Conduct is how market participants behave and how they serve the needs of customers. It is about how a business operates as a whole, and it’s driven by the culture and the governance of the organisation.
We expect financial service providers to promote fair outcomes for consumers. This means a focus on:
We expect boards and senior managers to look at this list and then ask themselves whether they are doing these things. We also expect them to be proactive in identifying instances where they may not be properly serving the needs of customers.
We assess the conduct of market participants in a number of ways, including:
We also get information from consumers to understand their perspectives on the conduct of market participants.
Life insurer conduct and culture review
The FMA previously raised concerns about the extent of replacement business in the life insurance industry. Replacing one insurance policy with another can be in a consumer’s best interest. However, if the move is driven by what the adviser will earn in incentives and commission, and there is no clear benefit to the consumer, it is known as ‘churn’. In response to these concerns, we initiated a review to determine whether insurance churn exists in the New Zealand market and, if it does, whether it harms consumers.