FSC reminds members of Code of Conduct
FSC reminds members of Code of Conduct | Insurance Business New Zealand
Insurance News
FSC reminds members of Code of Conduct
Dedicated event puts spotlight on standards
Insurance News
By
Terry Gangcuangco
The Financial Services Council of New Zealand (FSC) has reminded members of the organisation’s Code of Conduct in a dedicated event examining the standards and how to apply them.
Held earlier this month, the online panel discussion was moderated by Fidelity Life customer remediation head and FSC code governance committee chair Charlotte Cockrell (pictured top left).
Cockrell was joined by FSC chief executive Richard Klipin (pictured bottom right), Partners Life conduct head and FSC code working group member Kristen Smith (pictured top right), and Compliance Refinery CEO Steve Burgess (pictured bottom left). Both Burgess and Smith are also members of the code governance committee.
It was noted that the webinar’s purpose was to serve as a timely reminder amid the growing FSC membership and following a recent review of the Code. As a result of the review, which was conducted three years after the Code took effect in 2019, it was recommended that awareness of it be improved.
“I think this is really an important discussion because there are lots of other codes that large and small organisations need to abide by,” Klipin said. “But if you just step back from that and you think about the sector we’re in – we’re in a sector that manages people’s wealth, invests in people’s wealth, protects their wealth, provides advice – we’re basically in the trust business.
“You have to have a measure and a benchmark that says, ‘When you come into the sector, this is what you can expect’… That’s the principal point where we started, and so we hold ourselves collectively to that account. Now, of course, there are other regulators and lawmakers and common law and so on that have that as well, and the idea of the Code is to complement that rather than to either supersede it or to replace it.”
The CEO added: “Every day the sector’s on show to the millions of customers that we serve, so the Code becomes a really important measuring stick, if you will, of ‘Are we turning up every day’ across the tens of thousands of employees and businesses across the sector when we sit in front of New Zealanders and help them make the right decisions about their future.”
The FSC Code of Conduct, which Cockrell said is intended to complement existing legislation while also operating in conjunction with other industry guidelines, consists of the following standards:
Members must carry out business professionally, with due care, competence, and skill, and act with integrity. They must behave in a way that promotes public confidence in the financial services industry.
Members must communicate with customers clearly and effectively.
Members must make reasonable efforts to ensure that customers are provided with sufficient information to enable them to make informed decisions about products and services.
Members must seek and consider customer feedback.
Members must design and distribute products responsibly.
Members must provide employees and distribution channel personnel with appropriate training.
Members must maintain appropriate internal processes for explaining the risks to a customer of replacing or retaining an existing product or service.
Members must manage conflicts of interest fairly and in a way that promotes good customer outcomes.
Members must treat customers fairly.
“When you look at the Code and how it was created and the methodology behind it, a lot of that aligns really well to how we should be doing business on the outcomes of the Australian Royal Commission, CoFI (Conduct of Financial Institutions), and those kinds of things,” Burgess said.
“I think it’s really strong in terms of increasing the standards in the industry and also championing that we do have those standards in the industry and how important it is that these are our values and this is what we want to move forward with.”
Meanwhile Smith pointed out that it is important to have a broader view of conduct expectations.
She said: “I think for a lot of us, for the companies we work for, our [own code] sometimes is more on culture and what your values are as a business, what you’d expect, whereas this one for the FSC is a bit broader.
“Also, we have to recognise that not all FSC members would necessarily be involved in CoFI – they wouldn’t necessarily be financial institutions – so, you do want to have that broader view of conduct expectations and what we, as an industry body, would like to see for customers that would lead to good customer outcomes.”
As part of the discussion, Cockrell went through the standards, with the goal of highlighting how members, in the context of their respective business models, can demonstrate that they are supporting good customer outcomes through the Code.
Commenting on the fifth standard, Burgess asserted: “I think this is one where probably the most work needs to be done in the market at the moment… This one’s really important. You look across the industry now and you see a lot of what we’d call legacy products that are existing out there and everybody wishes they could go away but nobody knows how to make that happen.
“There’s a lot of things in that, when you’re designing and distributing products, ‘How are you doing that fairly?’ I think you see a lot of the FMA (Financial Markets Authority) remediations right now where a lot of those are, ‘Yes, you had a product, but did you actually implement the different variables?’ – multi-policy discounts, those kinds of things.
“So, it’s really important, when you’re designing a product, that you do consider the customer life journey… not just today and how you’re going to market it, but as you go along, and the Code covers that really well… I think it fits really well to where we are with conduct obligations.”
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