29 June 2016
Commerce and Consumer Affairs Minister Paul Goldsmith has welcomed the release of the Financial Markets Authority’s (FMA) review of insurance replacement business today.
“Transparency is vital for consumers to have confidence in markets and make informed decisions,” says Mr Goldsmith.
“Insurance replacement is an area where there has been considerable scrutiny, particularly to determine if ‘churn’ in the life insurance market may be harming consumers.
“The report released today is a thorough analysis of current practices in this part of the New Zealand financial market. It is encouraging to see that the majority of insurance advisers do not have high levels of replacement business and appear to be putting the consumer’s interests first.
“However, the report has identified a small proportion of advisers where there is a risk of consumer harm and potential churn.
“I’m pleased to see the regulator is taking further action to examine whether the advisers with the highest levels of replacement business have been acting in the interests of their customers.
“It’s important for the industry to work collectively to address the issues the report raises and make their practices more transparent to their customers,” says Mr Goldsmith.
“Shortly I will receive the Ministry of Business, Innovation and Employment’s final report following the review of the Financial Advisers Act (FAA) and Financial Service Providers (FSP) Act.
“This review has been examining the conflict of interest issues raised in the Financial Market Authority’s report as well as other areas such as licensing and disclosure. The findings of the FMA report will be considered as part of the FAA Review.
“I expect to publish MBIE’s report on the outcomes of the FAA and FSP Act review in mid-July,” says Mr Goldsmith.