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Direct Debits - and example of the diversity of servicing investments

A friend recently changed banks and his experience shows just how far some organisations have to go in terms of migrating systems online.

  • Two companies had online systems to change the bank and account
  • Two companies allowed you to do it by telephone
  • Two companies required a signed form, but were happy to receive it by email
  • One company required an original form and siganture, all posted - how quaint.

But worse still, said that it wasn't their fault but a requirement of the bank... which it obviously wasn't, given the performance of the others.Imagine how much that manual process costs. Now where do you think two linsurers that my friend dealt with sat in that list?

Traded Life Insurance Policy Interests

The UK looks set to ban retail sale of Traded Life Insurance Policy Interests according to Money Marketing. The economic liberal in me says that you should be able to buy and sell any property you have. Yet clearly we limit some things in the public good - the sale of guns, certain chemicals, and medicines. In the wrong hands even mere objects can cause mayhem.

Perhaps there are some financial products like that. Your first thought might have been mortgage-backed securities, but at least with those, you actually want the homeowner to repay the loan and keep their house. You aren't gaining from their loss.

But there is something darker still: life insurance backed securities. The arguments in favour of creating advanced liquidity for the life assured are all true, but there remains something icky about owning a security where payment is dependent on how fast people die.

Governance, Risk, and Compliance

During the period when we were looking at a lot of QFE Adviser Business Statements one of the areas which gave the most difficulty for companies was the difference between management and governance. This was especially true for adviser businesses, and for sales teams, which are only really developing management systems right now - and governance is poor.

Over in the Finance and Accounting function the business knows clearly that tasks and people need to be managed, but additional, parallel structures need to be in place to ensure good governance. Audit functions bypass line management and have access to information and people at all levels to ensure that accuracy and generally accepted practices are being followed throughout the function. Sales management is poor in many businesses - even large ones - because in services the task and the people are difficult to monitor and manage.

But that is why Governance, Risk, and Compliance functions are convergent.

We argue that they are now so convergent as to be inseparable. In effect a new function exists in every business above a certain scale. It is an expansion of the role that perhaps would have been seen as the preserve of the audit committee, or part of Finance or Strategy.

Compliance is dependent on effective governance, and so often on risk-based assessments that it cannot be considered in isolation either. For most businesses, designed to be compliant day-to-day, if everything works fine, then business as usual systems operate in a fully compliant way. When they are tested is by events that are out of the ordinary: new products or services, new market conditions, a bad apple joins the sales team, tough times puts temptation in the way of a staff member - and so on. The characteristics of such events are that they need the skills of good risk management

The regular tasks required to ensure compliance must be subject to governance. Hence, we have our convergence.

Over :-)

I am glad the election is over. The period of intense nastiness, increasing media stupidity (off a pretty high base), and variously the lecturing / hectoring attitude common amongst most supporters of all sides, just makes it all damned unpleasant.

I am glad we are past the crescendo, and it will all settle down a little more.

We can now expect the usual lengthy dissection, with people grumbling in the usual way: about the turn-out, about might have-beens, the failures of MMP, the referendum, and all sorts of other things. If you forgot to vote, or chose not to vote, you will find your action variously vilified and appropriated for their own purposes. Yet the varying strength of a mandate, while carrying no legal force, is also a valuable signal in a democracy.

If you really care about it then participate more fully in the day-to-day functioning of democracy: learning about issues, engaging with policy-makers and regulators, joining a party or issues-based group, and submitting on draft bills.


Housing Returns Expected to Remain Negative

That isn't the headline that the Herald used for the information, but it is the most likely outcome. The Herald has:

Auckland to lead house price growth, says ASB Survey

They continue with the first line which states:

ASB expects house prices nationwide to grow by around 3 per cent over the coming year, the bank's chief economist, Nick Tuffley, said.

This is a survey of consumer expectations. Interestingly the Reserve bank has consumer expectations of inflation they estimate inflation in the coming 12 months at between 4% and 4.3% depending on the methodology you use.

So the expectation is for a net return of 1.3% - a continued easing of house prices relative to other products and services.

I may be banging on about this a bit, but you won't get any improvement in financial literacy until you get financially literate journalists. We should have a rule - always talk about real prices, always talk about inflation.


Sean Carroll Leaves Asteron (NZ)

It was nice to see Sean Carroll on his last day. He was relaxed and cheerful as he said farewell to some advisers at lunch. Sean has completed seven years with Asteron New Zealand and is now returning to Australia. It was great to hear him talk about how valuable the close direct relationships with advisers are - they mean immediate feedback on your plans and performance. I think Sean can look on Asteron's performance during that time and be satisfied with the job he has done.


We have been working with the good folks at Inform holdings for a couple of years now (I'm on their board). If you are an adviser who uses Allied Kiwi then you will have already seen the great tools they offer.

Now a new tool have been launched: Quotemonster

This is a great service - all cloud based, offering the easiest way to quote a range of insurance companies and compare products. In their own words: "It is powerful, intuitive, and totally free! Comparing the market has never been this easy" and I agree.

Go and check it out.



Holocaust Life Insurance

I've explained to policyholders on numerous occasions that deaths even in war can be covered because there usually aren't that many. Of course, unless war destroys an insurance company, it can pay out.

Then there is the question of policies on people murdered during the Holocaust. Remarkably, many of these have never been paid out, and the reason for that has been for many cases the absence of a death certificate.

It is sad that after so many years and so much pain the issue hasn't been resolved properly. It's one of those long-term issues which damages the reputation of insurers and undermines the strong case for insurance. Hat tip: Hank Stern, at Insureblog, go and read all about it.