Explaining fees and products key for consumers

17 December 2018

Consumers want their financial providers to do more to explain fees and help them understand why their products are right for them. This is according to The Financial Markets Authority (FMA) survey into consumers’ experience of providers’ conduct, released today.

The survey focused on the ‘five Cs for good conduct’: capability, conflict, culture, controls and communication, as outlined in the FMA’s guide to good conduct.

Eight in ten New Zealanders said they have at least one investment type, with KiwiSaver being the most common, followed by life insurance. More than half of New Zealanders surveyed have more than one product.

The survey found that New Zealanders are relatively satisfied with their financial providers, with consumers feeling they are treated fairly (70%), and with respect (72%).

FMA Director of Strategy and Risk, Simone Robbers said; “This survey is part of the FMA’s continued focus on conduct and culture in New Zealand’s financial services.

We’ll keep leaning into the providers to ensure that good conduct and good customer outcomes are their top priorities. In a year when the conduct of major institutions in financial services has come under close scrutiny it is encouraging that most consumers tend to trust their provider.”

Consistent with the first survey in 2017, the lowest scoring results relate to how clearly consumers felt their fees were explained to them (58%) and whether they were helped to understand why the product was appropriate for their needs (58%).

However these scores show increased satisfaction of 5% and 6% respectively in these areas compared to 2017. These increases were largely driven by KiwiSaver members.

Simone Robbers explained: “Changes to make KiwiSaver fees more transparent this year appear to have helped, with a significant rise in positive perceptions amongst KiwiSaver members.

While this shows that providers have done some work in this area, there is more to do. Explaining fees and whether a product is appropriate are the areas having the biggest impact on how consumers rate providers. Consumers agree with us that these factors are the best sign of whether providers are putting customer interests first and demonstrating good conduct.”

The survey also found differences in how investors feel about their financial providers, based on their investment types. People with investment portfolios said they trusted their financial providers more (86%) than those with KiwiSaver accounts (67%).

Half of those surveyed with an investment portfolio were over the age of 60. KiwiSaver membership was more skewed towards people aged between 30 and 50. Just 15% of people over the age of 60 had KiwiSaver.

The 2017 survey can be found here.

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