Hon Kris Faafoi
Minister of Commerce and Consumer Affairs
17 September 2019
PANUI PĀPĀHO
MEDIA STATEMENT
The Minister of Commerce and Consumer Affairs says a number of life insurers still need to lift their game after an
underwhelming response to the RBNZ and FMA conduct and culture review.
Earlier this year, the review highlighted a culture that prioritises sales over customer interests. The FMA and RBNZ
then asked 16 life insurers to provide work plans that would demonstrate the steps they would take to improve processes,
governance and monitoring of conduct risk.
“Disappointingly, in many cases the responses from some life insurers show slow and inadequate progress, and I share the
regulators’ concern,” Kris Faafoi said.
”Many of the plans life insurers provided to the RBNZ and FMA for improving their internal systems were poorly expressed
and incomplete.
“Some life insurance companies also appeared to be trying to ‘pass the buck’ to the brokers and advisors they use to
sell their products.
“I do acknowledge that some life insurers have made commitments to address issues, and are moving in the right
direction. However, overall the industry still has work to do.
“I want insurance providers to understand that they remain responsible for the quality and appropriate design of the
products they sell, whether directly or through contracted agents, to ensure those policies fit customers’ needs,” Kris
Faafoi said.
Mr Faafoi added that the Government had been working to fast-track measures to improve conduct in the financial sector,
and will announce action on this shortly.
“We know the wider financial services sector – including both banks and insurers – hasn’t been putting customer
interests top of mind. Sales incentives are a big part of the problem. Incentives play a useful role in some cases and
we don’t want to remove them entirely. But when insurers sell financial products and services, the focus needs to be on
the customer and not just on profit.
“We plan to introduce a regime where banks and insurers are primarily focused on their customers.
“I thank the RBNZ and FMA for their continued efforts to ensure there is improvement in conduct and culture right across
the life insurance industry,” Minister Faafoi said
ends