Consumers big winners from new financial conduct regime
MEDIA RELEASE: 25 September 2019
Consumers big winners from new financial conduct regime, says Financial Advice New Zealand
Consumers are the big winners from today’s moves by the Government to introduce a new regime to regulate financial conduct, says Financial Advice New Zealand Chief Executive Katrina Shanks.
“Creating a licensing regime for banks, insurers, and non-bank deposit-takers and requiring them to meet a fair treatment standard with regards to customers is a good move.
“The aim of the Code of Professional Conduct for Financial Advice Services, due to be implemented next year, is to make sure customers are treated fairly. Aligning financial institutions to a similar standard should ensure a consistent approach for the life cycle of a product, from design to claim.
“We agree in principle with the creation of obligations for financial institutions around how they design their remuneration and any sales incentives, and how they manage the risks those incentives create. All stakeholders must ensure people can access quality advice and that includes a remuneration system that allows a range of sustainable financial advice business models.
“Removing sales targets and incentives is a good idea because we recognise that from time to time this has sent incorrect messaging to those providing advice. We will be interested in seeing more detail in this area.
“The new Financial Services Legislation Amendment Act will address the conduct and culture of all advisers from next year, and we congratulate the Government for allowing it to be implemented and assessing its effectiveness when considering the role of advisers in relation to financial institutions.
“We do, however, disagree with the example given to support the claim that incentives can lead to sales staff pressuring customers into buying unsuitable products, such as policies they can never claim on. The example given is an extreme one which we would not consider to be representative of the practices of 99.9% of financial advisers.
“We are all focused on good consumer outcomes, and that means good accessibility for the public to financial advisers. This announcement endorses the importance of financial advisers and the sustainability of their future.”