Changes in Suncorp management, and more daily news

Paul Smeaton the CEO of Suncorp New Zealand is set to leave his current role and move into the role of Chief Operating Officer at Suncorp’s headquarters. The role of Suncorp NZ CEO will be filled by Jimmy Higgins the current Chief Financial Officer.

“I want to let you know that I am moving to a new role within the Suncorp Group and that our Chief Financial Officer Jimmy Higgins will be stepping in as Acting Chief Executive Officer.

I will be heading back across the Tasman to take up a new role as Chief Operating Officer – Insurance based at Suncorp’s headquarters in Brisbane, as part of some wider executive changes within the Suncorp Group.”

Recruitment for a permanent CEO will begin shortly.

“While there is an internal and external recruitment process underway for my replacement, I am very confident that I will leave you in excellent hands with Jimmy in the interim.”

In other news:

nib: New clients that sign up using nibAPPLY 1 July – 30 September will go in the draw to win one of ten NZ Mystery Weekends for two

Fidelity Life: Fidelity Life launched Stress less their July Sharecare challenge

FMA: Statement of Performance Expectations

nib: nib Adviser Webinar - DHBs and nib’s First Choice Network

AMP: AMP Life rating affirmed after sale


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


Financial Advice weigh in on disclosure regulations, and more daily news

Financial Advice New Zealand have voiced their approval of the new disclosure regulations that were announced by MBIE on 25 June 2020. Katrina Shanks has said that new regulations mirror what Financial Advice outlined in their CoFI submission.

“Financial Advice NZ chief executive Katrina Shanks said the new rules had picked up many of the points made in the association's submission.

“The focus of the sector during this process was to ensure the right balance between good consumer outcomes and a financial advice sector which isn’t encumbered by unreasonable red tape and adverse outcomes.

“We support regulations around disclosure made to clients – including on conflicts of interest, commissions and other incentives and disciplinary issues.”

The need for disclosure being limited to adviser fees, the products they offer advice on, their conflicts of interest, commission they receive, and how clients can contact dispute resolution services is something Financial Advice is please about.

““However, we are pleased to see a change from the draft disclosure requirements that now only requires disclosure of these matters when they would likely materially influence a client’s decision. This is something we strongly recommended in our submission to ensure disclosures were meaningful and not overwhelming for consumers.

“We were concerned the draft regulations required disclosure of product fees charged by unrelated third parties (e.g. insurance premiums) so the removal of the requirement to disclose fees for ‘acting on the advice’ was a sensible move."” Click here to read more

In other news:

FSC: FSC 2020 Awards - Nominations Open

FMA: FMA takes CLSAP NZ to court over alleged anti-laundering breaches

Westpac: Westpac to launch carbon footprint tracker

BNZ: BNZ launches banking support for domestic, economic abuse survivors


New financial advice regime start date set, disclosure regulations resources, and more daily news

After being delayed because of COVID-19, MBIE have announced that the new financial advice regime will begin on 15 March 2021. In addition to the new date being set, the Government has set new disclosure requirements as part of the Financial Services Legislation Amendment Act to ensure that customers have the ability to make more informed decisions. Advisers will be required to disclose their services and other relevant information. This will allow potential clients to decide if the service on offer is right for them.

“The new disclosure requirements will require businesses and individuals who give financial advice to disclose important information about their services to their clients.

“The disclosure requirements are set in regulations under the Financial Services Legislation Amendment Act, which introduces a new regulatory regime for financial advice,” said Sharon Corbett, manager financial markets at the Ministry of Business, Innovation and Employment.”

On disclosure, the details confirm that as expected a progressive disclosure regime is being put in place, much along the lines suggested by the consultation. We think that is good - it makes sense, and it allows the right level of information for each stage of the sales process. It will not please everyone, some prefer the certainty of fixed requirements that are all dealt with at a specific point in time, especially if they have a very simple (and short) advice process.

UPDATE: because I was asked: yes, dollar disclosure of commission payments is required. A range might be disclosed at one point and a specific figure disclosed when known. 

More important, perhaps, is the start date for the new regime. I cannot underline enough how important compliance assurance is as you come up to this date. There are some simple steps you can take to get yourself to a point of comfort. 

