AMP sale finalised, and more daily news

The sale of AMP Life to Resolution Life has been finalised. The sale amounted to A$3 billion (NZ$3.19 billion), with A$2.5 billion being paid in cash and the remaining A$500 million being paid in equity interest in Resolution Life Australia. 

“The total sale proceeds are A$3 billion, comprising A$2.5 billion cash and A$500 million equity interest in Resolution Life Australia, a new Australian-domiciled, Resolution Life-controlled holding company that is now the owner of AMP Life.”

As a result of the sale, AMP will transfer an estimated A$55 billion in client funds as part of the company’s internal separation process. And although AMP will sell AMP Life, the company will be providing technology and administrative services to AMP Life for the next two years as part of a transitional services agreement.

“The separation of AMP Life will significantly simplify AMP’s group structure. The internal separation process included the transfer of approximately A$55 billion of client funds via several successor fund transfers.

 

Collectively these transfers represented one of the largest fund transfers of this kind and enables AMP to focus on its strategic simplification of its wealth management platforms and products.

 

In addition to its residual 20% holding in Resolution Life Australia, AMP will continue to provide technology and administrative services to AMP Life for a two-year period under a transitional services agreement. All customers’ terms and conditions will remain unchanged through the separation.” Click here to read more

Therese Singleton has been appointed CEO of the Resolution Life New Zealand Limited which has an A- financial stability rating from Standard and Poor's. 

 

In other news:

Kepa: Kepa are planning to hold two-day workshops for compliance support people in mid-sized to large adviser businesses in August, September and October

Fidelity Life: Fidelity Life launched Live in the Green, their July Sharecare challenge

nib: nibAPPLY offer extended until end of September

RBNZ: Monetary Policy dates for 2021

 


Gastric cancer claim denial, and more daily news

After taking out life and trauma insurance from Westpac in 2013, a family was denied a $100,000 insurance payout after Ailepata Ailepata was diagnosed with gastric cancer. His wife Shirley Farani has said this money would have helped raise her children.

“A South Auckland crane driver has been denied a $100,000 payout for his gastric cancer after a government-owned finance company switched his policy.

His wife is furious that on the basis of what she says is a salesperson's garbled pitch - and despite recent official warnings to the insurance industry about its practice of "churning", or replacing old policies with new ones - her family of three children has now been pushed to financial breaking point.”

The switch in policy resulted after they inquired about taking out a mortgage and a New Zealand Home Loans broker suggested they change insurers.

“The family, who live in Māngere Bridge in Auckland, had paid for life and trauma insurance cover from Westpac since 2013. When, in 2018, they enquired about a mortgage with government-owned New Zealand Home Loans, an agent visited their home. He suggested changing insurers. They did, but ended up with less cover.”

The change in insurer meant that their new cover was $100,000, half the amount they had with Westpac.

“They thought having their insurance with their mortgage provider might make sense, she admitted. The new policy provided just $100,000 trauma cover, half of the $200,000 they had under Westpac.She found that out when she made a claim for the gastric cancer, she told RNZ.” Click here to read more

I am always conscious that there will be another side to this story, and knowing New Zealand Home Loans, a statement of advice on file. It will be important to know about those. Of course, either way, this won't look good. It is a reminder that doing the right thing isn't just a question of what is correct from a procedural point of view, but how it will look from the public perspective. Nobody wants coverage like this.

In other news:

Asteron Life: Market insights and impact from Covid-19 webinar

Fidelity life: Updated agency agreement will come into effect 6 July

FMA: Financial advice's 'golden opportunity'

FMA: John Botica welcomes disclosure requirements and new regime start dates


UPDATED: Melanie Purdey shares top FAP related questions, and more stories

Melanie Purdey shared what she thought advisers should be asking to ensure that they make the right decision in regard to joining a FAP.  Melanie covered culture, controls, communication, capability, and conflict.

