Steering clients through changes in their circumstances

Steering clients through changes in their circumstances

The Insurance & Savings Ombudsman Scheme has recently had a number of calls from financial advisers seeking guidance on how to deal with clients who thought that their adviser should have asked about them changes in their smoking status. The clients had become aware that giving up smoking could reduce their premiums. This had prompted the clients to make a complaint to their adviser and to request for a refund of the additional premium from their adviser.

Karen Stevens, Insurance & Savings Ombudsman, explained “The recent queries from advisers poses a number of issues, including what obligations there are (if any) on advisers to actively ask customers about these types of changes in circumstances. We think that it would be very helpful to include a question about smoking when discussing changes in circumstances with clients.”

Ms Stevens suggests that advisers explain what action should be taken if a client mentions to their adviser that they have given up smoking. Ms Stevens stated “Even if you know it will not affect their premium, we think it would be good practice to explain what you will (or they should) do with that information. You should then make a file note of this conversation and diarise any follow up required.”

Ms Stevens noted that the ISO Scheme has the ability to identify changes in practice that can avoid future issues. Ms Stevens commented “As we have an overview across the industry, we have the ability to spot potential issues that may only appear as a one-off for an individual or business. By sharing these with the industry our aim is to assist advisers avoid any potential issues at the outset. We don’t want to be the ambulance at the bottom of the cliff, we’d prefer to stop people falling off the cliff in the first place.”

Other information

The ISO Scheme has been assisting the financial service providers who are members of the scheme to resolve clients’ issues before they become formal complaints for over 17 years. This is a free service available to all Participants and usually results in the client’s complaint being resolved before the need to make a formal complaint to the ISO Scheme. This is evidenced in the small number of complaints the ISO Scheme formally investigates (around 250 pa) compared with the 3000 complaint enquiries the ISO Scheme receives every year. For more information visit www.iombudsman.org.nz.
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