  1. Refer to a detailed list of all the reference standards required to achieve compliance - call or write to ask me for such a list if you need one.
  2. Conduct a gap analysis against the full range of requirements.
  3. Start at the top - ensure your governance structures are in place, this is the engine that drives all effective compliance practice
  4. Fill in the processes required against the gaps identified, reporting into your governance process on a regular basis

Much of the commentary does not link directly to the documents, so here is a good digest of links for you: 

The MBIE media release: https://www.mbie.govt.nz/about/news/disclosure-requirements-and-commencement-date-set-for-new-financial-advice-regime/

The disclosure requirements page on MBIE's website: https://www.mbie.govt.nz/business-and-employment/business/financial-markets-regulation/regulation-of-financial-advice/regulations-to-support-the-financial-services-legislation-amendment-act/disclosure-requirements/

The overview of the disclosure regulations: https://www.mbie.govt.nz/dmsdocument/11508-regulations-setting-out-disclosure-requirements-in-the-new-financial-advice-regime-overview

The FMA's media release on the start date for the new regime: https://www.fma.govt.nz/news-and-resources/media-releases/fma-welcomes-start-date-of-new-financial-advice-regime/

The regulations in full: http://www.legislation.govt.nz/regulation/public/2020/0132/latest/whole.html#LMS177125

 

In other news:

Fidelity Life: New Learning Management System for product accreditation and eLearning to be launched soon, Fidelity Life: New Sharecare challenges will begin 1 July 2020

Fidelity Life: Golden Life Plan will be no longer be offered to new applicants from 1 July 2020

Financial Advice NZ: Bring in the Experts: Disclosure Requirements with MBIE

Mixed response to full licensing details


Daily news update: Southern Cross report on member feedback and more stories

Southern Cross have reported that the feedback they received from members on the $50 million return has be positive. Additionally, it was reported that the credit return has been helpful.

Although helpful, Southern Cross have said that it is unlikely to happen again if we remain in Alert Level 1.

“Despite the significant chunk of savings made through April, Astwick says that as long as New Zealand stays at Alert Level 1, another giveback of a similar scale is unlikely – especially since the private health system was able to resume as early as Alert Level 3.” Click here to read more

In other news:

RBNZ: RBNZ released a statement supporting a worldwide multi-stakeholder appeal to keep and improve migrants’ access to remittance or money transfer services during the current economic crisis brought about by the COVID-19 pandemic.

FMA: FMA statement on director liability and continuous disclosure

FMA: Auditor Regulation and Oversight Plan 2020-2023

Alert Level 1: what have advisers learnt from lock-down?


Daily news update: FMA consultation paper, and more stories

The FMA have revealed their proposal of what full licence standard conditions would look like when they released their consultation paper. The consultation ends Friday, 7 August 2020 at 5 pm. The proposal will be discussed in our quarterly report. If you would like to discus your options feel free to contact Russell on 021 764 606 or by emailing your queries to russell.hutchinson@chatswood.co.nz.

Click here to read more

Click her to see full consultation

In other news:

FMA KiwiSaver tracker updated, showing part of COVID-19 impact

Adviser platform offers specialist support for challenging claims

Australia: Financial advisers get last minute lifeline on exams


FMA release draft licence conditions for consultation

Katrina Shanks of Financial Advice New Zealand hosted John Botica from the FMA to talk about the newly released licence conditions. You can find the consultation paper on licence conditions at this link: https://www.fma.govt.nz/assets/Consultations/FAP-full-licensing-standard-conditions-consultation-document.pdf . John Botica started by taking us through a reprise of the options for licence structures, which was valuable given the new classes of licence introduced by the paper for consultation. The consultation outlines three possible licence classes and eight possible standard licensing conditions, as follows:

Classes (Summarised)

  • Class A: Sole practitioner businesses
  • Class B: FAP providing advice on its own account and/or through Financial Advisers
  • Class C: FAP providing advice on its own account and/or through Financial Advisers and/or through Nominated Representatives and/or through engaged entities

Standard Conditions

  1. Record keeping
  2. Internal complaints process
  3. Regulatory returns
  4. Outsourcing
  5. Professional indemnity insurance
  6. Business continuity and technology systems
  7. Ongoing eligibility
  8. Notification of material changes

Further consultation on the regulatory return framework and methodology is planned, date unstated, but noting that such reporting by the FAP to the FMA will not be required during the two-year transitional licensing period.

