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

 

Insurance churn by financial advisers a growing issue


Insurers continue to top FSCL cases but insurance churn by financial advisers a growing issue

Insurance companies are continuing to attract the most complaints to dispute resolution service Financial Services Complaints Limited (FSCL), but it is sales of replacement policies by independent financial advisers that is causing FSCL increasing concern.

In its annual report released today, complaints against insurers – predominantly in relation to travel insurance – once again made up the greatest proportion of cases formally investigated by FSCL, accounting for 58 out of 180 cases in 2015/16, or 32%.

Chief Executive Officer Susan Taylor says that while overall figures remain low – accounting for 11 investigations in the last year – a growing number of complaints were arising out of the sale of replacement life, trauma and health insurance by financial advisers.

“These complaints raise a question as to whether some financial advisers are acting in their client’s best interests, or their own.”

The report states that FSCL expects this to be an increasing trend and notes the Financial Market Authority’s current investigation into insurance ‘churn’ – where a financial adviser has recommended their client change insurer every two years or so, for the adviser’s benefit (more commission), rather than the client’s.

“It is really important that consumers understand the potential risks of changing insurers, as the consequences of not being covered when you think you are can be disastrous.”

To help financial advisers avoid complaints, FSCL is calling for them to provide their clients with a comprehensive written statement when advising on replacement insurance cover, including:

• 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 fees or commissions

• how the replacement policy will be implemented.

FSCL’s annual report shows it handled over 3,600 consumer enquiries and complaints about financial service providers to the end of June 2016, up 40% on the previous year, and formally investigated 178 cases, a 10% drop.

Ms Taylor says that despite the jump in enquiries and complaints, awareness of its service – and that of other dispute resolution schemes in the sector – remained worryingly low and continued to be a focus area for FSCL.

“Of course, the best way for a consumer to find out about FSCL is for their financial service provider to tell them about us when they make a complaint, which we encourage our participants to do. It is also important that financial service providers recognise when a complaint has been made and that complaints are taken seriously.”

FSCL’s Annual Report 2015/16 is available on its website at www.fscl.org.nz/publications


ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

RNZ: Housing Boom Could Get Worse, Economist Warns

Economists are calling on the Reserve Bank to reinstate lending restrictions, warning the housing market is spiralling out of control. More>>

ALSO:

Westpac: Sets Out Plan To Go Cheque-Free

Westpac NZ has announced details of its plan to phase out cheques, after signalling in May that it would be supporting a move to other forms of payment. Cheques will cease to be available as a means of payment after 25 June 2021. Westpac NZ General ... More>>

ALSO:

NZTA: Major New Zealand Upgrade Programme Projects Go To Tender

Two major New Zealand Upgrade Programme projects are beginning tenders for construction. The New Zealand Upgrade Programme is a $6.8 billion investment to get our cities moving, to save lives and boost productivity in growth areas. The first Auckland ... More>>

Reserve Bank: RBNZ Seeks To Preserve Benefits Of Cash

The Reserve Bank – Te Pūtea Matua is taking on a new role of steward of the cash system “to preserve the benefits of cash for all who need them”, Assistant Governor Christian Hawkesby told the Royal Numismatics Society of New Zealand annual conference ... More>>

ALSO:

Economy: Double-Dip Recession Next Year, But Housing Rolls On

New Zealand's economy is expected to slip back into recession early next year as delayed job losses, falling consumer spending, and the absence of international tourists bites into growth. More>>

ALSO:

Microsoft New Zealand: Microsoft Expands “Highway To A Hundred Unicorns” Initiative To Support Startups In Asia Pacific

New Zealand, 14 October 2020 – Today Microsoft for Startups launches the Highway to a Hundred Unicorns initiative in Asia Pacific to strengthen the region’s startup ecosystem. This follows the initiative’s success in India, where 56 startups were ... More>>

Economy: NZ Small Business Recovery Continues In September

Xero, the global small business platform, today released its Small Business Insights (XSBI) for September revealing an uptick in small business jobs and year-on-year revenue growth in New Zealand. Nationwide, the average number of jobs in the small ... More>>

ALSO:


Courts: Businessman Eric Watson Sentenced To A Four-Month Jail Term

New Zealand businessman Eric Watson has been sentenced to a four-month jail term in the UK for contempt of court, TVNZ reports. More>>

OECD: Area Employment Rate Falls By 4.0 Percentage Points, To 64.6% In Second Quarter Of 2020

The OECD area employment rate – the share of the working-age population with jobs – fell by 4.0 percentage points, to 64.6%, in the second quarter of 2020, its lowest level since the fourth quarter of 2010. Across the OECD area, 560 million persons ... More>>

Spark: Turns On 5G In Auckland And Offers A Glimpse Into The Future Of Smart Cities

Spark turned on 5G in downtown Auckland today and has partnered with Auckland Transport (AT) to showcase some of the latest in IoT (Internet of Things) technology and demonstrate what the future could look like for Auckland’s CBD with the power of 5G. 5G is ... More>>

Stats NZ: Monthly Migration Remains Low

Since the border closed in late-March 2020, net migration has averaged about 300 a month, Stats NZ said today. In the five months from April to August 2020, overall net migration was provisionally estimated at 1,700. This was made up of a net gain ... More>>

University of Canterbury: Proglacial Lakes Are Accelerating Glacier Ice Loss

Lake Tasman, New Zealand | 2016 | Photo: Dr Jenna Sutherland Meltwater lakes that form at glacier margins cause ice to recede much further and faster compared to glaciers that terminate on land, according to a new study. But the effects of these glacial ... More>>

ALSO: