Partners Life quits FSC over MJW report

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Partners Life has quit the Financial Services Council (FSC) following a report they say lacked impartiality and was bias against registered financial advisers.

Tuesday, November 10th 2015, 4:08PM 1 Comment

The life insures announced their resignation today after the company raised concerns to the FSC about the MJW report on the retail personal risk insurance in New Zealand.

Partners Life had been a member of the FSC board for the last two years.

“The world moves in mysterious ways,” managing director Naomi Ballantyne said.

“After initially being denied entry into the FSC, Partners Life has been a fully committed, contributing member of the FSC Board for the past couple of years and have been very encouraged by the direction the FSC has been taking over the past year in respect to raising awareness amongst officials and consumers of the value that our industry adds to New Zealand society.

“However, as discussed with the FSC board on several occasions, Partners Life is vehemently opposed to the FSC’s involvement with the release of the MJW report. “Our view is that the scope of the report differs significantly from what the FSC and Partners Life had agreed to fund.”

Ballantyne said they felt the consultation process, the evidence gathering and the analysis of the market undertaken by MJW in the development of the report fell significantly short.

“Partners Life, along with other FSC member companies, accepted that a professional, well researched, unbiased report would be useful to help the industry and officials understand how best to mitigate against detrimental advice conflicts, which can drive negative consumer outcomes in the life insurance sales process.

“Unfortunately, in Partners Life’s opinion, the resulting report does not match the agreed scope, nor does it meet the standards of impartiality, research capability, open consultation, or in-depth analysis that should be expected of an independent report by a professional services organisation,” Ballantyne said.

“Specifically, it is our opinion that the focus of the report and its recommendations demonstrate a particular bias against the RFA distribution channel and the commissions payable to this channel, without sufficient evidence to support this bias. “In addition, there is insufficient analysis of the impact that the report’s recommendations will have on consumers’ ability to access independent advice; on the fixed costs of the industry if variable commissions are no longer sufficient to fully fund marketing and lead generation costs; or on the cost of life insurance products if distribution competition is significantly reduced as a result of the recommendations.”

Partners Life had consistently opposed the FSC allowing the report to be released in association with FSC brand, Ballantyne said.

“The brand association would be expected to add significant gravitas and importance, and implied industry endorsement, to what would otherwise be regarded as a report outlining the personal opinions of the authors.

“While there were a number of member companies who shared some of Partners Life’s concerns with the report, it became clear that we were not going to be as successful as we wanted to be in our campaign to distance the FSC from the report in question, leading us to instead have to distance ourselves from the FSC,” she said.

Tags: Partners Life

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