Since its 2018-19 probes into the conduct and culture of banks and life insurers alongside the Reserve Bank, the Financial Markets Authority (FMA) says 225 issues have been reported to the FMA involving life insurers.
Clare Bolingford, the FMA's Director of Banking and Insurance Conduct, disclosed this figure in a speech at a Financial Services Council (FSC) conference on Wednesday afternoon.
"Since our 2018 review of life insurers’ conduct and culture, many providers have been evaluating their products to ensure they’re fit for purpose, and self-reporting any concerns to us. In that time - almost four years - 225 such issues have been reported to us involving life insurers, many the result of creaking systems and weak controls," Bolingford says.
"Nearly half a million customers have been impacted, and more than $43 million paid in remediation. And that’s just for the one-third of issues whose impacts have been fully assessed."
"It’s worth remembering, when we first reported on remediation in September 2019, insurers that had at least undertaken reviews identified 75,000 customers impacted, with a value of around $1.4 million. Last September we highlighted credit card replacement insurance as a product that has had low or poor value for large numbers of customers, not helped by the way it was sold. The more firms have looked, the more problems they’ve found," says Bolingford.
Last month Cigna Life Insurance admitted to making false and/or misleading representations to customers in proceedings brought by the FMA at the High Court in Wellington.
"When we asked firms to go and check their business for signs of poor practices, we did find - and in fact are still being informed about – multiple issues negatively impacting customers and some unfair treatment. Many of these have now been fixed and customers put right, but many are still being worked through. And I expect more will continue to come to light, particularly in firms that may not yet have properly tested the areas where harms to customers can occur," Bolingford says.
The FMA is yet to disclose the number of conduct and culture issues reported to it by banks, and the level of remediation paid for them, over the past four years.
Bolingford recently spoke to interest.co.nz about the FMA's plans to start regulating the conduct of financial institutions in an episode of our Of Interest podcast.
The FSC is an industry body whose members include life, health, disability and income insurers, fund managers, KiwiSaver and workplace savings schemes including restricted schemes, professional service providers, and technology providers to the financial services sector.
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