Advisers need to consider the culture of the FAP. To ensure that there is synergy between them and the FAP. Melanie suggests advisers look into the FAP’s leadership, integrity and commitment to customers.

“Does this FAP have the leadership and legacy of looking out for clients’ best interests and putting them in priority?

Have they modelled a culture committed to attracting advisers with integrity or have numbers been the main driver for recruitment? Have they demonstrated leadership in dealing with renegade advisers who have committed breaches in the past?”

Click here to read more

In other news:

Asteron Life: Underwriting and New Business teams moved into a regional-based structure

Fidelity Life: Premium increases for some Income Protection and Key Person Cover customers effective 1 August 2020

Fidelity Life: Premium increases for some new level trauma covers, including Trauma Multi effective 1 August 2020. The underlying rates for some personal IP covers will increase for benefit periods to age 65 to age 70.  For new business for level Trauma and IP the to age 65 term will become to age 70. This was first reported incorrectly by Chatswood as a change to ages of eligibility, our apologies for the confusion. 

Fidelity Life: Planned changes or removal for some sales discounts including Key Person Cover


Daily news update: overview of main points from CoFI select committee hearing, and more stories

Insurance and industry associations representatives shared their views on CoFI during the select committee hearing held on 10 June 2020. Participants included, Cigna head of legal Michael Burrowes, AIA general counsel Kristy Redfern, Financial Advice New Zealand CEO Katrina Shanks, Partners Life chief legal, risk and conduct officer Rebecca Sellers, industry expert David Whyte and Anna Black Fidelity Life chief risk officer.

Michael Burrowes head of legal said that the bill was a good idea but was rushed and complex. Michael and AIA general counsel Kristy Redfern both suggested that the bill be delayed. Kristy highlighted that unlike Australia, New Zealand had time to get the bill right. She also warned that the reform was affecting the mental wellbeing of advisers, which could lead to New Zealanders becoming even more underinsured.

“Michael Burrowes, head of legal at Cigna, said the bill was a good idea but there had been a lack of consultation with the industry for what would be a substantial and important regime. The result was rushed, complex and lacked the appropriate clarity and detail.

He and AIA general counsel Kristy Redfern called for the bill to be delayed until FSLAA had bedded in.”

“Redfern said changes to commission rules in Australia had affected the availability of advice and given that New Zealand was underinsured already, that outcome should be avoided. She said the threat of significant reform was affecting advisers’ mental wellbeing. “It’s more important than ever that any additional regulation is fit for purpose and doesn’t create unintended consequences and anxiety.”

She said, because there was no evidence of widespread misbehaviour New Zealand had time to get the bill right.”

Katrina Shanks shared Financial Advice’s concerns as well as saying that it was hard to understand the implications of CoFI as a lot was left to regulations. Katrina also highlighted that that unlike other sectors, the power to prohibit incentives was very strong. Similarly, David Whyte said that it was unclear if advisers were caught by providers’ fair conduct programmes.

“Shanks said Financial Advice NZ had six main concerns: the bill’s power to regulate sales incentives, no definition of “fair”, confusion over whether financial advisers are included in fair conduct programmes, the definition of intermediary, the claims process, and the timing of the bill’s enactment.”

“David Whyte, speaking on behalf of a group of sector participants including Financial Advice New Zealand, the TripleA Advisers Association and Wealthpoint, said the drafting was confusing because it was not clear whether financial advisers were caught by providers’ fair conduct programmes.”

Rebecca Sellers, chief legal, risk and conduct officer at Partners Life highlighted that incentives played an important part in the livelihoods of many advisers. While Anna Black Fidelity Life chief risk officer said that the outcome of CoFI needs to increase customer trust and ensure sustainability

“Partners Life chief legal, risk and conduct officer Rebecca Sellers said incentives played an important part in the livelihoods of many businesses and were a matter of substantive policy that should not be delegated to regulation – though committee member and Labour MP Duncan Webb asked AIA how the rules could be kept up-to-date with a changing industry if they were not in the regulations.”

