The Financial Markets Authority (FMA) has revealed that $150 million has been returned to customers by banks and life insurers following the regulator’s conduct and culture reviews into these firms.
The joint reviews of banks and life insurers were conducted by the Reserve Bank of New Zealand and FMA from 2018 to 2019. The regulators asked financial institutions to report on any issues requiring remediation, with the latest update reflecting the government’s continuing efforts to review the practices and systems of these companies.
“The remediation work shows the extent of weaknesses in the systems and processes across banks and life insurers,” said Clare Bolingford (pictured above), director of banking and insurance at the FMA. “This demonstrates the significant amount of work required by financial institutions to ensure they are identifying, rectifying, and remediating issues which, to date, have impacted over 1.5 million customers with a total sum of $150 million returned so far.”
Last month, the FMA said that there were 225 such issues in the life insurance sector, resulting from outdated systems and weak controls, with nearly half a million customers impacted. More than $43 million has been paid in remediation. The FMA said these figures represent just a third of issues whose impacts have been fully assessed to date.
For the banking sector, there were 266 separate issues being remediated, 952,000 bank customers impacted, and $109 million returned to bank customers.
“We acknowledge the substantial work by banks and insurers to date to fix their customer issues – especially those firms tracing back further than they had to,” Bolingford said. “We note that over the past 12 months boards have displayed a greater understanding of what needs to occur to achieve consistent fair customer treatment. It is likely there’s more self-reporting to come as firms continue these efforts. The more firms have looked, the more problems they’ve found. You can reasonably expect our future monitoring activities to consider how well firms have completed, and reported on, these matters.”
The FMA said it will provide guidance on licensing standard conditions, as well as release an application guide and an information sheet on the fair conduct programme, before Conduct of Financial Institutions licensing begins in June 2023.
