Issue 424 October 1, 2019
Commercial banks have brought down their grilled and glass-panelled counters, allowing for closer interaction with customers; insurers largely operate through brokers who reach across to people and offer them products and services, and most importantly, rise to every occasion to settle claims.
But all is not well with the finance sector, with banks and insurance companies coming under fire in many parts of the world. The voice against these on either side of the Tasman has been growing louder in recent years.
Tighter regime
The long-felt need for a tighter regime has prompted Commerce and Consumer Affairs Minister Kris Faafoi to introduce a new Legislation to Parliament, providing for cleaner, more transparent and accountable business practices for all financial institutions.
Mr Faafoi said that customers can expect fairer treatment from banks, insurers and other financial service providers after the legislation is passed.
The aim is ban target-based sales incentives, which put profits ahead of people.
Important activities
The finance sector operates the payments system, channels money from savers to those who need capital either through the banking system or through pooled savings vehicles like mutual funds. Banks provide liquidity to the system by making markets and establishing prices for financial assets.
The players also help people manage physical and financial risk with products such as insurance policies and derivatives. Often these involved the sale of a complex product to a client who neither read the small (almost invisible) terms and conditions nor understand them.
Reserve Bank of New Zealand and Financial Markets Authority have observed that profits are placed before people. There have been too many complaints, over too many years, for this not to be true.
Transparency International New Zealand Chairperson Suzanne Snively said, “The demonstration of willingness by banks, insurance companies, financial companies and other financial services providers to engage with a voluntary self-assessment, will draw the world’s attention.”
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