FSC launches Code of Conduct

On the eve of its national conference, the Financial Services Council (FSC) has launched the FSC Code of Conduct.

The new Code of Conduct is available here.

Who needs to read it, and why?

All members of the FSC must comply with the Code. Its 35 members comprise 95% of the life insurance market in New Zealand and manage funds of more than $47.5 billion. The members include major insurers in life, disability and income insurance, fund managers, Kiwisaver, professional services and technology providers to the financial services sector. With a distinct consumer focus, the new Code is relevant to all participants in the sector.

What does it cover?

The product of two years of work by the FSC members, the Code of Conduct sets out to build the professionalism of the industry by reinforcing the need for good conduct and strong consumer-focused culture. The Code sets out to achieve this purpose through the following:

  • Setting out nine Code Standards focused around three core objectives; a principal ethical standard, customer perspective standards, and delivering good customer outcomes.
  • FSC members must comply with the rules, act in a way to maintain and enhance the good image of the industry, and use reasonable endeavours to ensure that employees and agents are aware of, and comply with, codes of conduct and standards.
  • The Code will sit alongside and complement existing regulations and law.
  • Potentially material breaches of the Code will be assessed by an independent disciplinary committee, and potential sanctions range from a reprimand, to fines of up to $100,000, through to expulsion from the FSC.
  • The Code is not intended to create legal or other rights between any person other than the FSC and its Members, nor does it replace New Zealand law in any situation of inconsistency.

Our view

The Code demonstrates the purposive objective of the financial services industry to improve itself by lifting its standards and delivering value back to New Zealanders.

The Code Standards provide rules at a high level and it is currently unclear what actions members must take to satisfy each of the particular standards. The FSC members will continue to work to develop best practice and guidance for the Code’s nine standards. Members will need to develop their own business models to suit their circumstances to ensure that they are meeting their commitments under the Code.

What next?

The Code is effective from 1 January 2019, and applies to all dealings that could impact the standing of the New Zealand financial services industry.

The Code is a living instrument that represents an ongoing commitment by FSC members to continuously improve the conduct, culture and consumer outcomes for the benefit of New Zealanders and the New Zealand Economy. The FSC Board will review the code at least every three years.

If you have any questions in relation to the new Code of Conduct or are considering how these changes affect you or your business, please contact one of our experts.

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