Industry reacts to disclosure regulation draft, and more daily news

The submissions on disclosure regulations have been released by MBIE. Although the response was largely positive, some concerns were raised about the disclosure requirements set to come into place on 15 March 2021.
 
AMP highlighted the risk of repetition without addressing issues currently being undervalued by consumers. To ensure value is added AMP suggested that disclosures need to be simple and brief, something AMP doesn’t believe has been achieved by the current draft.

“AMP said there was a risk that the disclosure would end up being repetitive and not address the issue of long, impenetrable disclosures not currently being valued by consumers.

 

“For benefits to be delivered to New Zealand consumers it is essential for disclosures to be simple, meaningful, very brief and unobtrusive. We do not consider that these aims would be met with the regulations as drafted.”

 

Under the new rules, advisers are required to disclose any commissions or incentives they receive that a reasonable client might think might materially influence their advice.”

While Financial Advice said that a reasonable person wouldn’t have a good grasp of identifying conflicts of interest within the industry and that the regulation could be strengthened by having higher standards in place. Financial Advice highlighted that there are many references to ‘incentives’ so including a definition and reference to ‘disincentives’ would be valuable. 

“But Financial Advice NZ said a reasonable client would not expect to have a good grasp of identifying conflicts of interest in the sector.

 

“The regulation could be strengthened by having a higher standard, such as – ‘any interest of A, P, or any other person connected with the giving of the advice that has the potential to influence the advice given by A’.

 

“There are various references to ‘incentives’. We recommend including in the regulation a definition and reference to ‘disincentives’ as well. For example, a reduction of commission rates for low volumes could escape the disclosure regime. Disincentives is an area that is often overlooked and should be drawn attention to, so FAPs and advisers cannot avoid their disclosure obligations by saying ‘this disincentive is not technically an incentive’.”” 

AIA stated that there should be further clarification on was is “practicable” for advisers to include and highlighted that this would cause significant issues for financial advice providers. Although AIA doesn’t see this as an issue as they are prepared to invest in the appropriate systems to aid advisers. 

“AIA said there should be more detail on when it was considered “practicable” for advisers to include in their disclosure the amount of fees payable by a client connected to the advice recommendation.

 

“This is a significant issue for financial advice providers. For AIA NZ, significant system investments will be required to provide estimates. While AIA NZ anticipates making this investment, we are concerned that other providers may choose not to do so, and instead elect not to provide estimates on the basis that it is not practicable to do so. This is an undesirable outcome for consumers which we consider could be avoided by better articulating the circumstances when providers may elect not to provide estimates.” Click here to read more

In other news

FSC: Generations Conference will no longer take place

Kepa: Kepa Compliance Officer’s Course was held in partnership with Rosewill Consulting  

Fidelity Life: Fidelity Life were announced as finalists in Best ICT Team Culture category in the 2020 CIO Awards

Fidelity Life: new applications are encouraged to be done through e-App

Fidelity Life: options for alteration requests are:

·       emailing signed alteration requests to admin.services@fidelitylife.co.nz

·       email from the individual policy owner’s email address

·       Mailing to Customer Care, Fidelity Life, PO Box 37-275, Parnell, Auckland 1151


nib financial growths amid COVID-19, and more daily news

nib New Zealand announced that the 12 months to June 30 2020 has been an overall successful year for the insurer. nib experienced a 10.2% growth in revenue to NZ$253.1 million while also prioritising their efforts to support members and the community through COVID-19 related relief and other initiatives. The underwriting results also increased 11.2% to a total of NZ$25.9 million.

“nib New Zealand today announced an improved operating performance for the 12 months to 30 June 2020 (FY20) lifting membership, revenue and earnings.

nib New Zealand premium revenue grew 10.2% to NZ$253.1 million while underwriting result was NZ$25.9 million, up 11.2%. The FY20 underwriting result includes a NZ$9.0 million COVID-19 deferred claims provision for an expected claims catch-up in healthcare treatment deferred during the peak of the COVID-19 that is expected to occur in FY21.

nib New Zealand Chief Executive Officer, Rob Hennin, said nib performed well in FY20, reporting good financial results alongside its strong focus on supporting members and the community throughout COVID-19.

“Helping our Kiwi members stay safe and healthy throughout the COVID-19 pandemic has been a priority, which is why we moved quickly to implement an extensive support package,” Mr Hennin said.”

As part of their member support initiative nib has provided COVID-19 financial hardship support to over 2,000 members, premium relief and suspension options to over 5,000 members, extended cover for COVID-19 related treatments, expanded GP and specialist consultations through telehealth, and extended treatment pre-approvals.

““To date, we’ve provided more than 2,000 Kiwis members with access to financial hardship support, including premium relief and suspension options, postponed premium increases for over 50,000 members and extended coverage for COVID-19 related treatment across all levels of hospital cover, at no extra cost.

