They say with great power comes great responsibility – in the world of financial regulation, change comes with compliance. If companies are doing right by their clients, though, Ando Insurance Group chief operating officer Thérèse Singleton (pictured) thinks there won’t be much of a burden in order to comply.
“We have a lot of work underway around the impact of what we do with customers,” noted Singleton, who spoke with Insurance Business prior to the recent passing of the Financial Markets (Conduct of Institutions) Amendment Bill (CoFI) in Parliament. “That’s broadly going to things such as simple plain English communications with customers and the use of data to actually understand the experience customers are having with us.
“There’s quite a sophisticated amount of work underway around ensuring that we can lead the business such that conduct is something we don’t have to worry about; it’s just a good outcome from the work that we do. So, why we’re running it as a specific programme of work [is because] my very strong view is if you are running the business properly, your staff are trained properly, your brokers understand your products, you have good data and insights into your customers, then the outcome will be good conduct.”
For the COO, who came onboard the underwriting agency earlier this year, the above is “really what I’m driving pretty hard inside of Ando,” which is making sure that everything the company does is in furtherance of a good outcome for customers.
“When you call it ‘regulatory burden’, I think it’s a ticket to play,” she went on to state, “and I think that particularly the general insurance sector has been lightly regulated to this point in relation to market conduct issues. We would welcome with open arms everything that supports good outcomes for customers and a systemised approach to the measurement of whether or not insurers are providing good outcomes.”
CoFI, through which a new regime is set to come into full force in early 2025, seeks to ensure that financial institutions and their intermediaries comply with a principle of fair conduct and associated duties and regulations. Once in force, according to MBIE (Ministry of Business, Innovation & Employment), the regime will require banks, insurers, and non-bank deposit takers (NBDTs) to establish, implement, and maintain effective fair conduct programmes.
Read more: CoFI passes in Parliament
Singleton, whose credentials include time spent as Resolution Life New Zealand chief executive, believes it’s a long time coming.
“I’ve come from a financial services background,” she highlighted, “so every year somebody has asked me that question – ‘Is it all happening at the one time and is it too hard to manage?’ I think that there’s a long lead-in time for regulatory reform. And when it comes to customer conduct issues… if everybody’s doing the right job by customers, the need to do more once the legislation passes should be minimal.”
Nonetheless, the Financial Markets Authority (FMA) is working with financial institutions to ensure they are prepared for the new regime, with the MBIE also developing supporting regulations. These regulations include those that will prohibit sales incentives based on volume or value targets, as well as regulations to support law provisions relating to the Lloyd’s insurance market.
In a previous statement, the FMA declared: “The new conduct regime is outcomes-focussed with requirements that are intended to be flexible and non-prescriptive. It is not a rules-based regime that prescribes how outcomes must be achieved. The intention is that this will drive positive industry behaviour change to ensure the fair treatment of consumers.
“The new law applies to a range of financial institutions and needs to be workable across a diverse range of business models. The FMA expects firms to avoid a tick-box compliance approach and adopt good practice to achieve good conduct risk management and fair consumer treatment and outcomes.”
The regime will be requiring lenders and insurers to be licensed in respect of their general conduct towards consumers. Licensing applications are expected to open in the middle of next year.
“While fund managers, derivatives issuers, and advice providers are already subject to FMA licensing, the same supervision and monitoring powers will now apply to banks, insurers, and NBDTs,” pointed out FMA chief executive Samantha Barrass when CoFI was passed.
“This will bring all these firms’ engagement with consumers of their products and services into the FMA’s remit. We will be evolving our regulatory approach and embracing the opportunity to encourage and nurture a trusted financial sector which treats all consumers in Aotearoa New Zealand fairly.”
