Upcoming changes to independent audit requirements and other daily news

Internal affairs have reported that Cabinet have agreed to introduce an amendment to the current AML/CFT Act on 31 December 2020. All reporting entities will be required to have an independent audit completed every three years instead of every two years.

Cabinet has agreed to introduce a new regulation to extend the default time frame for AML/CFT independent audits from two years to three years. The implementation of these regulations is the responsibility of the Ministry of Justice and until the new regulation comes into force reporting entities must comply with the current obligation to complete an independent audit every two years.”

As a result of the change in regulation, the following expectations have been set in place:

“The Ministry of Justice advises us that they propose to have the new regulation in force by 31 December 2020. This would mean: 

  • Law firms, conveyancers, and new Trust and Company Service Providers are required to have their first independent audit completed by 30 June 2020. i.e. no change to the current timing.
  • Accountants and bookkeepers are required to have their first independent audit completed by 30 September 2020. i.e. no change to the current timing.
  • Real estate agents’ first independent audit would not be due to be completed until 31 December 2021 i.e. the independent audit due date for real estate agents would be extended from 31 December 2020 to 31 December 2021.
  • For any reporting entity that has already completed its first or a subsequent independent audit when the new regulations are implemented, it will have three years from the date of the last independent audit to complete the next one.” Click here to read more Audit Guideline

In other news:

AIA: HealthScreen service has resumed

Privacy Bill: The Privacy Bill third reading was completed in Parliament under urgency in a continuation of the 24 June Parliamentary session, with the Act coming into effect on 1 Dec 2020. The NZ Herald reports the key provisions as:

  • Mandatory notification of harmful privacy breaches
  • Introduction of compliance orders
  • Binding access determinations - If an organisation or business refuses to make personal information available upon request, the Commissioner will have the power to demand release
  • Controls on the disclosure of information overseas
  • New criminal offences
  • Explicit application to businesses whether or not they have a legal or physical presence in New Zealand

Financial Advice NZ: Bring in the Experts: Disclosure Requirements with MBIE webinar

Southern Cross: Southern Cross supports new safe haven for at-risk pets

RBNZ: Reserve Bank welcomes new funding agreement


Partners Life appoints Nadine Tereora, and more daily news

It has been announced that Nadine Tereora will join Partners Life as the new Chief Operating Officer. Nadine is set to join in 2021.

“It is my absolute pleasure to announce that Nadine Tereora is joining Partners Life in the role of Chief Operating Officer. While the details around her start date are still being worked out, we expect Nadine will be starting with us towards the beginning of 2021.

Having worked with Nadine in the past, and more recently having been in direct competition with her in her previous role as Chief Executive Officer at Fidelity, we are beyond delighted to be welcoming Nadine to the Partners Life team, and know that her unique mix of skills, experience and mana will be a huge asset to us as an executive team and to Partners Life as a whole.”

Naomi Ballantyne and Nadine Tereora

In other news:

Financial Advice NZ: Building on the stability of our banking system

Regulatory change needed, or halt to AMP Life sale, policyholder says

FSC webinar: Customers, complaints, code and claims - what have we learnt from COVID-19?

AIA: Progressive Care Claim Tool


Deeper look into AIA Vitality Business and Community Grant, and more daily news

AIA announced their AIA Vitality Business and Community Grant earlier this month. The grant is set up to support adviser initiative to encourage health and wellbeing.  Advisers are able to find inspiration by referring to a national think tank that New Zealanders will be adding to. “To help inspire you with ideas to help create a healthier community, AIA will be asking New Zealanders to submit their ideas from 29 June.  This will create a national think tank which you can then use to inform your own ideas or to adapt for your submissions.”

There is a process for selecting successful applications, but those most likely to succeed will be increasing engagement within their communities through activities including:

  • “Hosting events to create awareness of health challenges in your community.
  • Investing in digital marketing and promotion of healthy living through podcasts or a video series.
  • Developing marketing activities that will drive the awareness of health and wellbeing in your community.
  • Delivering educational opportunities to increase the importance of health and wellbeing for New Zealanders.”

