KiwiSaver providers should take better care, Vernon says
KiwiSaver providers should be required to take clients’ existing arrangements into consideration before recommending a switch, one provider says.
Monday, December 21st 2015, 6:00AM 
3 Comments
by Susan Edmunds
Blair Vernon, director of advice and sales at AMP, said he had concerns about members who were being moved between providers with little consideration given to whether it would benefit them.
He said he had dealt with clients who had been materially disadvantaged by the decision to switch.
In some cases, they had ended up missing out on additional contributions from their employer because they moved out of the employer's preferred scheme.
“They switch and then down the track find 1%, 3% or more in contributions they could have been getting is not going in.”
In another case, a KiwiSaver member was not able to claim on their group insurance policies because they were contingent on being a member of a certain scheme, from which they had shifted.
"In almost all situations the proactive activities of the sales representative takes zero consideration of the current arrangements in place for the client,” Vernon said.
He said Australian financial service providers would not be able to suggest a change without showing they had considered the consequences of that in relation to the client's existing products.
"It’s a question of at what point can there be seen to be an injury to the client and whose responsibility is that. Ultimately it's something the regulator needs to take a view on," Vernon said. "It comes back to what level of obligation do you have to understand people's current arrangements."
Financial Markets Authority director of regulation Liam Mason said the regulator expected KiwiSaver providers to put customer interests first.
But he said FMA investigations had shown most providers were offering a sales, not advice, model.
"We will continue to monitor KiwiSaver switching and retention tactics to ensure members are being treated fairly, and continue to work with them on any issues identified in our ongoing supervision. We will be looking for improvements from providers to ensure they meet the new conduct obligations of the Financial Markets Conduct Act.”
| « Muted response to Fed move | LVR restrictions to be reviewed » |
Special Offers
Comments from our readers
In the cases where the employee is alleged to have been disadvantaged by a Kiwisaver switch, have any of them made a complaint to the adviser who advised the switch, and have any of these progressed to a complaint to that new adviser's EDRS?
If no, why not?
If yes, what was the outcome?
Australian insurance cases where the customer has suffered under the new policies where the terms were inferior to what they had before have seen findings against the new advisor. Surely in the case of an employee who could no longer claim under his old group insurance scheme, he should get the same result?
It is vital we don't get confused about who does what and who carries which responsibility. PROVIDERS ARE NOT ALWAYS ALSO ADVISERS
Sign In to add your comment
|
|
Printable version |
|
Email to a friend |
I think the main problem is the admin. As an employer, you can't link contingent benefits to one KiwiSaver provider in any practical way. The employer pays contributions to the IRD - only the employee knows who their KS provider is and people can change provider at any time they like.
Linking contingent benefits to KiwiSaver generally can work...but linking benefits to one KiwiSaver scheme does not. It's the providers involved that should rethink strategies because that's what is causing the problem.