In addition, we expanded cover for consultations with GPs and specialists through telehealth, ensuring members could continue to see their medical practitioner during severe lockdown restrictions. We also extended treatment pre-approval from three to six months, meaning over 1,000 members did not have to reapply for surgery approval if they experienced delays in accessing hospital treatment."

In partnership with nib foundation, nib has donated $1 million to Lifeline Aotearoa and Clearhead as part of their community support initiatives.

"Further, we made a $1 million donation, together with nib foundation, to Lifeline Aotearoa and Clearhead, helping support our communities and the ongoing mental health needs of New Zealanders,” he said." Click here to read more

In other news:

Nib: Episode 4 of nib’s webinar series is set to stream September 2 2020 at 11:30am 

AMP: AMP makes top-level changes amid allegations

Asteron Life: Asteron Life profit drops

RBNZ: RBNZ to lead Asia-Pacific Central Banks working group

Financial Advice: Economic update by Economist Tony Alexander


Ditching the life insurance business appears to be just the start of a long process for AMP

David Chaplin of investmentnews.co.nz reports that the Just-appointed AMP Capital chief, Boe Pahari has resigned along with AMP chair, David Murray, following intense pressure over a sexual harassment incident. The scandal has also claimed AMP director, John Fraser, who resigned at the same time. More details at this link https://investmentnews.co.nz/investment-news/pahari-murray-gone-as-amp-capital-scandal-bites-back/


Importance of focusing on replacement business, and more daily news

Engagement in replacement business has been a focal point of regulators in previous years and the introduction of the new regime will mean that advice on policy replacement will be closely monitored. During an FSC Get in Shape webinar Steven Burgess from Compliance Refinery highlighted that the FMA has identified replacement business as an area that has the highest risk associated with it.

“Advisers engaging in replacement business have been under intense scrutiny from regulators over the past several years, and the new financial advice regime will ensure that close attention is paid to the details when replacing a customer’s existing policy.

As part of the FSC’s ‘Get in Shape’ programme for advisers, Steven Burgess, of Compliance Refinery, says the FMA has determined replacement business as an area ridden with potential risk. He says advisers will have to be extremely thorough in explaining the benefits, and, most importantly, the potential negative impacts of replacing a policy, and it will no longer do to simply quote a cheaper price.

“Replacement business is an area the FMA has determined as an area of ‘highest risk,’ and rightly so,” Burgess said.”

Steve suggests that advisers focus on providing comprehensive advice to clients. This means first understanding the different product offerings to ensure clients make informed decisions.

““That’s an area that advisers should be focusing on a lot more. It is much higher risk to potential customers, and it’s an area where you really need to be providing comprehensive advice to clients. You can’t limit the scope of that advice.”

“You need to make strong comparisons between what the old product was, and what the new product would be,” he explained.

“It’s really important that you get right down into the actual product details, so you can outline it and say “this is what you used to have, and these are the differences between that and what I’m recommending.” The more detailed the better, because these are the areas where the client can come back and tell you that they don’t have some sort of benefit or cover that they used to have, because they didn’t understand those differences.”

Burgess says that at the heart of it, advisers need to be extremely sophisticated in their understanding of various insurance products. He says risk is an area in which customers are usually the least knowledgeable, and it’s the adviser’s job to clearly lay out the risks specific to them.” Click here to read more

In other news:

Financial Advice: the Money Week event at the Base in Hamilton has been cancelled as a result of lockdown

Fidelity Life: Fidelity Life adds to board

AMP: Shake-up at AMP


Southern Cross study finds Millennials and Gen Z less happier, and more daily news

The Southern Cross Futures Report 2020 has found that Millennials and Gen Z are unhappy with several aspects of their lives including friendships, social lives and wellbeing. The study revealed the number of dissatisfied Millennials and Gen Z participants outweighed the dissatisfied participants in other generations.

“Nearly half of young adults are dissatisfied with their friendships, social lives and overall wellbeing, a survey has found.

The Southern Cross Healthy Futures Report 2020 looked at the mental health of Kiwis aged 18 to 29. Fifty one per cent of them were concerned about being lonely compared with 38 per cent of the average adult population.”

The study also revealed that suicide, cost of living, access to mental health services, and violence were issues concerning Millennials and Gen Z. Dr Stephen Child, Southern Cross chief medical officer credits exposure to unrealistic lifestyles in the media as being a contributing factor to dissatisfaction, with people comparing their reality to their expectations that are influenced by what is portrayed in the media.

“The issues weighing most heavily on young millennials and Gen Zers’ minds were suicide, the cost of living, access to mental health services, and violence, the study conducted by Colmar Brunton on behalf of Southern Cross revealed.

Southern Cross chief medical officer Dr Stephen Child said the level of happiness people felt was often related to how closely their reality matched their expectations.

