Legal and regulatory update for the life and health insurance sector

16 Sept 2021 – ASIC in Australia released additional information for advice licensees and financial advisers who are authorised representatives to help them prepare for the commencement of the design and distribution obligations on 5 October 2021. https://asic.gov.au/about-asic/news-centre/news-items/what-the-financial-advice-industry-needs-to-know-about-the-design-and-distribution-obligations/

17 Sept 2021 - Parliament's Finance and Expenditure Committee released submissions made to the inquiry into the current and future nature, impact, and risks of cryptocurrencies. https://www.parliament.nz/en/pb/sc/submissions-and-advice/all?custom=INQ_111968


Legal and regulatory review for the life and health insurance industry

16 Aug 2021 - Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill reported back from Parliamentary Select Committee. https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_109905/financial-sector-climate-related-disclosures-and-other

13 Aug 2021 - Inland Revenue advised it is seeking public feedback on the proposed scope of the topics outlined for its 2022 long term insights briefing on tax, investment and productivity, with submissions closing on 6 September 2021. https://taxpolicy.ird.govt.nz/news/2021/2021-08-13-consultation-ltib

11 Aug 2021 - The Takeovers Panel issued updated guidance on acceptance forms to recognise the phasing out of the use of cheques. https://www.takeovers.govt.nz/guidance/codeword/issue-52/guidance-on-acceptance-forms/

11 Aug 2021 – The Births, Deaths, Marriages, and Relationships Registration Bill completed its second reading in Parliament with the Minister for Internal Affairs inviting the Governance and Administration select committee to consider improvements to the self-identification process and to provide a further opportunity for public submissions. Relevant web links are https://www.beehive.govt.nz/release/simple-self-identification-one-step-closer and https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_74854/births-deaths-marriages-and-relationships-registration

12 Aug 2021 – ASIC released information outlining its approach to new laws reforming the Australian financial services sector. https://asic.gov.au/about-asic/news-centre/find-a-media-release/2021-releases/21-213mr-asic-s-approach-to-new-laws-reforming-financial-services-sector/


Legal and regulatory update for the life and health insurance sector

11 June 2021 – ASIC announced that it is extending for 12 months – to 31 March 2023 – transitional relief for foreign financial services providers (FFSPs) from the requirement to hold an Australian financial services (AFS) licence, pending the outcome of the Australian Government’s consultation about the regulation of FFSPs. https://asic.gov.au/about-asic/news-centre/find-a-media-release/2021-releases/21-131mr-asic-extends-transitional-relief-for-foreign-financial-services-providers-following-federal-budget/

11 June 2021 – NZX announced it is proposing hygiene amendments to the Listing Rules as part of its Hygiene Review, with a consultation paper released and submissions closing on 30 July 2021. https://www.nzx.com/regulation/nzx-rules-guidance/consultation

13 June 2021 – Government announced its intent to progress the Births, Deaths, Marriages and Relationships Registration Bill, making it easier for people to formally acknowledge their identified gender, including proposing a range of sex markers to be set in regulations rather than in legislation. https://www.beehive.govt.nz/release/progress-towards-simpler-process-changing-sex-birth-certificates - if this one raises questions about pricing and classification for risk I suggest you look back to my post : https://www.chatswood.co.nz/moneyblog/2021/05/stats-nz-update-data-collection-approach-.html 

14 June 2021 – NZ Herald reported on Government moves in Australia and NZ to allow unclaimed Australian superannuation money to go into KiwiSaver, also reported as agreed on 31 May 2021 in the joint release from the Australian and NZ Prime Ministers. Paragraph numbered 22 in the release at https://www.beehive.govt.nz/release/joint-statement-prime-ministers-jacinda-ardern-and-scott-morrison

8 June 2021 –Anti-money laundering and countering the financing of terrorism regulatory updates released including:

  • Anti-Money Laundering and Countering Financing of Terrorism (Requirements and Compliance) Amendment Regulations 2021

https://www.legislation.govt.nz/regulation/public/2021/0147/latest/LMS499118.html

  • Anti-Money Laundering and Countering Financing of Terrorism (Cross-border Transportation of Cash) Amendment Regulations 2021

https://www.legislation.govt.nz/regulation/public/2021/0144/latest/LMS499306.html

