Editorial One
Issue 408, February 1, 2019
The Financial Markets Authority (FMA) and Reserve Bank of New Zealand (RBNZ) have come down heavily on the 16 Life Insurance Companies in the country for they saw these companies as ‘placing their profits above the interests of the customers.’
Complacent Companies
A damning report of the two regulators, released on January 29, 2019, found that Life Insurers in this country have been complacent about considering conduct risk, too slow to make changes following previous FMA reviews and not sufficiently focused on developing a culture that balances the interests of shareholders with those of customers.
“The regulators found extensive weaknesses in life insurers’ systems and controls, with weak governance and management of conduct risks across the sector and a lack of focus on good customer outcome,” FMA Chief Executive Rob Everett said.
Urgent correction demanded
RBNZ Governor Adrian Orr said that Life Insurers must act urgently and undergo major change to address the weaknesses, as their services are vulnerable to misconduct.
The urgency in the Report was triggered by the escalation of issues seen in other countries.
As he rightly said, ultimately, insurers need to take responsibility for whether customers are experiencing good outcomes from their products, regardless of how they are sold.
Prime Minister Jacinda Ardern and Finance Minister Grant Robertson expressed concern over the Report but reserved their comments until “the government received the Report.”
Banks too at fault
But Mr Robertson said that the government may institute systems and procedures to discipline commercial banks and insurance companies.
In their assessment of the banking sector in November last year, FMA and RBNZ had cited significant weaknesses in the governance and management of conduct risks.
“These weaknesses have resulted in a number of issues that require remediation. Banks’ lack of proactivity in identifying and remediating conduct issues and risks means vulnerabilities remain,” their Report said.
New Zealanders have the right to know how their bankers and insurers conduct themselves and if they are being unfairly disadvantaged.
