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W & K

A Question of Ethics

Imagine you have heard a radio or television advertisement from an insurance company. They say in the advertisement that unlike other insurers they will really find out what your circumstances are, and because of this they can offer lower cost cover.

That sounds pretty good so you decide to see what the cost would be to cover your car or your house using their internet site. So you drill down and of course there are compulsory fields to complete, then there are all the questions about what you want to cover. All the time you are wondering, what about the cost? Before you get to that, they ask for your credit card number.

By this stage you have wasted around thirty minutes and still not had what you wanted, which was really only the price so you could make a price comparison with what you are paying your current insurer. You have a choice then of either providing your credit card, or simply saying to yourself stuff it, and exit out of the website. Now here is the rub. Some people provide their credit card details and finally get the price. That’s all they want. A few weeks later the credit card bill arrives and it looks higher than what was expected. It is then that you realise that you had been charged for cover that you didn’t want.

Unfortunately according to media reports this is happening in New Zealand. The insurance company involved is a genuine one, albeit one with a low credit rating and a lack of ethics. A low credit rating is a good indicator that the company could have difficulties in meeting potential claims in the event of a major event such as that experienced several years ago in Canterbury.

Have you ever wondered when doing a google or similar search, that names come up that you were not expecting? This occurs because of paid advertising on the search engines. Fund manager Milford was using ambush marketing simply adding their name to other companies’ KiwiSaver Fund names. They were using the name of one of their competitors in their own paid search result to try and confuse the person searching about KiwiSaver. It will be interesting to see what action if any is taken by the authorities, who already have Milford under investigation over market manipulation.

Whale Oil exposed this unethical marketing approach in a blog posted at 5 pm on Saturday 7 March. The blog showed screen shot images of several funds where the Milford name was added. These included ANZ bank owned One Answer KiwiSaver scheme, Fisher Funds KiwiSaver scheme, and Generate KiwiSaver scheme. By mid-afternoon on Monday 9 March, the links on Google had been removed.

Disclaimer

Steven Barton (FSP 32663) and Susan Pascoe Barton (FSP 32382) are Whakatane based Certified Financial Planners and Authorised Financial Advisers.  Their initial disclosure statements are available free of charge by contacting them on (07) 3060080 or they can be downloaded from www.pascoebarton.co.nz. This column is general in nature and should not be regarded as personalised investment advice.