COMPLIANCE NEWS - INSURERS - NOVEMBER ISSUE 2018
This month we look at a recent determination by the Insurance and Financial Services Ombudsman in relation to what is considered an unacceptable level of service provided by a financial adviser, the draft Code of Professional Conduct for Financial Advice Services, and an engineering panel created by Engineering New Zealand to assist with unresolved earthquake insurance claims in Christchurch. We also provide our general update on relevant legislation.
IFSO AWARDS COMPLAINANT $1,000 FOR UNACCEPTABLE SERVICE LEVEL PROVIDED BY FINANCIAL ADVISER
The Insurance and Financial Services Ombudsman (IFSO) has upheld a complaint made by a clientand awarded $1,000for incurring a special inconvenience. The client complained that they had not received services to an acceptable level.
In 1993, the client purchased a superannuation plan (Plan) from the adviser. The client then moved to Australia a few years later. In 2011, the client contacted the adviser to discuss the Plan. However, the adviser told the client he had retired and was unavailable to assist the client. Over the span of six years from 2011 to 2017, the client contacted the adviser numerous times to enquire about the Plan. During this time, the adviser did not provide the appropriate level of time investment or expertise for the client.
Section 33 of the Financial Advisers Act 2008 requires advisers to exercise the care, diligence, and skill that a reasonable financial adviser would exercise in the same circumstances when providing a financial adviser service. Section 28 of the Consumer Guarantees Act 1993 states that services must be provided with reasonable care and skill. The IFSO case manager's view was that the fact that the adviser had retired did not mean that he was not required to meet the standards set out in the Financial Advisers Act.
In this case, the IFSO case manager found that the adviser did not meet the requirements of the above sections in relation to the services he provided the client. The IFSO case manager believed the lack of communication constituted a special inconvenience and determined that the adviser should pay $1,000 to the client. Arriving to this determination, the IFSO case manager took into consideration:
while an adviser could not be expected to respond immediately while on holiday, professional standards require having an adequate process
in place to deal with client requests;
Please contact us if you have any questions on the obligations of financial advisers providing advice regarding insurance products, including training for advisors.
CONSULTATION OPEN FOR DRAFT CODE OF PROFESSIONAL CONDUCT FOR FINANCIAL ADVICE SERVICES
Professional Conduct for Financial Advice Services (Code). Submissions close on 9 November 2018. The Commerce Minister intends to
approve the Code by Christmas or early in the New Year.
The Code includes a number of changes including the minimum standards of general competence, knowledge, and skill. To meet the minimum standards, individuals are required to be an authorised financial adviser immediately before the commencement of the Code, or hold a New Zealand Certificate in Financial Services (Level 5) or the National Certificate in Financial Services (Level 5).
Older relevant qualifications may be used to show achievement of qualification outcomes provided the person can
demonstrate how competence, knowledge, and kill has been maintained since attaining the older relevant qualification. The person must also show he/she has an up-to-date understanding of the regulatory framework for financial advice in New Zealand.
Please contact us if you have any questions on the Code or would like any assistance with preparing a submission on the Code.
BODY OF EXPERTS CREATED TO ASSIST WITH UNRESOLVED INSURANCE CLAIMS IN CHRISTCHURCH
Engineering New Zealand, a not-for-profit body which promotes the integrity and interests of the engineering industry, is creating an expert engineering panel as part of the Government's new Greater Christchurch Claims Resolution Service.
The panel will contain a number of independent engineering experts to help resolve the engineering disputes behind the unresolved earthquake insurance claims in Christchurch. The goal of the panel is to provide well-informed advice and provide facilitation services to help resolve claims.
Review of the Insurance (Prudential Supervision) Act 2010
Further to our comments made in our April Issue, no new information has been released regarding the review of the
Insurance (Prudential Supervision) Act 2010 (IPSA). Work on IPSA has been deferred until the Reserve Bank of New Zealand completes its
other initiatives which take priority over this review.
Financial Services Legislation Amendment Bill
The Financial Services Legislation Amendment Bill (Bill) is still before the Committee of the Whole House. The Bill is an omnibus Bill which makes amendments to the Financial Markets Conduct Act 2013 and the Financial Service Providers (Registration and Dispute Resolution) Act 2008. A number of regulations will need to be made to support the measures in the Bill. The intention is for the Bill to pass before Christmas
or early 2019.
Fair Insurance Code
The Insurance Councilof New Zealand (ICNZ)is in the process of reviewing the Fair Insurance Code and the submissions received from the public. The ICNZ expects the new Fair Insurance Code will be introduced in 2019. We will update you as new information comes to hand.
Earthquake Commission Act 1993
The Earthquake Commission Amendment Bill (Bill) is in its Second Reading. The Bill makes changes to the Earthquake Commission Scheme to simplify and speed up the claims process. The Select Committee recommend the majority of the Bill be passed with amendments shown in
the Select Committee's report.
The Select Committee's recommended amendments include the redrafting of the collection and disclosure of personal
information provisions. These provisions will need to ensure they align more closely with the Privacy Act 1993. Another recommended amendment is to provide the Earthquake Commission the ability to accept noticeof damage to a dwelling after the two year limit set in the
Canterbury Earthquakes Insurance Tribunal Bill
The Canterbury Earthquakes Insurance Tribunal Bill (Bill) is currently before the Select Committee. The Bill intends to
establish the Canterbury Earthquakes Insurance Tribunal (Tribunal). The Tribunal will provide speedy, flexible, and cost- effective services to help resolve insurance claims between policyholders and insurers, and insured persons and the Earthquake Commission. Claims must relate
to damage to residential buildings, property, or land caused by the series of Canterbury earthquakes which occurred in 2010 and 2011.
The Privacy Bill is currently before the Select Committee. Parliament is currently reviewing the submissions received from the public. We will update you when new information comes to hand after the submissions have been reviewed.
Disclaimer: The information contained in this newsletter is provided for informational purposes only, and should not be construed as legal advice on any matter.