The Financial Markets Authority (FMA) encourages financial institutions to share knowledge and practices to better serve their customers.
The FMA’s review of reviews, conducted with 10 deposit takers and 10 insurers, is intended to serve as an industry guide for ongoing improvement rather than imposing any new legal requirements.
“When financial institutions proactively review products and services, they can identify and respond to consumer harms and help promote improvements in the provision of financial services that meet the needs of consumers,” FMA executive director of licensing and conduct supervision Clare Bolingford said.
“There’s a developing area around action-tracking. So it’s great to have done the review, but are you following it up and are you making sure that you’re fixing any issues that you found?”
She mentioned that the insurance company Tower self-reported overcharging customers by more than $11 million but subsequently did not address the issue promptly.
“It really hammers home how important these reviews are, not just in terms of conducting the reviews in a timely way and finding issues, but also making sure those issues are addressed quickly so that harms don’t occur in the future.”
The FMA took civil action against Tower for its delay in addressing the issues, leading to a $7 million fine for misleading and overcharging 61,000 customers.
“It’s important that firms get on top of these things quickly,” Bolingford said.
“We know mistakes happen. Errors are going to occur. It’s about how you fix and address them, and then communicate clearly with people that builds trust with the industry and to make sure that customers get a good deal.”
“We saw some good practice around the use of complaints and speaking with different stakeholders but felt the dispute resolution services were overlooked as a source of insights as well.”
“Strengthening governance and board reporting to ensure accountability and oversight is key, as is improving consumer communication strategies to build trust and transparency,” she said.
“Companies should ensure they have established clear processes for tracking and implementing review outcomes, including post-review monitoring.”