More details available here

In other news:

CFFC: The Commission for Financial Capability launched new resources to help students gain NCEA credits

RBNZ: The Reserve Bank resuming review of the Insurance (Prudential Supervision) Act 2010

AIA: how MIP works adviser resource


Daily news update: overview of main points from CoFI select committee hearing, and more stories

Insurance and industry associations representatives shared their views on CoFI during the select committee hearing held on 10 June 2020. Participants included, Cigna head of legal Michael Burrowes, AIA general counsel Kristy Redfern, Financial Advice New Zealand CEO Katrina Shanks, Partners Life chief legal, risk and conduct officer Rebecca Sellers, industry expert David Whyte and Anna Black Fidelity Life chief risk officer.

Michael Burrowes head of legal said that the bill was a good idea but was rushed and complex. Michael and AIA general counsel Kristy Redfern both suggested that the bill be delayed. Kristy highlighted that unlike Australia, New Zealand had time to get the bill right. She also warned that the reform was affecting the mental wellbeing of advisers, which could lead to New Zealanders becoming even more underinsured.

“Michael Burrowes, head of legal at Cigna, said the bill was a good idea but there had been a lack of consultation with the industry for what would be a substantial and important regime. The result was rushed, complex and lacked the appropriate clarity and detail.

He and AIA general counsel Kristy Redfern called for the bill to be delayed until FSLAA had bedded in.”

“Redfern said changes to commission rules in Australia had affected the availability of advice and given that New Zealand was underinsured already, that outcome should be avoided. She said the threat of significant reform was affecting advisers’ mental wellbeing. “It’s more important than ever that any additional regulation is fit for purpose and doesn’t create unintended consequences and anxiety.”

She said, because there was no evidence of widespread misbehaviour New Zealand had time to get the bill right.”

Katrina Shanks shared Financial Advice’s concerns as well as saying that it was hard to understand the implications of CoFI as a lot was left to regulations. Katrina also highlighted that that unlike other sectors, the power to prohibit incentives was very strong. Similarly, David Whyte said that it was unclear if advisers were caught by providers’ fair conduct programmes.

“Shanks said Financial Advice NZ had six main concerns: the bill’s power to regulate sales incentives, no definition of “fair”, confusion over whether financial advisers are included in fair conduct programmes, the definition of intermediary, the claims process, and the timing of the bill’s enactment.”

“David Whyte, speaking on behalf of a group of sector participants including Financial Advice New Zealand, the TripleA Advisers Association and Wealthpoint, said the drafting was confusing because it was not clear whether financial advisers were caught by providers’ fair conduct programmes.”

Rebecca Sellers, chief legal, risk and conduct officer at Partners Life highlighted that incentives played an important part in the livelihoods of many advisers. While Anna Black Fidelity Life chief risk officer said that the outcome of CoFI needs to increase customer trust and ensure sustainability

“Partners Life chief legal, risk and conduct officer Rebecca Sellers said incentives played an important part in the livelihoods of many businesses and were a matter of substantive policy that should not be delegated to regulation – though committee member and Labour MP Duncan Webb asked AIA how the rules could be kept up-to-date with a changing industry if they were not in the regulations.”

“Anna Black, chief risk officer at Fidelity Life, said the outcome of the bill needed to increase customer trust and ensure sustainability of the industry over the long term. “Pausing is appropriate.”” Click here to read more

In other news:

Commerce Commission: The Commerce Commission:  announced that it has finalised the criteria it will use to assess whether a lender is “fit and proper” under the Credit Contracts and Consumer Finance Act

Partners Life: Partners Life sponsored the filming for Fight For Time, a story of the Pink Dragons

FSC: FSC 2020 Awards will be held at the FSC Generations Conference Gala Dinner

FSC: Generations Conference earlybird tickets now available

FSC webinar: Introduction to Generations webinar

FSC: FSC’s partner Voices of Hope will be the charity partner for the 2020 Conference


Daily news update: RBNZ recommendations for Appointed Actuaries, and more stories

The Reserve Bank have released their thematic review of an Appointed Actuary role. The review was commissioned to better understand how the role works in practice. The review is presented in the form of a 55-page report that covers the role and scope of responsibility of Appointed Actuaries, regulatory requirements, insurer models, independence, conflicts of interest, expectations in a crisis, actuarial recommendations and advice, and engagement with the board, management, auditors and RBNZ. 