Subscribers to the quarterly life report will see a review of the conditions and their possible impacts on business structure, digital advice, governance, connected systems, and capital requirements. 


Daily news update: FMA’s guide to customer vulnerability, and more stories

The FMA published their expectations for identifying vulnerability and handling vulnerable customers appropriately. This guideline provides further insight on the FMA’s conduct expectations for managing the specific needs of vulnerable customers. The document focuses on understanding vulnerability, staff capability, customer service and communications.

“This document provides further explanation on the FMA’s conduct expectations for serving the needs of vulnerable customers, set out in our April 2020 letter to financial services CEOs. We expect to issue more detailed guidance and feedback on vulnerability practices as we continue our engagement with industry over the coming months.” Click here to read more

In the document the FMA talks about identifying circumstances rather than 'types' of people that are vulnerable. The Human Rights Commission compiled a detailed guide to vulnerable people after the Canterbury Earthquakes. That guide also talks about situations and conditions and intersections between these. For example individually, neither poverty, nor family situation, nor work situation may make a person vulnerable. But a person who has recently lost their job, who also cares for someone who is unwell, and is experiencing financial stress, is probably vulnerable. 

In other news:

AMP: Insurer AMP among NZ businesses planning exodus from expensive city centre properties

Southern Cross: We’re here for a healthier New Zealand

FSC: FSC on licensing: "You don't have as long as you think"


Daily news update: FMA lodges claims against ANZ, and more stories

The FMA has lodged claims against ANZ. The FMA has stated that ANZ charged customers credit card repayment insurance (CCRI) when in fact there was no cover provided for those customers. In June 2019 ANZ notified the FMA of some CCRI policies duplicates and issuing and failing to cancel CCRI policies for ineligible customers while charging premiums on those policies. These issues were identified by ANZ between May and June 2018.

“The Financial Markets Authority (FMA) has filed High Court proceedings against ANZ Bank New Zealand (ANZ), alleging the bank charged some customers for credit card repayment insurance (CCRI) policies that offered those customers no cover.

The FMA proceedings have two causes of action. Firstly, that ANZ issued duplicate CCRI policies to some customers, which provided no additional benefits or cover, and charged premiums on those policies, during the period April 2014 and November 2019. Secondly, ANZ issued and failed to cancel CCRI policies for ineligible customers, also charging premiums on those policies, during the period 1 April 2014 – May 2018. These two issues relate back to at least 2001. However, the FMA claim reflects the introduction of the Financial Markets Conduct Act 2013, which came into effect from April 2014.” Click here to read more

In other news:

RBNZ: RBNZ is set to work on South Pacific Remittances, Climate Change and their Te Ao Māori strategy.

RBNZ: RBNZ have acknowledged the efforts of the financial sector in meeting the needs of customers.

FMA: Time for financial advisers to step up on KiwiSaver


Daily news update: FMA investigate advice regarding KiwiSaver , and more stories

The FMA is looking into an adviser that recommended clients move savings into more conservative accounts during Level 4 lockdown. The FMA has stated that this advice could cause great damage to clients. Clients that accepted the advice provided in a mass email would have locked in the losses caused by the market volatility. As a result of the adviser’s actions, the FMA has reminded the public that they should consider all options before making any changes.

"The AFA sent a bulk email in March 2020 to clients urgently recommending they move their savings in KiwiSaver and other funds to less risky options.

The FMA was alerted to the communication after receiving a complaint from one of the adviser’s clients.

FMA head of supervision James Greig said the advice was inappropriate and had the potential for significant harm.

"The FMA has a low tolerance for poor conduct that poses risk to customers as a result of the Covid-19 crisis, especially because New Zealanders are looking for financial guidance at this time.” Click here to read more

In other news:

FMA: Providers working to help panicked switchers

PartnerRe: PartnerRe announces two new CEOs

Partners Life: New independent director at Partners Life

Is a brokerage no longer a “lifestyle” business?

Reserve Bank: Reserve Bank governor believes rates can go lower