“If people’s expectations are higher than their reality, they can be unhappy. Generally, advertising, television, music videos over the last 30 to 40 years have all been selling and projecting expectations that are unreal.”” Click here to read more

In other news:

FMA: KiwiSaver statements starting to help members take action

Fidelity Life: Not All Hope Gone – Millennials Can Bounce Back Amid COVIDUpheaval, Says Top Advisor

AMP: AMP predicts profit drop


Fidelity Life moves 3000 policies to the cloud and more daily news

The first phase of Fidelity Life’s technological update is now completed. The $25 million change is part of Fidelity Life’s digitisation process that will ensure 3000 policies are relocated to the cloud.

“New Zealand's largest locally-owned insurer, Fidelity Life, has completed the first phase of its $25 million technology transformation, migrating of 3000 policies to a Microsoft Dynamics 365 cloud platform.  

The project, which was nicknamed ‘Watson’ for the innovative spirit of Fidelity Life founders Gordon and Shirley Watson, underpins the company’s five-year transformation strategy, built on the idea of "reimagining life insurance for New Zealanders".”

Project Watson is in collaboration with Datacom, Theta, DX Labs and Microsoft. In the past 12 months Fidelity Life has worked to update different aspects of the business to accommodate the implementation of Project Watson.

“The project has been delivered with the assistance of partners Datacom, Theta and DX Labs as well as Microsoft.

Fidelity Life chief technology officer Dan Wilkinson said the strategy required a high degree of ambition and innovation, and a traditional approach wouldn't cut it. 

Over the past 12 months we’ve focused on bringing our people along via fundamental improvements to the entire technology ecosystem, such as a new virtual desktop solution which enabled a seamless transition to remote working during the Covid-19 lockdown," he said.”

The transformation is designed to ensure sustainable growth is achieved as well as improving the support offered to advisers and partners.

“Fidelity Life’s transformation was all about delivering sustainable growth. 

“Project Watson will drive innovation, productivity, resilience and improved support for our advisers and partners," Wilkinson said. 

"Most importantly, though, it will allow us to develop simpler, more flexible products and deliver good outcomes for our customers."” Click here to read more

In other news

Kloogh victim despondent protections not in place

AMP: 'Retirees' stick with KiwiSaver, AMP says

RBNZ: Transparency And Disclosure Critical To COVID-19 Response


AIA set to host online health and wellness event, and more daily news

It was announced that AIA will host an online health and wellness event, AIA Live, on August 2 2020 from 2 pm to 10pm. The event will be focused on mental wellbeing, exercise, activity and rest, nutrition and personal growth while also incorporating music and comedy into the sessions. AIA Life is set to solidify AIA’s commitment to encouraging healthy living. 30 sessions will be running during the event to appeal to people of all ages and in different regions.

“AIA, the largest independent publicly listed pan-Asian life insurance group, today announced plans to host its first ever regional online health and wellness event, spanning 13 markets and headlined by AIA’s Global Ambassador David Beckham.

AIA Live will be broadcast on Sunday 2nd August and will include more than 30 unique sessions, delivering health and wellness content to inspire, motivate and educate people across the region as part of AIA’s commitment to helping them live Healthier, Longer, Better Lives. Key themes will include mental wellbeing, exercise, activity and rest, nutrition, personal growth, as well as light-hearted moments of music and comedy.

AIA Live has been designed to appeal across all age groups and multiple markets, celebrating the cultural diversity of the region while at the same time bringing people closer together to deepen their knowledge of health and wellness in a fun and engaging way.”

Although registration is required, AIA Live will be hosted on AIA’s Healthy Living YouTube channel. This event allows AIA Vitality members to earn points. As part of the event AIA New Zealand ambassadors Ian Jones and Jess Quinn will be hosting activities. Jess Quinn will be running a body image workshop while Ian Jones will be holding a HIIT workout session.

“AIA Live will be hosted on AIA’s Healthy Living YouTube channel and AIA Vitality members will be able to earn AIA Vitality Points for taking part. By registering for the event, participants will also earn the chance to win significant prizes including trips to London to watch Spurs play and meet their first team players, as well as signed footballs from David Beckham, virtual cooking lessons with Jeremy Pang, and merchandise from our other ambassadors. AIA also plans to host similar days in China and India in early September, with tailored content for those markets.

AIA Live will be broadcast in New Zealand on Sunday 2nd August from 2PM-10PM. As part of the event, AIA New Zealand ambassadors Jess Quinn and Ian Jones will be taking part with Jess running a body image workshop and Ian demonstrating an at-home High Intensity Interval Training (HIIT) workout.” Click here to read more

In other news:

Kiwibank: Thousands of Kiwibank customers caught up in privacy breach

Southern Cross: Health screenings 101

AMP: KiwiSaver Still Attractive In ‘retirement’


Details on Financial Advice NZ Money Week, and more daily news

Financial Advice NZ’s Money Week will begin on August 10 2020. This year there will be two initiatives in place. This first will be focused around working with the FMA to hold an interactive day to help the public better their financial understanding. The second initiative will be a webinar to discuss different aspects of personal finances.

