Monday 15th February 2016
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Former Labour cabinet minister Peter Neilson is stepping down as chief executive of the Financial Services Council, the lobby group representing the KiwiSaver and personal risk insurance industries, amid a review of how the sector pursues its collective interests.
Neilson's departure comes after a series of resignations from the FSC by member companies, some of which disagreed with the FSC's public position on fee-based insurance and savings product sales, published in a report commissioned from actuarial consulting firm Melville Jessup Weaver.
The report suggested that commission-driven selling risked encouraging sales of unnecessary cover and created conflicts of interest for financial advisers. The report found up to half of new policies sold by financial advisers were to people who already had life insurance
Five of the largest personal insurance firms, including AMP, Sovereign, Asteron, and Partners Life resigned from the FSC late last year. While some didn't state reasons, the Good Returns website quoted Asteron Life's managing director as saying "the accent of the MJW report, and the FSC’s association with it, makes our continued membership difficult.”
The Investment News New Zealand website quoted Naomi Ballantyne at Partners Life saying in a note sent to financial advisers that the report showed a “particular bias” against commission-driven third-party distribution of life insurance products and that Partners Life had been "consistently against the FSC allowing the report to be released in association with the FSC brand."
“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,” Ballantyne said.
In a statement today, the FSC's chair, Rob Flannagan, said there would be no need for a full-time chief executive while the membership assessed how best the Kiwisaver and life, income protection and credit insurance sectors best represented their collective interests.
"We part on good terms," he said of Neilson's exit. "Board members would welcome his future involvement in the industry as an employee, consultant, or board member."
Neilson was previously head of the Sustainable Business Council, prior to its absorption into Business New Zealand, where the council's strident support for policies to combat climate change led to tension with some of its members.
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