It seems Consumer NZ’s latest insurance survey has struck a nerve, with Financial Advice New Zealand commenting that the organisation’s claims show a lack of understanding.
Consumer NZ’s annual insurance survey revealed that those who bought life insurance or general insurance from a bank or broker were significantly less likely to be satisfied than those who bought directly from an insurance company – emphasising that sales incentives and commissions were likely a major factor behind the difference in satisfaction.
Katrina Shanks, chief executive of Financial Advice NZ, said the report’s claims were “naïve” and were “based on an outdated review.”
“Financial advisers have clients’ interests top of mind and ahead of their own, and the sector’s current code of conduct will be further strengthened by the Financial Services Legislation Amendment Act, which comes into force in July, and which will demand a higher standard of care and transparency for all advisers,” Shanks explained.
“Consumer NZ’s advice to consumers to switch companies purely to save money is also naïve and misleading. Unlike switching between power companies, there are major risks to switching insurance policies, which require expert advice by a financial adviser. Key risks include such things as non-disclosure, pre-existing cover, and policy wording. Consumers could be left with inappropriate and inadequate insurance cover or, even worse, no cover at all.”
Read more: Brokers slammed in new Consumer NZ survey
Shanks said advisers are well aware of the issue in conflicts of interest and that they are actively managed.
“Commissions, as a form of remuneration, help maintain a sustainable business model for advisers so they can continue to provide New Zealanders with low-cost advice on how to increase their financial health, wealth and wellbeing,” she said. “There’s no evidence commissions cause significant additional costs or harm to consumers or encourage poor adviser behaviour.”