The first: we're working with the FMA to hold an interactive day at The Base Mall in Hamilton on Saturday 15 August from 9-5pm. We'll be providing a space for the public to get a better understanding of all things financial. We'll also have people there to answer any questions (general advice) the public may have. If you're a local adviser and would like to join the FMA and myself for an hour or two, please email Jasmina Nagar

The second initiative: to host a public-facing webinar every day of that week from 11am-12pm to discuss five topics around personal finance. We're hoping to engage the public to seek financial advice and increase their financial health, wealth and well-being. Watch this space for more information and the marketing campaign that will support this initiative.”

In other news:

Over 900 transitional licenses have been issued with more than 300 issued to Authorised Bodies

Over 6,700 advisers have been attached to a transitional licence,  meaning 75% of advisers have made a decision on the FAP transitional licence they will operate under

FSC: Navigating Regulation 

AMP: Aussie advisers to file class action against AMP


FMA looking to obtain power over mergers and acquisitions, and more daily news

After a policyholder raised concerns over the sale of AMP Life the FMA has stated that it would like to obtain the power to oversee mergers and acquisitions relating to banking, insurance and non-bank lenders. The proposed expansion of regulatory power would give the FMA power to require a conduct assessment be completed before purchase.

"The Financial Markets Authority (FMA) wants to be given the power to block mergers and acquisitions that affect banking, insurance and non-bank deposit takers’ products.

The regulator wants to be able to require a prospective new owner of a financial institution, or a particular loan or insurance book for example, to undergo a conduct assessment first.

It says it would exercise this power as the overseer of a conduct regime to be introduced once the Financial Markets (Conduct of Institutions) Amendment Bill is passed."

The FMA has presented their idea to MBIE and has suggested that additional clauses be added to CoFI to permit the FMA to oversee future mergers and acquisitions.

"The FMA argues that in the same way the Reserve Bank (RBNZ) needs to ensure a financial institution meets its prudential requirements before it becomes licenced, so has to give its approval for a merger/acquisition to proceed, the FMA should be given similar powers when it comes to conduct.

It has discussed the matter with the Ministry of Business Innovation and Employment, and suggests clauses be added to the Financial Markets (Conduct of Institutions) Amendment Bill, which is currently before the Finance and Expenditure Committee." Click here to read more

In other news:

Department of Internal Affairs: Department of Internal Affairs advised that it is calling a list of businesses who operate in the sectors that it supervises for AML/CFT that have not registered with the Department or confirmed that they do not provide products or services that would require them to comply with the AML/CFT Act, to obtain clarity about their status.

FANZ: Trusted Adviser mark criteria revealed

'Make real money': Client sues over 'sophisticated' investor tag

This last story is well worth a look too. Here is a quick snippet. It is worth considering that compliance structures are now complex. If clients do not understand the consequences of their choices within the establishment of the nature of the relationship, then it is likely that advisers, advice providers, and even product providers will be blamed: they have experience and information on their side. This may be hard to distinguish from a client who knew exactly what they were doing and simply reach for any and all means to recover losses that they should take responsibility for. It is always complicated 

'A woman who says she lost hundreds of thousands of dollars on funds of fallen investment manager Blue Sky claims she was wrongly steered into classing herself as a “sophisticated” investor."


AIA community grant launched, and more daily news

AIA has launched their community grant programme. The grant is set on helping financial advisers motivate those in their communities to maintain a healthy lifestyle. Ten advisers whose ideas are voted as the best will be awarded $50,000 each.

“The programme has been designed to help financial advisers make a difference in local neighbourhoods and highlight the importance of health, wellbeing and overall financial resilience to New Zealand. Through a competitive application process, ten grants of up to $50,000 each will be awarded to initiatives designed to make a positive difference to the health and wellbeing of New Zealand communities.”

Advisers can submit their ideas on AIA NZ’s website and Instagram using the hashtag #aiahealthynz and tagging @aiavitalitynz.  The Winners will be announced in August.

“AIA will select ten applicants for the grant to be announced in August 2020.

To submit your ideas, post an image or video to Instagram with the tag #aiahealthynz, pin your local community and tag @aiavitalitynz.  Applications can also be submitted on AIA New Zealand’s website.” Click here to read more

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In other news:

The Protected Disclosures (Protection of Whistleblowers) Bill underwent its first reading in Parliament, being referred to the Education and Workforce Select Committee.

AMP: Sale of AMP Life criticised

To FAP or not to FAP, the update

Share: Former Fidelity executive joins dealer group