A reliance on legacy IT systems is among weak spots identified in a review of 10 New Zealand insurers and 10 deposit-takers by the nation’s Financial Markets Authority.

The regulator says its research was designed to show how financial institutions carry out assessments of products and services.

“Scheduled reviews typically run on a one- to three-year cycle, with reactive triggers for reviews such as complaints and material changes to the product/service or its environment,” the authority said.

“Participants use a mix of quantitative metrics and qualitative feedback to inform reviews, but some participants overlook stakeholders that are relevant to consumers, such as intermediaries and dispute resolution schemes.

“We also saw limited recognition in reviews of the risks posed by legacy systems and products.”

The authority says system and technology failures have led to consumer harm.

“Proactive detection and swift correction of issues is important to mitigate these risks. Regardless of how assessments of systems and technology are scheduled and carried out, they are an important factor in understanding how consumers experience a product or service, and whether consumer requirements and objectives are being met.”

Legacy systems have landed Australian and New Zealand insurers in trouble with regulators, mostly over failures to properly calculate premiums.

Last week, Tower was penalised $NZ7 million ($6.1 million) for failing to pass on premium savings to customers, due to issues with its policy system.