Cullen drops hint on priorities for task force

In a speech to Tauranga businesses, Cullen singled out concerns such as problems of conflicts of interest through commission-driven agents, transparency around fees and the roll-up of savings products with insurance products as having priority. He also indicated he wants to see “an industry that provides a range of products suited to local conditions, that operates transparently and applies a high level of expertise while charging competitive fees”. The task force, which has a wide-ranging ambit, has been mulling over the first batch of responses to its issues paper put out before Christmas. The issues paper was a wide one, as was the consumer questionnaire put out about the same time. The issues of commission sales versus fees appears to have emerged as a major issue from the first round of the task force’s work, but Cullen’s comments are the first time a minister has singled out the issue. Cullen also indicated his next Budget – now less than a month away – will have quite a bit on savings, although two age-old panaceas, compulsion and specific incentives, are out. “We are treading carefully, and seeking a path that does not rely too heavily on either the notion of compulsion or the manipulation of the tax system. Compulsion can negate some of the economic benefits of savings – by stipulating a particular kind of investment – and also the social benefits “if there is not sufficient choice to promote education and wealth management skills”. Tax incentives are distortionary – “by sequestering retirement savings in a special category, they can also make it difficult for households to take an integrated approach to all of their assets, including housing, education, and perhaps a business”.