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Financial Services Conduct and Culture Review

The FMA has released an interim update on the conduct and culture review. As this mostly concerns banks, I was not sure how interested I would be in the announcement. But it is worth a look. YOu can check out the summary at this link.

One item I would like to understand better is this comment:

   "Currently we consider it is appropriate to prioritise our work on banks and life insurers, we haven’t made any decision as to whether to expand that focus in the future."

If that is a risk-based assessment, then it would be nice to understand some of the thinking behind it. Non-bank lenders are the main missing element in the review. Historically they have been a significant component of consumer complaints. I would be as pleased as anyone else to find that all is well in the lending area. But an economy that has been expanding for a long period tends to find lending processes get looser, or more pro-lending, as the expansion gets older. This is then found out in the inevitable recession. That alone, in my mind, suggests that lending should be included.

But to return to life insurers. In the initial round of requests, there was just one insurer (AMP), in the second round of requests, most other major insurers were asked for information. A critical factor is the extent to which conduct risk extends through the sales process. In vertically integrated organisations, that means looking at the extent to which they are responsible for assessing suitability of product irrespective of whether they are giving financial advice, or just selling the insurance. For companies that use intermediaries, it will be most interesting to see the extent to which we need to take responsibility for the actions of advisers. This could have far-reaching consequences for the future of distribution. It also links in to the review of insurer conduct issues raised in the insurance contract law review paper released by MBIE. I think a good debate about the way we look at these distribution aspects will be key to the success of the conduct review.

Bharat Mehta


It is with great regret I share the following announcement: We are sad to share that Bharat/B passed away unexpectedly from a heart attack early this morning. [27 June] If you would like, you are more than welcome to attend the funeral at Morrison’s Funeral Home in Henderson commencing at 12.30pm Saturday 30th June. Thank you for your kind words, messages and prayers at this time. Love Mamta, Roshani, Manisha, Sachin, Sonil and the Mehta Family.

Bharat will be known to many of you through his career in the insurance industry. Bharat worked at Sovereign and Colonial in marketing, at Asteron Life as head of product, Westpac, and also as a financial adviser. He was also a fierce competitor on the sports field. He loved cricket and typically opened the bowling and would bat at three or four. I remember fondly the day he scored a century at Victoria Park, batting with a nasty cut to his cheek. His family meant everything to him, and recently I was very glad of his advice on the raising of children. Roshani, Manisha, Sachin, and Sonil each reflect so much of the best of both Bharat and Mamta. A great friend, who knew how to look after his friends, he loved all of life and knew how to live well. My deepest condolences to Mamta and the Mehta family.


Advice at the Crossroads

Big thank you to the Financial Services Council for organising the event 'Advice at the Crossroads', held this morning. Also thanks for Graham Rich, of Portfolio Construction Forum, for his challenging introduction to the event and my fellow panelists Katrina Shanks, new CEO of Financial Advice New Zealand, and Rebecca Sellers of Melior Law.

For a grey and wet morning it was a great turnout. More questions raised than answered, I felt, but some great contributions.

Kevin Smee raised the question of finding a way to get younger people interested in financial advice. Tony Vidler talked about the challenge of connecting with customers. Cris Nel observed that engagement with customers is what really works - a theme Naomi Ballantyne picked up as well. As always we talked about the conflict between the need to pay for financial advice and the different ways of doing that. Graham Rich said that trends around the world were against commission being a valid way to pay for financial advice. But others disagreed. I felt that sometimes in these discussions we mean different things by the term 'financial advice' a point which Rebecca Sellers nailed by talking about the difference between sales and advice, and describing the definition of financial advice as 'loose and baggy'.

Advice at the crossroads

Blog lite, as I am buried in work

In the next few days, I shall have completed the quarterly life report - subscribers should be receiving copies around the end of this week, After I have been through the checking of drafts stage. I shall look forward to being in contact with you about meeting up to talk through the report. Meanwhile, I have to get back to it...

Test and measure, then repeat, faster

One of the keys to taking good photos, is to start by taking a lot of them, and then critically examining which worked best. Practice helps a lot, but plenty of it, and varied, makes it works even better. Because one of the keys to quality is that it is rare - dig up plenty of ore and you simply have a better chance of finding gold. Not indiscriminately, of course, but, don't use discrimination as an excuse for inaction. Don't let perfect become the enemy of obtaining a perfectly good learning experience.

Some of the most successful people I know are failures, have failed, and will fail again. Fear of failure is normal, being too wrapped up in avoiding failure, or even worse, denying it, will usually deny you success as well. This article explores the value of failure. Link. Try some more, Godin has an excellent summary of the secret to great ideas here.

More people are killed by suicide than war or terrorism put together

I was shocked, even, perhaps, amazed to read the statement that more people are killed by suicide than war and terrorism combined. Noticed in this post: and verified by these data:

Surprising to some is that the number who die from suicide is more than double that of homicide at a global level. In fact, the number of deaths from suicides is higher than the number of deaths from all forms of violence – including homicide, terrorism, conflict, and executions – globally and across many countries across the world. You can see this relationship here. As Yuval Noah Harari notes in his TED Dialogue: "Statistically you are your own worst enemy. At least, of all the people in the world, you are most likely to be killed by yourself".

Courtesy of Max Roser, at Our World in Data.