Acknowledging inconvenience, even if you didn't cause it, can be a powerful way to defuse tension with a client who is unhappy. It is also something that is positively encouraged by the new Privacy Act. But I think Seth Godin says it best with this piece.
The Financial Markets Conduct (Australian Licensees) Exemption Notice 2020 issued by the FMA allows Australian licence holders and representatives to operate in New Zealand. Although MinterEllisonRuddWatts special counsel Alistair Robertson says there is nothing to worry about, some advisers have expressed their concerns about allowing Australian advisers to enter the market at this time. Robertson has clarified the terms of the exemption saying that Australian advisers that choose to move to New Zealand will be able to continue servicing Australian clients.. The exemption doesn’t allow Australian advisers to service New Zealand clients. Australian advisers looking to achieve the exemption will need to:
“Hold a current Australian financial services licence, be in the business of providing a financial service in Australia, and not have a New Zealand place of business.
Be registered as a financial service provider in New Zealand, and be a member of a dispute resolution scheme.
Take all reasonable steps to ensure its representatives submit to the New Zealand courts in respect of the relevant financial services.
Give the FMA written notice that it intends to rely on the Exemption Notice.
Have procedures that give reasonable assurance that the licensee and its representatives comply with relevant Australian regulatory requirements when giving regulated financial advice to a New Zealand retail client under the Exemption Notice.”
“The FMA released an updated exemption that allows Australian financial service licence holders and their representatives will be free to operate in New Zealand without a local licence, following the rubber stamping of the Financial Markets Conduct (Australian Licensees) Exemption Notice 2020.
The move, which came at around the same time that politicians were scrambling to finalise a trans-Tasman travel bubble, was the finalisation of a proposal first put forward to the industry in August 2020.
Some advisers may be worried that allowing Australian advisers into the New Zealand market at such a tumultuous time of regulation change could cause trouble.
Alistair Robertson, special counsel at MinterEllisonRuddWatts says that New Zealand advisers have nothing to be worried about.
“The exemption is limited in scope. It does not allow Australian financial advisers to solicit New Zealand retail clients. It generally allows Australian advisers to continue to service Australian clients if they, the adviser, move to New Zealand without having disruption to those clients and without complying with the New Zealand licensing regime.” Click here to read more
In other news
Asteron Life has notified advisers that it would like to know when a customer compliant relating to the insurer is brought forward. Asteron Life has said that this presents an opportunity to improve services. Asteron Life has prepared a shareable information sheet about the steps to support clients through their complaint process.
“If a client has a complaint, we want to know about it because we see it as an opportunity to put things right and improve our service for the future.
We take complaints seriously, whether it’s about our products, services or something else. Our established complaints management process - which meets regulatory and industry code of practice obligations - ensures we put the client at the heart of everything we do. It also means we are able to acknowledge and respond to a client complaint in a timely manner.”
Since you work so closely between Asteron Life and the client, you may end up being the recipient of a complaint about Asteron Life. So our team can do everything they can to resolve it, we have put together a simple one-page guide on how you can support the client and report the complaint. The guide includes an outline of how to spot a complaint, how to deal with a complaint and who to notify at Asteron Life.
This document is not for clients, but rather an easy process for you to follow. Please feel free to share the guide with your colleagues who may also receive complaints from clients. If a client would like to know more about the complaints process they can visit the Asteron Life website or call us on 0800 737 101.”
In other news
14 Oct 2020 – The Financial Advisers Disciplinary Committee website has again been amended such that the “Next Hearing” has been changed from 2 Nov 2020 to 19 Nov 2020, again with no further information provided other than details of the venue. https://fadc.govt.nz/upcoming-hearings/
14 Oct 2020 – Good Returns reported the launch of the Trusted Adviser mark by Financial Advice NZ, noting that the public launch of the mark is scheduled for February 2021. https://www.goodreturns.co.nz/article/976517649/trusted-adviser-mark-finally-launched.html
2 Oct 2020 – Government released the Request for Proposal documents to appoint the next set of KiwiSaver default providers. https://www.mbie.govt.nz/about/news/kiwisaver-default-provider-rfp-opens/
5 Oct 2020 – Department of Internal Affairs posted on its AML/CFT News and Information website information on some of the risks associated with compliance with election financing laws. https://www.dia.govt.nz/AML-CFT-Election-financing-laws
5 Oct 2020 – The Financial Advisers Disciplinary Committee website has again been amended such that the “Next Hearing” has been changed from 5 Oct 2020 to 2 Nov 2020, again with no further information provided. https://fadc.govt.nz/upcoming-hearings/
After speaking with an adviser a woman proceeded to cancel her $300,000 policy and add a trauma/critical illness policy. After suffering a back injury a month after making the changes, the woman’s claims were denied.
