Financial Services Council Annual Awards speech

Introduction

  • Ngā mihi nui ki a koutou. Ki te atua, tēnā koe. Ki te Papatūānuku, tēnā koe. Ki te whare tu nei, tēnā koe. Ki nga hoa mate, ki nga ora ora, tēnā koutou, tēnā koutou, tēnā koutou katoa.
  • Quick translation in Māori Language Week, acknowledge to the Sky and to the Earth, to this house where in tonight and also those who are with us and those who have parted.
  • Thank you very much for the invitation to be here tonight.
  • Can I thank Richard Klipin and Rob Flannagan for inviting me to speak tonight, and to present these awards?
  • And can I acknowledge my Parliamentary colleague, the Honourable Paul Goldsmith?
  • Also, I want to acknowledge him as former Minister of Commerce.
  • He jokingly said, I think, that I stand on the shoulders of giants.
  • But I do, very much, respect the privilege of being Minister of Commerce.
  • I’m pleased to have this opportunity to talk with you as key members of the financial services industry.
  • Together you play a critical role for New Zealanders as they look to protect and grow their hard-earned wealth.
  • It is a huge responsibility that relies on your integrity and trust.
  • As your conference theme this year states, the financial services sector can make important contributions ‘Towards Wellbeing’ ambitions for all New Zealanders.
  • So it’s important that consumers’ wellbeing is prioritised and that consumers can have confidence in our financial system. 
  • That needs to be at the heart of what your sector does. The customer needs to be at the heart of what you do.
  • And in the 10 or so months since the reports from the FMA, the Reserve Bank have come out, I have seen good examples of people working in this field to make sure that they’re working towards doing better work in the customer’s interests.
  • But, as I’m sure you’ve heard from Rob Everett today, I have had feedback that suggests that  may not always be the case – for at least not in some areas of your sector. And that is disappointing.
  • So, I would like to talk to you about what I believe are the expectations of the public for the financial services industry here in New Zealand and some of the work the Government is doing that is relevant to you.

Financial Institutions Conduct  

  • I’ve already announced that the Government will be introducing measures to Parliament this year to regulate the conduct of financial institutions and protect consumers.
  • I plan to announce those soon.
  • But I do want to be clear, where it’s clear parts of the industry are dragging their feet around issues of conduct and consumer protection, we will help them to get there.
  • This is not about the journey. This is about the destination.
  • But having said that, I want to acknowledge the changes that some of you have made in the industry to remove soft commissions and rethink the way incentives are offered.
  • I know that some of you have been actively considering conduct issues in your own firms. I thank you for that work. But that kind of thinking needs to be embedded in all layers of your businesses and across the sector.
  • Those of you who are showing the kinds of improvements we want, thank you for showing leadership.
  • Fairness
  • I give you that message because it’s my responsibility, as Minister of Commerce and Consumer Affairs, to ensure that there are effective markets and ensure that consumers get a fair deal and services which are appropriate for them.  Treating customers fairly is essential to building trust between customers and the industry.
  • It’s important that when customers purchase financial products, such as life insurance, that the person selling the product acts in a way that takes each customer’s specific situation into account and that they think about what’s in the customer’s best interests.
  • Let me add that the responsibility doesn’t just rest with the person working on behalf of the life insurance provider or other financial service provider, it is also the responsibility of those providers to make sure the products their agents are selling are appropriate and in the best interests of customers that are buying them.
  • This includes the design of products. And customers should be able to have confidence that products are designed with their interests in mind.
  • There shouldn’t be cases here in New Zealand where New Zealanders are being sold products which they’re never going to be eligible to claim on.
  • We didn’t have a Royal Commission here in New Zealand but the FMA and the Reserve Bank did find that if we didn’t make changes we could get into the same territory that necessitated a Royal Commission in Australia.
  • Both you and I too do not want to go there.

Insurance contract law update

  • Another priority for me is the review of insurance contract law.
  • Some of the laws governing insurance in New Zealand have not been changed for over a hundred years.
  • As the Minister of Finance may have mentioned to you, insurance is a critical factor in the overall role of financial service providers and their ability to provide people with a very real sense of well-being.
  • My focus is to consolidate and modernise the various pieces of legislation around insurance contract law to ensure that insurance is working to customers’ interests and to those of your modern businesses in 2019.
  • This will include important changes to the duty of disclosure on customers and reforms to the regulation of unfair contract terms in insurance contracts.

Review of KiwiSaver default provider arrangements

  • As you all know, a review of Kiwisaver default provider arrangements is underway.
  • After 10 years of Kiwisaver we now know that many default members are not engaging with their Kiwisaver accounts and making active decisions about their retirement savings in a way that was originally expected.
  • It is important that we get the settings right as we look to appoint the next group of KiwiSaver default providers.
  • You’ll be aware, also, that the Capital Markets 2029 review into how New Zealand’s capital markets could be reshaped over the next 10 years has just been delivered and it has a few things to say about KiwiSaver and the Kiwisaver settings that might be changed, and we’ll weigh up the merits and implications of those recommendations over time.
  • The bottom line is that we want to ensure that KiwiSaver, including default fund members, get good value-for-money.
  • In July, MBIE and the Treasury released a discussion document on the review. Submissions close in a week, so if you’ve got something you’ve still got a week left to have your say.  

Concluding comments

  • Just finishing up, as Minister of Commerce and Consumer Affairs, I am focused on ensuring we have healthy and growing financial markets, and also promoting fair and positive outcomes for consumers.
  • My challenge for you all is to show strong leadership that puts your customers first, with the flow-on effects that will see more trust and more public engagement with your services.
  • I’m talking about leadership which goes beyond just the legal or regulatory compliance and works proactively to promote what’s in the best interests and wellbeing of your customers.  I believe there is benefit to you in that.
  • Thank you again for the invitation to be at your awards dinner tonight. I hope you enjoy the rest of your  conference, and aIso congratulations to all those who win awards tonight.
  • Nga mihi nui. Kia koutou katoa.