  • Anti-Money Laundering and Countering Financing of Terrorism (Definitions) Amendment Regulations 2021

https://www.legislation.govt.nz/regulation/public/2021/0145/latest/LMS499212.html

  • Anti-Money Laundering and Countering Financing of Terrorism (Exemptions) Amendment Regulations 2021

https://www.legislation.govt.nz/regulation/public/2021/0146/latest/LMS499387.html

 


Australian financial adviser numbers dropping fast

News reports show a drop in adviser numbers in Australia close to 15% in just one year, perversely leading to increased ASIC levies for the remaining advisers to cover ASIC costs. https://www.moneymanagement.com.au/news/financial-planning/asic-levy-increase-due-declining-adviser-numbers

These costs must, of course, be passed on to consumers. But the real impacts will not be on the relatively wealthy clients that continue to get financial advice, it will be borne by the many consumers that can no longer receive good advice. They will struggle in an increasingly complex financial world. A divide will widen between the more literate and numerate who will be able to DIY and those who lack the skills or inclination who will tend to lead more financially precarious lives due to lower savings rates and fewer options. Access to advice must always be a consideration.

I have not checked because my concern is mainly New Zealand, not Australia, but perhaps one of my readers who is more across that jurisdiction can pull the relevant impact statement that was inevitably prepared and find what was said at the time. Did they assume a 15% decline and believe the change worth it? Or did they underestimate the impact of change? 


Zombie fee focus by regulators and more daily news

Investment News NZ highlights the issue of 'zombie fees' in its recent piece on ASIC's legal action against five AMP entities in Australia. "Zombie fees" are fees which carry on being charged even if no service is being given, sometimes even if the client has died. Of course, if an investment management service is continuing then some level of fee should continue but it is hard to argue advice is being given if the client is dead. In a sector which usually knows the age of its clients and offers products explicitly focused on end-of-life issues we are being challenged to be more active in identifying when a client dies, which is a matter of public record, rather than simply continuing to take the money. 

In a release, the Australian Securities and Investments Commission (ASIC) says the legal action alleges five AMP entities “were involved in charging life insurance premiums and advice fees to more than 2,000 customers despite being notified of their death”.

Last year AMP paid out about A$9 million in a remediation program established to redress fees charged to close to 20,000 dead insurance and superannuation fund clients.

But the latest ASIC action comes in “respect of 2,069 deceased members affected by the retention of premiums, and 27 members affected by the retention of advice fees”.

Does this affect New Zealand? Not directly, in the Investment News NZ column it is clear that NZ entities are not part of the recent news. However, it is clearly unacceptable to continue to charge premiums and or advice fees long after a person is dead in either jurisdiction. We can expect that when conduct law passes here, a conduct program will need to envisage how to identify if a person has died and how to treat products while and end-of-life process is followed. Advisers, largely exempt from the conduct programs, will inevitably be caught by either their obligations under the Financial Advice Provider license, Code, or commitments to product providers. 

You can read more at this link: https://investmentnews.co.nz/investment-news/zombie-fee-charges-rattle-amp/ 

Other daily news: 

Kōura is calling for advisers that want to offer a 'facilitated' digital advice process. This underlines the trend towards convergence of digital and human in contrast to the binary view of development in the past. 

Pinnacle Life shares details of how a change in income may affect the need for life insurance. 

Adviser business values - those that are low and those that are high - are the subject of my recent piece at goodreturns. 

Seth Godin shares with us how not to miss a deadline - and how to - in two interesting and challenging posts: https://seths.blog/2021/05/how-not-to-miss-a-deadline/

 


Legal and regulatory review for the life and health insurance sector

22 Apr 2021 – ASIC released its set of expectations of life and general insurers following a review of insurers’ responses to consumers experiencing financial hardship during the COVID-19 pandemic. This and vulnerable client issues are likely to be covered by the FMA over the course of the year so these expectations are well worth reviewing. https://asic.gov.au/about-asic/news-centre/news-items/asic-sets-expectations-of-life-and-general-insurers-following-a-review-of-insurers-responses-to-consumers-experiencing-financial-hardship-during-the-covid-19-pandemic/