“The review, conducted by the Reserve Bank’s Industry Insights and Thematics team, was launched to better understand how the Appointed Actuary role works in practice for insurers, actuaries and the Reserve Bank, and to identify potential areas for improvement to make the role and regime more effective.

“The review concludes the regime and appointed actuary role are largely effective, but improvements can be made across the board – with the actuaries themselves, insurers and at the Reserve Bank. These improvements are important, and we will be working closely with the industry to support necessary changes,” Deputy Governor and General Manager for Financial Stability Geoff Bascand says.”

RBNZ outlined their expectations as well as identifying several areas that could be improved upon.

Key areas for improvement identified include:

  • Processes for appointments, absences, and reviews to continue with or replace the Appointed Actuary
  • Preparedness for the Appointed Actuary’s involvement in a crisis
  • Identifying and managing conflicts of interest
  • Clarity of delegations
  • Processes for following up recommendations in the Financial Condition Reports
  • Engagement between insurers’ boards and Appointed Actuaries
  • Engagement between the Reserve Bank and Appointed Actuaries
  • Guidance around the Reserve Bank’s expectations of the Appointed Actuary role, including explicit expectations regarding their independence and impartiality

Click here to read full report

In other news:

AIA: AIA Vitality members can donate their weekly AIA Vitality Active Benefit rewards to Trees that Count to plant native trees

RBNZ: Reserve Bank’s Expectations of Insurers and Appointed Actuaries

FSC webinar: 'Money & You - It's not about money, it's about you'


Daily news update: CoFI submitters areas of concern, and more stories

There have been many submissions on the topic of CoFI. AIA, Cigna, Fidelity Life, Partners Life and AMP have shared their views in regard to the implications CoFI will have on advisers, commission as well as the scope of COFI and the time needed.

Fidelity has stated their concern for potential adviser issues and customer confusion relating to advisers having to comply with different fair conduct programmes. Gail Costa, CEO of Cigna, has said that because of CoFI, advisers could end up preferring one provider's conduct programmes to simplify their compliance obligations, causing a conflict of interest. Partners Life have said that advisers should not be caught by the bill at all. While AIA have said that advisers that were not licensed under FSLAA should be the only ones affected by CoFI.

“While submitters voiced support for the overall intention of the bill, all raised concerns about how it has been drafted.

Significant concern related to how advisers will be dealt with under the bill. There is a carve-out for financial advice providers, but not necessarily for individual advisers, in its current form.

That could mean all advisers had to show compliance with the financial advice providers’ conduct programme, as well as meeting their own obligations under FSLAA.”

When discussing commission, Fidelity said that CoFI could create uncertainty and affect participants’ ability to plan for the future. Nick Stanhope has said that change in commission, will create very high levels of regulatory risk.

“Submitters were concerned that the bill left open the option of regulators introducing new rules for commission structures, without any legislation change being required.”

Another area or concern was the scope of CoFI. AMP stated that they were concerned that being considered a financial institution would increase costs. And Partners Life has said that there is a risk that CoFI is going to create an uneven playing field. KiwiSaver customers would have protection through the bill if they were with a bank but not through a fund manager.

“Many submitters were worried about the scope of the new bill. Some said it was too broad – AMP Wealth Management New Zealand said it was concerned about being included as a financial institution – the cost of licensing would affect its ability to keep costs down. The Securities Industry Association said it seemed that NZX trading, and advising market participants, had been inadvertently captured as intermediaries.

But Partners Life said there was a risk it would create an uneven playing field – a customer would have protection through the bill if they were in KiwiSaver through a bank but not through a fund manager.”

