FinCap welcomes passage of CoFI bill

FinCap welcomes passage of CoFI bill | Insurance Business New Zealand

FinCap welcomes passage of CoFI bill

FinCap has positively received the passage of the Financial Markets (Conduct of Institutions) Amendment Bill, highlighting the incoming requirement that banks and insurers consider how their conduct could challenge the wellbeing of those unable to pay.

FinCap is a non-government organisation supporting around 900 community financial mentors at 200 services across New Zealand.

Ruth Smithers, FinCap CEO, said the bill’s passage is a win for everyone in Aotearoa as the reform opens the door to improving the culture of institutions at every level, including products being designed and sold with actual usefulness and fairness to whānau in mind.

“There are too many links between businesses operating here and across the Tasman to ignore the findings in Australia’s banking royal commission,” Smithers said.

She also applauded the adoption of FinCap’s and many other submitters’ recommendations to consider potential vulnerability as a part of fair conduct programmes.

"Financial mentors regularly see where unfair conduct in terms of poor service, exclusion from access or a lack of appropriate assistance from financial institutions causes serious harm to those who face difficult circumstances in the community,” Smithers said. “These new requirements are a fly in the ointment for any part of these businesses seeking to look past that.”

Another point Smithers welcomed was the tackling of issues with commission-based selling for financial institutions’ staff.

“Reining in sales incentives so that salespeople have at front of mind what options work best for each whānau rather than what will make their employer the most money, is a fence at the top of the cliff rather than an ambulance at the bottom,” she said.

With these reforms now in place, FinCap urged authorities to further examine commission-based selling across the board, especially those that provide “junk insurances” and other products that are not fit for purpose.

“One can be the start of a long road of financial difficulties and a lot of avoidable work to set things right for whānau and the financial mentors they work with,” Smithers said.