Financial Markets Authority executive director of licensing and conduct supervision Clare Bolingford. Photo: Supplied
The Financial Markets Authority (FMA) wants financial institutions to learn from each other when it comes to doing the best by their customers.
The FMA's review of reviews provided by 10 deposit takers and 10 insurers was expected to be treated as an industry guide for continuous improvement, without creating any new legal obligations.
"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 said the insurance firm, Tower, was an example of a company that self-reported a mistake in overcharging customers more than $11 million, but then failed to fix the problem in a timely manner.
"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 ended up bringing a civil case against Tower over its failiure to fix the problems quickly, which resulted in it being fined $7m for misleading and overcharging 61,000 cusotmers.
"It's important that firms get on top of these things quickly. 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."
She said companies should also do more to settle disputes with consumer.
"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."
Bolingford said accountability and oversight was also something that needed attention.
"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.
"And finally, companies should ensure they have established clear processes for tracking and implementing review outcomes, including post-review monitoring."
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