“The woman met with an insurance adviser to review her cover – she already had a $1 million life insurance policy with one insurer and another $300,000 policy with another, but no trauma, critical illness or mortgage replacement cover.
The adviser recorded that she was working 28 hours a week as an accountant in her own company and studying part-time.
It was recommended she combine her life insurance policies with one of the existing insurers and cancel the $300,000 policy. The adviser also said she should include some trauma or critical illness cover and mortgage protection cover in case she could not work for a period of time.
The woman accepted the adviser’s recommendations. She cancelled the $300,000 policy and a new policy providing cover for trauma/critical illness commenced in October. In November she tripped and fell, injuring her back.”
When speaking with the adviser the woman noted that she worked 28 hours and studied part-time, when claiming she told her insurer that she worked 30 hours a week and informed ACC that she worked 40 hours a week. Her insurer discovered that she wasn’t working and instead was a full-time student. The woman proceeded to lodge a complaint against the adviser stating that she wasn’t informed that she would need to provide financial statements and a result of the advice she’s cancelled her $300,000 policy.
“She submitted a claim under her trauma/critical illness insurance, stating that she had been working as an accountant for 30 hours a week. She also stated on her ACC form that she had been working for 40 hours a week.
When the insurer asked for documents to corroborate her income, she was unable to provide convincing information. The insurer then discovered that she was a full-time student. The insurer declined the claim and voided the new insurance policies but later reinstated the $1 million life policy that she had before the changes were made.
The woman complained that the advice she had received from the adviser caused her to lose the $300,000 life insurance policy that she had cancelled on the adviser’s advice. When the complaint was not able to be resolved directly with the adviser, she went to FSCL.
She told the dispute scheme the adviser had not told her she would have to provide financial statements to support any claim.”
Although the FSCL concluded that the advice given was sound advice, the chain of events highlights the importance of risks of non-disclosure.
““We were satisfied that the advice to increase the cover with one insurer and cancel the smaller policy was sound advice and had not caused any loss,” FSCL said.” Click here to read more
Advisers reading the reports will notice inconsistencies and gaps. The story is plainly larger and more complex than is being shared. As such, there is no real basis for making form judgments. In more general observations we should probably note the increasing likelihood of client complaints and the difficulty of managing disclosures - making sure that clients are really clear about the importance of accurate disclosure and helping them to achieve that - for their benefit and ours. After all, complaints just cost us all money and reputation.
In other news:
Southern Cross: a Risk Partner – Sales and Marketing role is currently being advertised
Strategi: Strategi are offering remote AML/CFT audits
Ailepata Ailepata’s gastric cancer claim denial as a result of a New Zealand Home Loans broker suggesting Ailepata change insurers has caused division within the industry. While some have sided with Fidelity Life’s decision to deny the trauma claim, others have contested the decision. Tony Vidler described the incident as a shocker and hoped it would highlight the duties of advisers by stating that advisers need to act as front-line underwriters since they are better judges of insurer criteria than clients.
“Vidler said: “Clients often, with the best of intentions, tell you everything they think you want to know then later say ‘I didn’t think that would matter. A doctor told me I needed to get my blood pressure under control 17 years ago but that doesn’t matter, does it?’
Clients were in a poor position to judge what would be important to an insurer, he said, and it was the adviser’s job to step up.
“I always take the view that the adviser should be the frontline underwriter … if there’s any doubt or questions you’ve got to draw attention to it.”
If there was a concern about something from a client’s past, the adviser could suggest the insurer requested medical files, he said.”
Katrina Church has stated that they isn’t enough information to condemn the advice provided to Ailepata Ailepata by the mortgage broker. Instead Katrina said that in her experience clients don’t usually understand their disclosure obligations. While advisers work to minimise risk of each application but she suggests that advisers consider the question do clients understand what they have to do when applying.
“Church said there was not enough in the articles written about the case to condemn any adviser. “My experience is most clients don’t truly understand what their obligations regarding disclosure are. And as advisers I would ask do we do enough here to help out clients? Are we training this as well as we can in the industry?
“Advisers are the first underwriters and we should do all we can to derisk the situation for clients – this is something that online or applications made direct to providers can't. That’s our point of difference.
“Advisers should be thinking, is this client really understanding what they have to do when they are filling out this form? That’s the first thing. The industry could do better, insurers could do better.” Click here to read more
In other news:
Financial Advice: Financial Advice formed a group called Corporate Associates
Financial Advice: consultation of the Trusted Adviser mark closed July 22 2020
Professional IQ are hosting a workshop titled 'Prima facie claim: the first glimpse of a problem with the claim' on the 8th of August. Details below:
Clients are often surprised when the insurer asks them to prove or quantify their loss. Using case studies of complaints to the IFSO Scheme, this webinar will look at:
- What is the prima facie claim
- What insurers expect clients to prove
- What clients expectations are
- What the common issues are
- How to avoid common issues
Click here to register.