Chatswood serves the life and health insurance sector in New Zealand with market intelligence, data, and bespoke consulting services. Some of these are provided in conjunction with Quality Product Research Limited - a subsidiary that brings you Quotemonster.
We believe that good decisions are more likely to occur when we have good information about the market environment in which we operate. Intuitive leaps and creative decisions are always required, of course, but the more they are based on a firm foundation of observation, the better they tend to be.
Commerce Commission says mortgage advisers at risk of being ‘unduly influenced’ by commissions
Controversy has arisen based on the back of some comments John Small, Commerce Commission chair has made around the mortgage advice sector, on the back of the Commerce Commission releasing a draft report from the market study on the banking sector that has recently been released.
Controversy has arisen based on the back of some comments John Small, Commerce Commission chair has made around the mortgage advice sector, on the back of the Commerce Commission releasing a draft report from the market study on the banking sector that has recently been released.
Small told journalists that he’s ‘not sure if you went to a mortgage broker that they would tell you’ about how they only work with certain banks and the different commissions advisers can receive, stating,
“From the broker's point of view, they will get different amounts of money from different banks. I'm not sure when you go to a mortgage broker that they would declare that to you.”
There has been a lot of feedback from mortgage advisers on the article posted on Good Returns, qualifying that they both state which banks they work with and the fees they receive from each bank in their disclosure statements all clients receive.
We study disclosure documents and note that they are all good at disclosing the range of lenders that the mortgage adviser offers to clients. The information is in the public disclosure document and is clear. The range that most mortgage advisers have access to through their aggregator is usually extensive as well - they are subject to commercial pressures and operate under strong incentives to ensure that they have relationships with at least the main lenders. Most have longer lists. Although we cannot access robust statistical information on disclosure on specific fees and commissions once a preferred lender is established, we note that there is clear guidance on how to make effective commission disclosure. So it would be interesting to hear more details on the experiences are leading the Commerce Commission to this viewpoint. On the other hand, the comments about AML/CFT limiting access to even basic banking services ring true to many of us in the sector.
More daily news:
Financial Advice NZ central branch meeting 26 March, Palmerston North
Legal and regulatory update for the life and health insurance sector
6 Jun 2023 - The Australian Prudential Regulation Authority (APRA) has released the finalised reporting standards for insurers impacted by the introduction of the Australian Accounting Standards Board 17 Insurance Contracts (AASB 17). https://www.apra.gov.au/news-and-publications/apra-responds-to-consultation-on-minor-amendments-to-insurance-reporting
8 Jun 2023 - The FMA has filed civil proceedings against AA Insurance Limited for failing to apply multi policy and membership discounts, as well as guaranteed no claims bonuses to eligible customers’ premiums, resulting in $11.12 million in overcharges. https://www.fma.govt.nz/news/all-releases/media-releases/fma-files-proceedings-against-aa-insurance-for-alleged-fair-dealing-breaches/
8 Jun 2023 - MBIE: Regulations have been made to support the Financial Markets (Conduct of Institutions) Amendment Act 2022. Links to the regulations are below, along with details of an online information session that MBIE will be holding regarding the sales incentives regulations.
Links to the regulations
The regulations can be found at the following links:Financial Markets Conduct (Conduct of Institutions) Amendment Regulations 2023: https://www.legislation.govt.nz/regulation/public/2023/0123/latest/whole.html
These regulations cover the sales incentives prohibition based on volume or value targets and other provisions to ensure the regime works as intended, including provisions setting the requirements for participants in the Lloyd’s insurance market.
Financial Markets Conduct (Fees) Amendment Regulations 2023: https://www.legislation.govt.nz/regulation/public/2023/0124/latest/LMS829791.html These regulations set the licensing fee for financial institutions applying for a market services licence under the regime.
A commencement order has also been made, which will bring the regime into effect from 31 March 2025. As you may be aware, financial institutions will be able to apply for a licence from the FMA from 25 July 2023 and must be licensed by 31 March 2025 to continue providing relevant services to consumers. The FMA has advised that by submitting an application as early as possible, applicants will give themselves the best chance of ensuring their licence is processed before 31 March 2025. The commencement order can be found at the following link: https://www.legislation.govt.nz/regulation/public/2023/0122/latest/LMS830584.html