The government has received almost 150 submissions on the latest proposals to revamp the 2008 Financial Advisers Act (FAA) as the review process moves into its final phases.
James Hartley, Ministry of Business, Innovation and Employment (MOBIE) head of financial markets policy, told Investment News NZ (IN NZ) 146 submissions on the FAA Options Paper had been handed in prior to the February 26 deadline with “a few more still trickling in”.
“We’ve also had 545 responses to the shorter FAA questionnaire,” Hartley said, “which gained a lot of traction via social media channels.”
The questionnaire was aimed more at gauging consumer views on the FAA review with industry players expected to provide most of the formal submissions (which came in two tranches – a January 29 deadline for proposed changes to the Financial Services Providers Register, and February 26 for the remainder of the Options Paper proposals).
To date, only a handful of FAA Options Paper submissions have been published but Hartley said at first blush there appeared to be a wide variety of views expressed.
He said publication of all submissions could be a couple of months away as MOBIE had to closely scrutinise all documents for possible legal breaches (including potential defamation) and commercial confidentiality reasons.
However, a number of organisations have published their FAA Options Paper submissions independently with actuarial consulting firm, Melville Jessup Weaver (MJW), the latest to go public on its views.
In its submission, published last week, MJW reiterated its call for tighter controls on the life insurance industry, including a cap on commissions.
“How to deliver a fair basis to remunerate organisations and individuals when selling a life insurance product is an important and complex question. It is clear that the life insurance industry is unable to bring about a solution to the conflict of interest issue on its own,” the MJW submission says.
“The events after the publication of the MJW Report demonstrated this.”
The earlier MJW report on the life insurance industry has been widely cited as a catalyst for ructions in the Financial Services Council (FSC) that led to the resignation of several key insurer members and, ultimately, the departure of its CEO, Peter Neilson, last month.
Nonetheless, the MJW submission says the Australian experience, where tough new laws governing the life insurance industry have just been introduced, suggests NZ should follow suit.
“We note that Australia has seen the need to make major changes to remuneration and introduced legislation, which has been welcomed by the industry, to effect the changes,” the MJW submission says.
Late last month a couple of Australian financial institutions – Macquarie Bank and Suncorp – announced major changes to their life insurance operations. The Queensland-based listed financial group, Suncorp, revealed its life insurance brand, Asteron (which is also sold in NZ), would sit under a broader insurance division.
Paul Smeaton, who previously headed Suncorp’s general insurance division, Vero NZ, would also assume control of Asteron NZ following the changes. Current Asteron NZ boss, Nadine Tereora, has been handed the new role of executive general manager customer experience, reporting to Smeaton.
Meanwhile, last week Macquarie sold its life insurance business to Zurich, subject to regulatory approvals.
Greg Ward, Macquarie head of financial services, said the sale reflected “the need for significant scale in the capital intensive life insurance industry in order to drive appropriate returns”.
The NZ Bankers’ Association, the Financial Advisers Code Committee, and the NZ Law Society have also published their respective FAA Options Paper submissions.