• Govt focus on sales incentives

High upfront commissions and overseas trips are in the spotlight as the government works to overhaul financial services sales incentives.

On Tuesday, Commerce Minister Kris Faafoi and Finance Minister Grant Robertson revealed Cabinet had agreed to get rid of sales incentives that were driving poor customer outcomes in banking and insurance.

Advice on that is being fast-tracked and consultation is expected in May.

It follows a damning report on the industry, which said insurers were putting sales ahead of customers and did not have enough oversight of advisers.

A spokeswoman for Faafoi said officials would provide a range of options to support better customer outcomes.

“Some business practices may need to change to ensure the interests of the consumer are a priority.”

She said it was overseas trips and high upfront commissions that were of most concern.

That could be a concern for an industry where there are already suggestions that advisers may leave if they are near the end of their careers rather than undergo the process of transitioning to entity licensing under the Financial Services Legislation Amendment Bill (FSLAB).

She said it would not affect the passage of the FSLAB because the work streams were proceeding in parallel.

 

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