Insurance regulations conterproductive
Regulations for selling insurance, proposed by the Ministry of Economic Development, will have a counterproductive effect, says the Institute of Financial Advisers.
Wednesday, January 10th 2007, 8:42AM
by Rob Hosking
That “creates significant risk,” says the IFA.
“Two consumers buying the same product, one via agency, one not, who suffer the same adverse event, will potentially get different redress outcomes,” argues the institute’s submission on the proposals.
“It is the view of the Institute that it is unlikely that disclosure will be sufficient to enable consumers to appreciate the very significant differences and risks between utilizing the services of a financial intermediary in an agency or non-agency role.”
The redress for the consumer should be the same, regardless of how the product was delivered.
Instead of the current proposals, the consumer should be able to get redress, jointly or severally, from the product provider and the intermediary, irrespective of delivery via agency or non-agency arrangements.
The financial intermediary and the product provider would need to sort out between them where liability lies.
This would also help further one of the over-riding aims of the new regulations: improving the standard of financial intermediaries, the IFA says.
“This would have an advantage of imposing significant discipline on product providers to carefully vet the agents and intermediaries promoting their products and taking applications on their behalf, and would assist in reducing the potential for rogue advisers or agents to move from one product supplier to another.”
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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