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NZ banks told to treat vulnerable customers fairly post COVID-19

by Lewis Panther | 29 Apr 2020
NZ banks have been put on notice to treat vulnerable customers fairly following the loosening of Jacinda Arden’s lockdown measures.

They have also been urged to look out for COVID-19 related frauds against customers and asked to increase the level of contact they have with them.

The requests were made by Financial Markets Authority chief executive Rob Everett who wrote to the CEOs of the firms the regulator licenses outlining its expectations.

“We acknowledge COVID-19 has resulted in enormous pressure being felt by the wider financial services sector and that you have taken steps to support customers during these unprecedented times,” he said. 

“We also acknowledge the work of the industry associations at this time, reinforcing existing codes of conduct and the issuance of further guidance for their sectors and clients.

“The wide-ranging regulatory relief we have offered is all aimed at allowing you to continue to focus on serving the needs of your customers.”

While the letter went on to say the FMA expected customers should always be treated fairly, it highlighted the plight of those in financial hardship.

“Specifically at this time, we expect you to focus on the following areas and we will be looking for evidence that you are doing so when we have conversations with individual firms in the coming months,” Everett added.

“We expect you to be carefully considering potentially changed circumstances among your customer base and to be responsive to those changes. 

“This includes the increasing number of customers, who due to a number of factors, have become financially vulnerable.

“We view addressing the needs of vulnerable customers as fundamental to good customer outcomes and expect service providers to implement clear plans addressing how the needs of vulnerable customers can be met.”

Organisations were urged to take proactive steps that include ‘lowering fees or removing barriers to exiting/switching products or services where appropriate’.

The FMA also warned banks and customers needed to be the lookout for COVID-19 related scams.

“We are proactively monitoring the risk of customers being taken in by scams or other unauthorised or fraudulent schemes linked to COVID-19 and expect you to be doing the same,” the letter added.

Other measures the FMA urged to make sure customers included ‘communicating more regularly with your customers during this time’.

Everitt added: “Examples may include proactive approaches to customers with specific needs, additional staffing to call centres, and training for staff handling distressed customers.

"We acknowledge the significant role that advisers play in providing reassurance and support to customers, which should be their priority at this time. 

“We expect firms to support advisers in this and to provide appropriate guidance and support to advisers or intermediaries you may use.

“The impact of COVID-19 will be felt by the sector and our customers for some time and it will require continual emphasis on good customer outcomes. 

“To this end, we will be reviewing our conduct guidance and will be communicating this process in due course.

“Our focus is on maintaining market confidence and integrity, including taking swift action against misconduct that seeks to take advantage of the current COVID-19 crisis.

“This includes enforcing the fair dealing provisions of the Financial Markets Conduct Act 2013 relating to misleading and deceptive conduct.”

New Zealand FINSIA Council chair Bernard McCrea said: “We are happy that the banks are stepping up to the plate and focusing on the customers.

“They are having to make up the rules as we move along because we’ve never seen anything like this before. It’s not the GFC. But what we are seeing is going in the right direction. If the first version isn’t right, they are moving pretty quickly to fix it.”

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