MR No. 2018 – 21
24 May 2018
The FMA and the RBNZ have sent the letter below to the chief executives of New Zealand’s licensed life insurers.
As you will be aware we met recently with the Board of the Financial Services Council. We discussed the issues raised at the Royal Commission that pertain to life insurance providers. At the meeting we reiterated our views that the nature and extent of the issues within financial services in Australia and the obvious cross-over in terms of entities, people and practices into New Zealand demands a strong response from the industry here, and from the regulators. We acknowledge the strong support and engagement we received from the FSC Board.
We would like to set out the expectations of the FMA and the Reserve Bank as to next steps and to clarify the information and actions required from your organisation. Our objective in this exercise is to understand what work you have undertaken to review your operations to promptly identify and address any conduct and culture issues. We expect you to show us what you have done in order to be comfortable that there are no material conduct issues within your business. We anticipate that you will be familiar with our Conduct Guide (published in February 2017) and may be extending or enhancing your work in response to the guide as it intersects with issues raised at the Royal Commission. There may also be issues you are looking at more broadly as a result of that inquiry.
We consider that the window for you to demonstrate to consumers, regulators and other stakeholders that they can have full confidence in the financial services industry in New Zealand is narrow, and you will have seen we have encouraged proactive leadership from the retail Banking sector. Given the breadth of your business activities here in New Zealand we would like to ask you for the same information that we have requested from the Banking sector.
Aspects of financial services conduct and culture fall within the regulatory remit of both the Reserve Bank and the Commerce Commission. This letter has been shared with and has the support of the Commerce Commission. In addition, we advise that the responses we seek from you will be shared with both of these agencies.
The purpose of this exercise is for us to understand how you have obtained assurance that misconduct of the type highlighted in Australia is not taking place here. To clarify, we request a written response from your organisation outlining:
We envisage receiving from you a summary document that provides an overview of your programme of work including:
Please provide this overview to the FMA no later than Friday 22 June 2018. We will then assess this summary information and schedule a follow up meeting with your core team to discuss your response, agree next steps, timetable, further information requests and ongoing reporting. We will also work with you to schedule a meeting with your Board of Directors to discuss this work as appropriate.
We intend to be fully open and transparent in our inquiries and interactions with you and we expect the same approach from you. We encourage early discussion of any areas where you anticipate that some remediation may be appropriate or where you are considering changes to product offerings, sales practices or business structures.
We will also continue to focus on areas we have previously signalled as priorities, including:
Please also share this letter with your Boards of Directors. We will publish this letter on our website in the interests of transparency.
cc: Dr Mark Berry, Commerce Commission