Bank and insurer groups welcome govt’s new regime

The government’s announcement of a new financial conduct regime has been welcomed by banking, insurance and adviser groups, and the new legislation is set to be introduced to parliament by the end of 2019.

MBIE has released a package of options for the new regime following a public consultation. The regime will include a new licencing system for banks, insurers and non-banks, new fair treatment standards and a ban on volume-based sales incentives and soft commissions.

The New Zealand Bankers’ Association says the new legislation will be “good for customers and good for business,” and says banks want to treat customers fairly. Most banks scrapped scales incentives for frontline staff when the regulators’ published the findings of their Bank Conduct and Culture review last year.

“We will work closely with the government and regulators to develop and implement the new requirements,” New Zealand Bankers’ Association chief executive Roger Beaumont stated.

“While that review found no evidence of widespread misconduct and culture issues across the industry here we accept there’s work to do to put better systems and processes in place to ensure good customer outcomes. We’re working hard to do that.

“The banking industry understands the high standards expected by their customers and are prepared to meet those standards.”

Meanwhile, the Insurance Council of New Zealand (ICNZ) has also expressed support for the new regime and says it looks forward to seeing the final details of the legislation.

“Legislation in this area will address the first-mover disadvantage insurers struggle with, and removing these incentives will help customers have confidence that both the sales and underwriting teams behind their policies have their needs front of mind,” chief executive Tim Grafton said.

“It will be important that there is clarity around the overlapping regulatory regimes and that sufficient time is allowed for a smooth transition that minimises regulatory costs.”