NZ FMA sanctions 11 advisers

New Zealand’s investment regulator has sanctioned 11 life insurance advisers and is investigating a further three after a closer look at 24 advisers found that half lacked care and diligence in their advice and most failed to recognise conflicts of interest.

The Financial Market Authority zeroed in on the 24 advisers after an investigation into the sector in 2016 raised concerns that some advisers were likely to be acting in their own best interests by replacing insurance policies to boost commissions or get free overseas trips, a report in the New Zealand Herald stated.

Advisers who sell a certain number of policies within a timeframe can also qualify for overseas trips. Insurers have a claw-back period of two years in which they can claim the commission back if they lose the business which incentivises advisers to wait until the two years are up before switching them to a different company.

The 2016 report found around 200 advisers out of 3700 in the sector had a high estimated rate of replacement business.

As a result the regulator issued four private warnings, seven compliance letters and is undertaking ongoing inquiries into the conduct for a further three advisers.