“Anna Black, chief risk officer at Fidelity Life, said the outcome of the bill needed to increase customer trust and ensure sustainability of the industry over the long term. “Pausing is appropriate.”” Click here to read more

In other news:

Commerce Commission: The Commerce Commission:  announced that it has finalised the criteria it will use to assess whether a lender is “fit and proper” under the Credit Contracts and Consumer Finance Act

Partners Life: Partners Life sponsored the filming for Fight For Time, a story of the Pink Dragons

FSC: FSC 2020 Awards will be held at the FSC Generations Conference Gala Dinner

FSC: Generations Conference earlybird tickets now available

FSC webinar: Introduction to Generations webinar

FSC: FSC’s partner Voices of Hope will be the charity partner for the 2020 Conference


Daily news update: CoFI submitters areas of concern, and more stories

There have been many submissions on the topic of CoFI. AIA, Cigna, Fidelity Life, Partners Life and AMP have shared their views in regard to the implications CoFI will have on advisers, commission as well as the scope of COFI and the time needed.

Fidelity has stated their concern for potential adviser issues and customer confusion relating to advisers having to comply with different fair conduct programmes. Gail Costa, CEO of Cigna, has said that because of CoFI, advisers could end up preferring one provider's conduct programmes to simplify their compliance obligations, causing a conflict of interest. Partners Life have said that advisers should not be caught by the bill at all. While AIA have said that advisers that were not licensed under FSLAA should be the only ones affected by CoFI.

“While submitters voiced support for the overall intention of the bill, all raised concerns about how it has been drafted.

Significant concern related to how advisers will be dealt with under the bill. There is a carve-out for financial advice providers, but not necessarily for individual advisers, in its current form.

That could mean all advisers had to show compliance with the financial advice providers’ conduct programme, as well as meeting their own obligations under FSLAA.”

When discussing commission, Fidelity said that CoFI could create uncertainty and affect participants’ ability to plan for the future. Nick Stanhope has said that change in commission, will create very high levels of regulatory risk.

“Submitters were concerned that the bill left open the option of regulators introducing new rules for commission structures, without any legislation change being required.”

Another area or concern was the scope of CoFI. AMP stated that they were concerned that being considered a financial institution would increase costs. And Partners Life has said that there is a risk that CoFI is going to create an uneven playing field. KiwiSaver customers would have protection through the bill if they were with a bank but not through a fund manager.

“Many submitters were worried about the scope of the new bill. Some said it was too broad – AMP Wealth Management New Zealand said it was concerned about being included as a financial institution – the cost of licensing would affect its ability to keep costs down. The Securities Industry Association said it seemed that NZX trading, and advising market participants, had been inadvertently captured as intermediaries.

But Partners Life said there was a risk it would create an uneven playing field – a customer would have protection through the bill if they were in KiwiSaver through a bank but not through a fund manager.”

The last area that has created mass concern is time. Nick Stanhope has said that FSLAA should be given enough time to be implemented before more regulations are introduced. David Ireland, partner at Dentons Kensington Swan has also expressed his concern saying that CoFI hasn’t gone through the same level of consultation as other significant regulatory changes.

““No consultation draft was released for public feedback, with no opportunity to debate the outcome of the one round of consultation on the issues paper released last year. The outcome is a bill that provides a framework for a new regime, but with many of the details not fully formed and with many uncertainties as to scope and practical application.

