions to meet a fair treatment standard (for example, to pay due regard to the needs and interests of customers and treat them fairly)
3. Require licensed institutions to implement effective policies, processes, systems and controls to meet the fair treatment standard.
4. Create obligations for financial institutions in relation to how they design their remuneration and any other sales incentives, and how they must manage the risks those incentives create.
5. Prohibit sales incentives based on volume or value targets (e.g. soft commissions such as overseas trips, bonuses for selling a certain number of financial products, leader boards, and performance management based on the volume of sales). This prohibition will apply to banks, insurers, non-bank deposit takers and their intermediaries.
6. Make licensed entities accountable for sales to consumers by the entities’ contracted intermediaries who are not financial advice providers (non-adviser intermediaries include car dealers, retailers selling add-on finance and insurance, and travel agents or airlines selling travel insurance).
More information on the review is available at https://www.mbie.govt.nz/business-and-employment/business/financial-markets-regulation/conduct-of-financial-institutions-review

ends

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Campbell on: the local body election result in Wellington

For obvious reasons, politics is more of a big deal in the capital city than anywhere else in the country. Even so, fewer than four in ten eligible voters bothered to vote in Saturday’s local body elections in Wellington (turnout 39.66%).

Even less was felt to be at stake this time around than in 2016, when 45% of the electorate voted Justin Lester into the mayoralty.

To put it mildly, the Lester-led Council failed to live up to expectations. Lester will be remembered mainly for the fact that somehow, he managed to lose this election. . More>>

 
 

Could Do Better: Post-Sroubek Review Of Deportation Info

Ms Tremain acknowledges that the review highlighted some aspects of the process that can be improved and makes five main recommendations to strengthen the existing processes for preparing files for decision-makers. Those recommendations are: More>>

ALSO:

Gordon Campbell: On A New Book On The Leaky Homes Scandal

We all know that journalism is short of cash and under pressure from the speed, brevity and clickbait pressures of the 24/7 news cycle… but hey, given the right subject and a sufficiently stubborn journalist, it can still surpass most of the works of the academic historians... More>>

Regulation: Review Finds NZTA Road Safety Failings

The independent review, carried out by consultant agency MartinJenkins, lists at least 10 reasons for the failures including the agency being focused on customer service at the expense of its policing functions. More>>

ALSO:

Rod Carr: Climate Change Commission Chair-Designate Announced

Climate Change Minister James Shaw has today announced the appointment of Dr Rod Carr as Chair-designate for the Climate Change Commission. More>>

ALSO:

Compliance Complaints: 'Putting Right' Holidays Act Underpayment In Health

The Government is putting right a decade’s worth of underpayment to nurses, doctors and other health workers, says Health Minister Dr David Clark. More>>

ALSO:

IPCA: Disasterous Police Pursuit, Excessive Use Of Dogs

At no stage did Police follow the correct procedure for the commencement of a pursuit... A Police dog handler used his dog to help with the arrest of two of the young people. One suffered injuries resulting in his hospitalisation, and the Authority found that the use of the dog was an excessive use of force. More>>

ALSO:

‘Hard Place To Be Happy’: Report On Youth Residential Care

Children’s Commissioner Andrew Becroft says the report, A Hard Place to be Happy, contains important challenges from children and young people, aged 9 to 17, about their experiences in care and protection residences. “I found this report extremely difficult to read, and I think most New Zealanders would too.” More>>

Africa And Middle East Refugees: 'Family Link' Restriction Removed

The founder of the Double the Quota campaign has applauded the coalition government for Friday’s announcement that a discriminatory policy would be removed. More>>

ALSO:

 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

InfoPages News Channels