The last area that has created mass concern is time. Nick Stanhope has said that FSLAA should be given enough time to be implemented before more regulations are introduced. David Ireland, partner at Dentons Kensington Swan has also expressed his concern saying that CoFI hasn’t gone through the same level of consultation as other significant regulatory changes.

““No consultation draft was released for public feedback, with no opportunity to debate the outcome of the one round of consultation on the issues paper released last year. The outcome is a bill that provides a framework for a new regime, but with many of the details not fully formed and with many uncertainties as to scope and practical application.

“Conduct licensing is complex. A new regime as significant as this one ought not to be rushed through.”” Click here to read more

In other news:

FSC set to host Reserve Bank on CEO Roundtable 11 June 2020

FSC to make oral submission to the Finance and Expenditure CoFI 10 June 2020

FSC: Big Trends in Tech, Innovations and Investing Webinar to be held 9 June 2020

FSC: Get In Shape Advice Session 2 webinar with Karty Mayne and David Greenslade to be held 12 June 2020

BNZ: OMNIMax and BNZ work together to help BNZ customers get the most out of KiwiSaver


Daily news update: AIA and Southern Cross share claims insights, and more stories.

AIA and Southern Cross have provided insight into their claim volumes during Alert Level 4 and 3. Len Elikhis, chief officer, product and vitality highlighted that there was a drop in claim volumes, although he expects claims to have been deferred and not avoided. 

“AIA chief officer, product and vitality Len Elikhis says that for AIA, the vast majority of claims come from surgical procedures. Although the lockdown period saw a drop-off in claim volumes, he says these are more likely to be deferred rather than avoided, making any significant claims savings unlikely.

With Alert Level 2 offering more room for non-urgent procedures, Elikhis says insurers will start to see those claims numbers coming back up, and customers who put their claims off for the lockdown period will be looking to access elective procedures.”

Similarly, Southern Cross experienced a drop in claims during Level 4, however they paid out over 120,000 claims for consultations urgent care.

“Kerry Boille, chief sales officer at Southern Cross Health Society says that Southern Cross has also seen a reduction in claims since the lockdown, but has nonetheless paid a significant amount in consultations and urgent care. She says the focus has been on communicating clearly and openly with members, and in switching to digital consultations where possible.

“We are continuing to process and pay claims, and while we did see a drop-off, we’ve paid over 120,000 claims since we went into Alert Level 4 and the start of lockdown,” Boille said.Click here to read more

nib tell us that Mercy Ascot is now running providing surgeries on Saturdays to try and clear some of the backlog of treatment required. With responses like that the predictions that the sector will not catch up (and some treatments will simply not be provided) are likely to be proven wrong. 

In other news:

Partners Life: My Underwriting Manager (MUM) now automatically prompts updated COVID-19 related mental health questionnaires.

Partners Life: Underwriting restrictions 2020

nib: Webinar on how to use nibAPPLY to be held 10 June 2020

Fidelity Life: Insurer to move 270 Newmarket staff to CBD: Fidelity Life leases new Fanshawe St block

Coronavirus: Saturday surgeries to clear Northland DHB’s 900-strong backlog

Elective surgery back on and Taranaki GPs as busy as ever in level 2


Daily news update: all things AIA  

AIA made a number of announcements in relation to customer insights, AIA Vitality grants, and commission boosts. In regards to customer insights, AIA revealed that customer confidence in their financial standing is not as it was prior to COVID-19.

 “A recent survey found that half of all those surveyed said that COVID-19 was impacting their job security and that over 40 percent worry about money at least weekly.  The survey also found that confidence in making financial decisions had reduced.” 

Nick Stanhope has highlighted that although financial advisers play a significant role, they are usually small business owners. And similar to any small business, advisers may face economic hardship as a result of COVID-19.

“New Zealand’s financial advice firms are primarily small businesses employing fewer than five members of staff.  Financial advisers play a crucial role in increasing the financial resilience of New Zealand households which is now more important than ever. 

 

“Last year we paid out $476 million in claims, but we can’t do it alone.  Financial advice is more important than ever, however advisers have told us that they themselves are finding these times challenging.”” 

