• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to secondary sidebar
  • Skip to footer
  • Subscribe
  • Twitter
  • RSS Feed

Investment News NZ

Investment News provides financial advisers news stories from the financial industry in New Zealand. Subscribe to our free weekly newsletter.

  • Home
  • News
  • Kiwisaver
  • Subscribe
  • About
  • Advertise
  • Contact
You are here: Home / Investment News / Interview with a regulator: FMA churns on with life study

Interview with a regulator: FMA churns on with life study

May 7, 2017

Liam Mason: FMA director of regulation

Almost a year since releasing a report on ‘churn’ in the life insurance industry, the Financial Markets Authority (FMA) is still hauling in targeted advisers for further questioning.

In the June 2016 ‘Replacing life insurance – who benefits?’ report, the FMA identified about 200 advisers with “high replacement” records who were deemed “most likely to have the largest number of consumers whose policies have been churned”.

“In 2014, these advisers had 65,000 active life policies between them, paying around $110 million in annual premiums,” the June 2016 report says. “We acknowledge that some may be doing a great job for consumers, and it is possible only a small proportion may be churning policies.”

At the time, Liam Mason, FMA director of regulation, said the regulator would be “taking a closer look at the conduct” of the subset of high-replacement advisers.

“We will be examining the basis on which policies have been switched or replaced and the drivers for that activity – with a particular reference to incentives (of whatever form) provided by insurance providers,” Mason said last June.

After issuing a ‘section 25’ notice to the initial high-risk group of advisers last August, the FMA sent out a follow-up demand in November for more detailed information.

The August FMA letter sought broad information on adviser businesses such as a list of insurers they dealt with and a “list of all your clients that have moved their life, health or income protection insurance policies… since January 2012”.

It is understood the November ‘section 25’ notice – which refers to the section of the FMA legislation empowering the regulator to demand certain information from its regulatees – was issued to a winnowed-down version of the 200 or so advisers on the original target list. The November notice sought copies of the full file advisers held on specific named clients.

Following this second round of data collection the FMA has been conducting interviews with earmarked advisers: however, the regulator declined to reveal how many advisers were lined up for face-to-face talks nor when the process was scheduled for completion.

In a statement, the FMA said: “The initial information-gathering as part of the review of insurance replacement business has raised concerns about the conduct of some advisers that has required further inquiries. This is progressing and we are following up with the individuals concerned.”

It is understood, the data collection has been hampered in some instances by poor adviser record-keeping: under the current law registered financial advisers, who write the bulk of life business, have no obligation to keep accurate records of all client interactions.

Mason said last June the FMA report, based on a year-long collection and analysis of data from 12 NZ insurance companies, found a “clear link between high rates of replacement business in certain areas and high up-front commissions, or incentives for high sales volumes, such as overseas trips laid on by providers”.

The FMA report cites data showing life insurers spend about $430 million in commission each year with about $110 million of that accruing to the roughly 200 ‘high replacement’ group.

During the four-year period under scrutiny in the June 2016 study, the FMA accounted for 1,767 insurer-rewarded adviser trips spread across 40 different overseas insurance company events.

Twitter0
LinkedIn0
Google+0
Facebook0

Read More » Investment News

Recent articles

  • New Salt suite to spice up fund mix January 17, 2021
  • Wealth head quits ASB for Tower job; Platinum loses Asia manager; Matterson moves from Milliman January 17, 2021
  • Westpac follows ANZ with Northern Trust mandate… January 17, 2021
  • … as Trust Management wins over another senior BT investment hand January 17, 2021
  • Capital ventures into BlackRock’s ETF territory January 17, 2021
  • Fresh CIO role as South Pacific aims for co-investments January 17, 2021
  • Lessons from 2020: don’t stop thinking about tomorrow January 17, 2021
  • SSGA to push big firms on ESG, stays mum on merger January 17, 2021
  • Low-carbon switch: why electric future turns on listed infrastructure investor January 17, 2021

Primary Sidebar

WEEKLY NEWSLETTER

Sign up here to receive our weekly newsletter.
Learn More »

Most Recent Investment News

New Salt suite to spice up fund mix

January 17, 2021

Wealth head quits ASB for Tower job; Platinum loses Asia manager; Matterson moves from Milliman

January 17, 2021

Westpac follows ANZ with Northern Trust mandate…

January 17, 2021

… as Trust Management wins over another senior BT investment hand

January 17, 2021

Capital ventures into BlackRock’s ETF territory

January 17, 2021

Search by Keyword

Investment News

  • New Salt suite to spice up fund mix January 17, 2021
  • Wealth head quits ASB for Tower job; Platinum loses Asia manager; Matterson moves from Milliman January 17, 2021
  • Westpac follows ANZ with Northern Trust mandate… January 17, 2021
  • … as Trust Management wins over another senior BT investment hand January 17, 2021
  • Capital ventures into BlackRock’s ETF territory January 17, 2021
  • Fresh CIO role as South Pacific aims for co-investments January 17, 2021
  • Lessons from 2020: don’t stop thinking about tomorrow January 17, 2021
  • SSGA to push big firms on ESG, stays mum on merger January 17, 2021
  • Low-carbon switch: why electric future turns on listed infrastructure investor January 17, 2021
  • Bitcoin: the nonsensical asset that makes sense for the times January 17, 2021

Investment News Archive

Most Popular Articles

  • Westpac NZ flags retail advice sale to Forsyth Barr posted on October 19, 2020
  • The horror year in technicolour: free KiwiSaver 13 report released posted on September 30, 2020
  • NZ share-trading splurge could trigger tax alarms… posted on October 5, 2020
  • Flint set to spark platform competition posted on August 17, 2020
  • Four to the core: Smartshares to expand, rearrange and reprice ETFs posted on June 22, 2020
  • Kitset KiwiSaver scheme set to unwrap in spring posted on April 27, 2020
  • Funds eye bargains, self-shoppers hoard cash, KiwiSavers turn conservative posted on March 15, 2020
  • AMP Capital NZ chief quits amid equities exodus offshore posted on August 28, 2020

Sponosored Content

David-Boyle

On the industry play-list: four chart-topping regulations for 2021

David-Boyle

Charge of the lite (advice) brigade

Nathan Field

Pandemic Baby Boom a Bust

Star-date 2020: it’s inflation Jim but not as we know it

Quick-links to Popular News

  • FAP Compliance
  • Coronavirus
  • New Appointments
  • Financial Markets Authority (FMA)
  • Kiwisaver
  • Climate Change
  • Crypto Currency
  • Blockchain
  • Insurance

Secondary Sidebar

Recent News

  • New Salt suite to spice up fund mix January 17, 2021
  • Wealth head quits ASB for Tower job; Platinum loses Asia manager; Matterson moves from Milliman January 17, 2021
  • Westpac follows ANZ with Northern Trust mandate… January 17, 2021
  • … as Trust Management wins over another senior BT investment hand January 17, 2021
  • Capital ventures into BlackRock’s ETF territory January 17, 2021
  • Fresh CIO role as South Pacific aims for co-investments January 17, 2021
  • Lessons from 2020: don’t stop thinking about tomorrow January 17, 2021
  • SSGA to push big firms on ESG, stays mum on merger January 17, 2021
  • Low-carbon switch: why electric future turns on listed infrastructure investor January 17, 2021
  • Bitcoin: the nonsensical asset that makes sense for the times January 17, 2021

Footer

Copyright ©2020 InvestmentNews.co.nz — All Rights Reserved ·— Terms & Conditions