Goodreturns reports that AIA has resigned their membership of the FSC. Partners Life resigned yesterday. Both have identified disagreement over the report into conflicts of interest in the sales process. AIA Chief Executive Natalie Cameron's comments were extensive, these are worth highlighting:
“Different distribution channels using different remuneration models are needed if we are to increase availability and affordability. For instance, the Council report could have singled out banks, whose employees are remunerated on a bonus structure or volume basis, a key conflict of interest risk highlighted by the Financial Markets Authority in its Strategic Risk Outlook. Banks also perform an important role in this market and have their challenges – for example the financial products and union Fintec has called for the sales targets for bank staff to be reduced – yet it is the advisers who have been singled out in the FSC report.”
Also, the comment on the need to keep consumer access to financial services in view means that Cameron retains that focus on Code Standard 1.
Comments made by Partners Life CEO, Naomi Ballantyne, also identified the narrow focus of the report on the RFA channel:
Specifically it is our opinion that the focus of the report and the recommendations made demonstrate a particular bias against the RFA distribution channel and the commissions payable to this channel, without sufficient evidence to support this bias.
Ballantyne also tied this to the issue of customer benefit, and concern about access to financial products, and also the impact on
...the cost of life insurance products to consumers if distribution competition is significantly reduced as a result of the recommendations.