The AIA Vitality Community and Business Grant Programme is a way that AIA is looking to financially support advisers. Through the programme advisers will be rewarded for encouraging wellness within their communities. 

“This programme provides a total of $500,000 of grant funding for financial advisers.  Through a competitive application process, financial advisers will be able to apply for a grant designed to help their business make a difference to customers, their families and wider community.  The programme has been designed to encourage advisers to develop, design and implement initiatives to support community wellness and to raise awareness of the importance of health and wellbeing to overall financial resilience.”

Similar to the AIA Vitality Community and Business Grant Programme, AIA is looking to reward advisers that use eApp through the Small Business Support Package initiative. This promotion runs from 2 June to 1 September 2020 and is based on the feedback provided that adviser’s biggest concern.

“Responding to feedback from the financial advice sector that the single biggest concern for financial advisers at this time is short-term cashflow to keep businesses afloat, from 2 June to 1 September 2020 commission rates for insurance applications received by financial advisers through eApp, AIA New Zealand’s electronic application form system, will attract higher commission rates.  The increased remuneration for financial advice businesses is being introduced on a short-term basis only to provide increased support to ensure the resilience of financial advice firms to enable them to continue to support New Zealanders during these challenging times.” 

 

 


Daily news update: ASB and AIA to offer joint home loan benefit, and more stores

It has been announced that ASB and AIA are working together to offer current and new ASB home loan customers Compassionate Care. This benefit is free and is intended to offer customers some relief in the instance their co-borrower dies. Customers will be relieved of paying the interest portion of their mortgage for up to 12 months.

“ASB and AIA have launched Compassionate Care, a free home loan benefit for new and existing ASB home loan customers that covers the interest costs for about 12 months if one of the borrowers on the home loan dies.

It comes at no cost to the customer, and ASB and AIA say they have worked hard to ensure the process is simple and easy, with no requirement to sign up or activate the benefit.

AIA chief product and vitality officer Len Elikhis said ASB and AIA had conducted research to understand the needs of home loan customers and determined that the death of a borrower was a significant point of stress.

Not having to pay interest costs would give customers time to work out how they wanted to proceed with the loan, he said.

AIA will be tasked with adjudicating the claims.

It gave the insurer the chance to cover a large group of people, he said, and strengthened AIA’s partnership with New Zealand.” Click here to read more

This is a smart offer. It covers loads of people. As Len Elikhis points out - it is a significant concern to borrowers. It is also relatively low cost and could naturally lead to a conversation about wider cover requirements. This is also not something you have to leave to the big insurers. I know of one insurance broker who advertised free windscreen insurance for any client that bought car insurance with them. Whether the preferred car insurance paid it or not didn't matter - if it wasn't covered by the insurer they just paid it themselves. Good consumer offers like these create opportunities. 

In other news:

The depth of anger at the approach to regulation in Australia is being revealed with news like this: 

Call to boycott Australian financial adviser exam

nib: Lifeline Aotearoa Increases Support As Demand Surges Due To Covid-19

ICNZ: ICNZ And Banqer Partner To Empower Young Kiwis

 


Daily news update: AIA offer advisers commission boost, and more stories

It has been announced that AIA will be offering additional support to advisers. In the announcement AIA stated that they will be offering advisers commission boosts in two parts. The first will be focused on offering advisers 20% extra Basic Initial Commission on AIA Living applications submitted using eApp. This offer is being extended until 1 September 2020. The second method will be to offer a commission boost as part of their small business support package. AIA is looking to offer an additional 20% Basic Initial Commission on AIA Living applications submitted using eApp. This offer will run from 2 June 2020 until 1 September 2020.

“So far, 2020 has been a challenging year for us all. At AIA we want to help support you, your business, and your clients to make 2020 memorable for the right reasons.

We know from your feedback that the current biggest issue for you and your business is cash-flow.

That’s why we’re excited to be launching our 20/20 in 2020 offer that has two components: sharing the value of going digital and our new small business support package.”

In other news:

Professional IQ: Professional IQ launches level five version two

Digital advice the mass market solution: Carlyon

Economic crisis just getting started, says ASB