By Gareth Vaughan
Following probes into the conduct and culture of banks and life insurers in 2018 and 2019, the Financial Markets Authority (FMA) is preparing to start regulating the conduct of financial institutions.
The incoming regime aims to ensure financial institutions do what's best for their customers over the entire lifecycle of a financial product, and introduces a fair conduct principle through which financial institutions are required to treat customers fairly.
Why is change needed? What problems is the conduct of financial institutions regime designed to address? And what changes will consumers and the public notice?
To address these questions and other issues I spoke with Clare Bolingford, the FMA's Director of Banking and Insurance Conduct, in the latest episode of interest.co.nz's Of Interest Podcast.
"What the new regime does is it puts a legal obligation on banks and insurers to make sure they are treating customers fairly, that's the central principle," Bolingford says.
18 Comments
I am currently in the middle of an insurance problem. I have an upcoming surgery in October, I put a claim in with AIA but I got an email back saying the policy was no longer valid, with an accompanying letter which was sent by standard mail to my old address (I moved last year), dated February 2022 and stating that the premiums were overdue and that if I didn't pay the policy would be cancelled. Of course, I never got this letter. The reason why the premiums were in arrears is that I lost my wallet late last year and cancelled all my credit cards and the premiums were by AP form my credit card.
I put this to AIA and asked them to reinstate the old policy but they refuse to do it. They want me to apply for a new policy, in which the upcoming surgery will of course be excluded.
Any advice?
Thanks
Have you checked up on going Public?
Given the current pressure on the Public Hospitals, it's not unusual to be sent off to a Private provider instead (in my case, colonoscopy) and wonder why you paid your Private monthly fees for all these years (Southern Cross), when there is no cost to you as a referred-on Public patient. Yet others, who are still Private, get asked to pay their excess to the same hospital; at the same desk, on discharge at the same time.
You didn't notice you weren't making payments since the start of this year? When you cancelled your credit card did you not think to re-establish direct debits/auto payments? When you changed address did you update them?
Some personal responsibility needs to be taken here... If one of your clients stopped making payments for this long and made no contact would you give them grace?
I certainly have my share of responsibility. I did of course notify most providers and contacts of my change of address and also of my lost credit card, but I clearly forgot about the health insurance. I thought they may consider reinstating the policy since it also covers my daughter and I have been a very good customer for 15 years.
Come on Yvil, you'd have a big problem if it was close to a year someone hadn't paid you for... like most businesses you'd stop providing services and write of the bad debt or send it to a collections agency...
If they allowed what your asking for with every customer who had this excuse they wouldn't be in business long.
Take it on the chin, it was your stuff up and if you'd been more diligent on this you would of identified the problem earlier. I'm sure if it had been 1 month or so of non payment they would of been more understanding... but close to a year...
I'm sure cancellation for non payment is highlighted in the TnCs you approved when you took the insurance, just like Banks have clear outcomes if you don't pay your mortgage. Finance and insurance are pretty one sided commercially from my experience. Can I ask why you didn't update your new email and auto payments method...?
I don't have a new email, that's part of the issue, they only notified me of the missing payment by standard mail, not by email, which I would have received or phone call which is also unchanged. Had I known of the missing payments, I would hav made good immediately
Sorry to hear this Yvil..stressful.
Im in a similar position in that I pay my AA insurance premiums with a visa debit card.I occasionally lose my cards as you do, and find pretty quickly my life comes to a halt as uber,uber eats and a few other payments like apple and spotify don't go through.
When I last renewed my insurance I spoke with the AA about my concern of ending up your exact same scenario but with car insurance.
They advised that I don't need to worry because there a quite a few steps to go through before a policy can lapse.Follow up letters, phonecalls, emails etc.I cant remember the specifics.
I would push back and ask them if they have your alternative contact info available.There is a code of practise I believe insurers follow as a set of guidelines.
Stand your ground and consider taking them to small claims...or file an official complaint if small claims won't take it.I think a lot of people in big companies are fobbing off customers because they don't know ,a lazy or quiet quitting I guess.ie don't care.
And on the subject of travel insurance with AA be very careful.They are taking two weeks to reply to an email...if you are lucky.So if you are travelling you cant easily change your insurance if you plans change.Its hopeless.And you cant just buy a new policy online because a clause states it must be taken out before you leave NZ.
I think the central principles are Fair treatment AND Transparency. Please don't forget about transparency because if that part of the Conduct of Financial Institutions is properly implemented customers will have the ability to assess one bank against another. There are so many instances of zero transparency it will be hard for the FMA to properly regulate unless they actually know how the market works. Remember how you THINK something works versus how it should work, how it actually works, how it is regulated to work are completely different in most cases.
Claire - you and your team have your work cut out. I hope you have the knowledge of how it actually works in practice so that you can then apply your guidance and the intent of the Act to make it work Fairly AND Transparently. Good luck you will need plenty of it.
Couple of years ago had a call from Westpac, someone was trying to tell me that I was a good candidate for a new credit card and I am now “qualified” to apply for it and get amazing fees or something else...
And then asked me if I wanted to get it,- I said no. She asked why - and I simply answered- “…hmm because I don’t like to be in debt “ , She stuck for a couple of seconds, this answer surely was not in the script.
Just wondering, when they will finally be liable for proactively indebting other people.
New regulations don't always help the customer though. I asked about increasing our credit card limit recently as increasingly I have to make an extra payment before the due date to stay under the limit. (Of course pay it all off at the due date). But apparently after the responsible lending laws late last year, every limit increase has to go through a full credit application! What a hassle.
I have no problem with government identifying fraudulent behaviour, ie behaviour intended to deceive, and to legislate effectively to highlight "bad" behaviour. The second leg is a state responsibility to ensure such behaviour is detected and successfully prosecuted in a consistent manner.
But imagining government can rule on such a subjective term as "fairness", and expect civil servants to have clear knowledge of complex commercial activities, is a bit of a stretch.
I have zero confidence in the FMA who show every sign of being just another state bureaucracy mainly focussed on their own comfort. They generally seem to be totally unaware that by legislating all manner of procedures to protect the person on the street, they simply introduce more costs which will in the end, have to be paid for by the smuck end consumer.
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