A shocking report into bad behaviour among 16 insurance companies from New Zealand and Australia was published on Tuesday (January 29), detailing widespread misconduct such as: charging for services never delivered, sending customers mail-outs with incorrect information, selling credit insurance to customers who were potentially ineligible, and failing to cancel and alter policies at customers’ requests.
As the life insurance sector reels from the report’s revelations, the Government of New Zealand is starting to breathe down the neck of other financial services institutions. There are calls for insurance and banking CEOs to work under an executive accountability regime, according to a newsroom.co.nz report.
The Government announced this week that it plans to fast track tougher new financial regulation in response to repeated calls from the Financial Markets Authority and the Reserve Bank. This more stringent regulation could include a management accountability regime covering insurance and banking executives.
Commerce and consumer affairs minister, Kris Faafoi, said: “It’s an ambitious timeframe but my intent is to have ... legislation in Parliament by mid-2020, because it’s time to ensure consumers get protection that’s clearly needed.”
Unlike in other jurisdictions like Australia, where the Banking Executive Accountability Regime (BEAR) came into force in 2018, New Zealand has relatively few specific requirements around financial services conduct.
Speaking at a press conference after the release of the life insurance report, FMA chief executive Rob Everett, said: “The point we’re making to the Government is that in most modern supervisory regimes the regulators have to be able to go in and monitor and check even in the absence of a potential piece of wrongdoing or misconduct, and that just doesn’t exist here.
“We have also talked about the prospect of a management accountability regime similar to what some other jurisdictions have put in place as a way of making sure that not only boards are put on the spot for how they treat their customers, but senior management as well.”
newsroom.co.nz also reported Finance Minister Grant Robertson saying the financial services sector had been under-regulated for far too long and needed an “appropriately resourced regulator.”