“Conduct licensing is complex. A new regime as significant as this one ought not to be rushed through.”” Click here to read more

In other news:

FSC set to host Reserve Bank on CEO Roundtable 11 June 2020

FSC to make oral submission to the Finance and Expenditure CoFI 10 June 2020

FSC: Big Trends in Tech, Innovations and Investing Webinar to be held 9 June 2020

FSC: Get In Shape Advice Session 2 webinar with Karty Mayne and David Greenslade to be held 12 June 2020

BNZ: OMNIMax and BNZ work together to help BNZ customers get the most out of KiwiSaver


Experienced and reliable insurance administrator available, North Shore and city

Financial advisers that may be looking for a full-time insurance administrator should give me a call. A friend of mine is looking for work in this line, has 30 years experience in a variety of insurance related roles, most recently with busy advice offices. She also has a wider range of small business management skills so brings a range of skills for assisting in the general management of the business as well. I cannot recommend them highly enough. Drop me an email or call for details. 


Fidelity Life announces departure of CEO

Fidelity Life announces departure of CEO

Life insurer Fidelity Life has announced the resignation of CEO Nadine Tereora. Nadine has indicated she wants to spend more time with her family and this will be her final week at Fidelity Life.

Fidelity Life Chair Brian Blake says he’s disappointed to lose Nadine after three and a half years.

“During Nadine’s tenure as CEO Fidelity Life secured a $100 million cornerstone investment from the NZ Super Fund, won the ANZIIF New Zealand Life Insurance Company of the Year Award for three consecutive years and maintained our position as New Zealand’s largest locally owned life insurer.

“I’d like to thank Nadine for her service and wish her and her family all the very best for the future.”

Mr Blake emphasised Fidelity Life is in good shape: “We have a strong team, we’re in a strong financial position and we’re well-placed moving forwards.”

The challenges posed by Covid-19 have been navigated well so far, and the company’s transformation strategy is tracking well, with the recent launches of a refreshed brand and new wellbeing app, Sharecare, being great examples.

Fidelity Life’s Board will commence the search for a new CEO immediately. In the meantime, Chief Distribution Officer Adrian Riminton and Chief Financial Officer Simon Pennington have been appointed as joint acting CEOs to provide continuity for Fidelity Life’s people, as well as for customers, advisers and partners.

“We remain firmly focused on a successful and sustainable future with our customers at the heart of everything we do,” said Mr Blake.

Ends

 


Temporary commission boost from Cigna

It has been announced that Cigna plans to double the commission of advisers during June and July. This announcement comes after the Government stated that all New Zealanders need to have access to independent financial advice. The increase in commission payments will be made out in recognition of the efforts of advisers during Level 4 and Level 3.

"“Life insurer Cigna has announced that it will be doubling service commission payments to its insurance advisers for the months of June and July 2020.

Chief executive Gail Costa said the doubled payments are intended to recognise the effort insurance advisers have put into helping their clients over the past several months as the COVID-19 pandemic has unfolded, all while making adjustments to their own businesses.  She says the financial support should help them keep on top of any personal financial difficulty, and will help them carry on assisting their clients as they rebuild their lives.

The announcement was made following the Government’s statement that New Zealanders should continue to have easy access to independent financial advice." Click here to read more

In other news:

Fidelity Life: Covid-19 – all you need to know

How hard has it been to write new business during COVID-19?

Budget delivers for stricken advisers, FMA

Industry welcomes wage subsidy extension


Sorted sees the silver lining in huge increase of traffic

Sorted has had a big spike in traffic. Reported in Goodreturns, the focus in that article is on the demand for advice. That is true. The nature of the traffic also highlight the grim economic news: the most-used areas of the site were the mortgage calculator and the budget planner. But to return to the subject of advice, more than ever an holistic approach to financial advice is probably in demand now. We could do with a lot more capacity in this area - which currently is limited to AFAs. If you are an RFA, with relevant competence to offer financial planning, I suggest getting your transitional licence for the new regime and formalising your offer. It is needed.

Sorted: New Zealanders hungry for advice, Sorted says

In other news:

Fidelity Life: Fidelity Life makes board appointment

OBITUARY: Janet Brownlie

Suncorp: There is “no urgency” to return staff to offices - Suncorp

Pandemic risk mitigation and environmental policies go hand in hand