New Zealand’s Financial Markets Authority has set out seven areas of concern it wants to address in the life sector over the next financial year.

Its strategic outlook on risks to the banking and life insurance sectors identifies “poor governance and a self-interested culture”, conflicted conduct and incentives, poor systems and controls for misconduct, unsuitable products, inadequate remediation, underinvestment and poor implementation of technology, as well as an absence of regulatory oversight.

It will also focus on bedding down changes to the conduct and culture banks and life insurers following an industry review earlier this year. The review found insurers are not doing enough to address the risks that their conduct poses to customers.

Policy and regulatory reform in response to conduct problems, and the treatment of vulnerable customers by insurers is a long-term challenge, the authority says.

“Our ongoing work with the Reserve Bank of New Zealand on the conduct and culture reviews of the banking and life insurance sectors reflects our overall objective to improve standards of behaviour and ensure all providers are serving the needs of their customers.

“We expect all market participants to review the risks we’ve identified in the sectors that impact them, assess the relevance of these risks and what they are doing to mitigate them,” FMA CEO Rob Everett said.

Market participants should not be waiting for legislative changes, or the regulator to come knocking, to do the right thing.”