22 Apr 2021 – Department of Internal Affairs released its AML/CFT Regulatory Findings Report 2020 together with its targeted compliance assessment on reporting entities’ policies, procedures and controls for relating to politically exposed persons (PEPs). Weblinks follow:

https://www.dia.govt.nz/AML-CFT-Regulatory-Findings-Report-2020-available and https://www.dia.govt.nz/AML-CFT-Targeted-Compliance-Assessments

22 Apr 2021 – Government, Treasury and the RBNZ advised that a Cabinet decision to adopt the final measures resulting from the Reserve Bank Act Review will see drafting commence for new legislation to be known as the Deposit Takers Act. This Act will create a single regulatory regime for all bank and non-bank deposit takers (such as building societies and finance companies). It will also introduce a new deposit insurance scheme that will protect up to $100,000 per depositor, per institution in the event of a failure. Relevant weblinks follow:

https://www.beehive.govt.nz/release/deposit-taking-measures-protect-financial-stability-and-new-zealanders

https://www.rbnz.govt.nz/news/2021/04/new-deposit-takers-act-a-step-closer

https://www.nzba.org.nz/2021/04/22/deposit-guarantee-scheme-provides-extra-security-for-depositors/


Legal and regulatory review for the life and health insurance sector

19 Apr 2021 – Dentons Kensington Swan advised that the international Financial Action Task Force (FATF) had consulted private sector stakeholders on an update to FATF guidance on the risk-based approach to virtual assets and virtual asset service providers, with consultation having opened on 19 March 2021 and with submissions closing on 20 April 2021.

https://www.fatf-gafi.org/publications/fatfrecommendations/documents/public-consultation-guidance-vasp.html

20 Apr 2021 – APRA and ASIC released a Life Insurance Claims and Disputes Statistics publication, covering a rolling 12-month period from 1 January 2020 to 31 December 2020. https://www.apra.gov.au/news-and-publications/apra-and-asic-publish-latest-data-on-life-insurance-claims-and-disputes-3

21 Apr 2021 – FMA media release stating that it was warning the funds management industry to avoid advertising large investment returns for the 12-month period to March 31, 2021, as this could mislead investors. https://www.fma.govt.nz/news-and-resources/media-releases/advertising-investment-returns-could-mislead-investors/

21 Apr 2021 – MBIE opened consultation on outstanding aspects of the upcoming regime governing conduct in the financial sector, including consulting on regulations covering matters such as requirements for claims handling and complaints processes, prohibitions of certain types of sales incentives, and the treatment of intermediaries, with submissions closing on 4 June 2021. https://www.mbie.govt.nz/about/news/consultation-opens-on-additional-measures-in-new-financial-conduct-regime/

21 Apr 2021 – Parliamentary website updated for the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill, showing submission closing date as 28 May 2021 and report date as 16 Aug 2021. https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_109905/financial-sector-climate-related-disclosures-and-other

21 Apr 2021 – IRD advised that it has identified several errors in the recent special report on the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021, and is currently in the process of updating it. An updated version will be published by early next week. https://taxpolicy.ird.govt.nz/news/2021/2021-04-21-updates-required-special-report


Legal and regulatory update for the Life and Health Insurance sector

11 Mar 2021 – Takeovers Panel released three updated Guidance Notes as follows: https://www.takeovers.govt.nz/

  • Independent Advisers. The amendments made in this revision are to Appendix A:  The Panel's Policy on the Approval of Independent Advisers.
  • Panel’s Exemption Powers - providing guidance as to when exemptions are likely to be granted.
  • Creeping Acquisitions - providing information on the ability of a holder or controller of between 50% and 90% of the voting rights in a Code company to increase its control percentage by "creeping" under rule 7(e) of the Code.

11 Mar 2021 - ASIC consults on implementing a deferred sales model for add-on insurance products. The deferred sales model introduces a four-day pause between the sale of a principal product or service and the sale of an add-on insurance product. https://asic.gov.au/about-asic/news-centre/find-a-media-release/2021-releases/21-043mr-asic-consults-on-implementing-a-deferred-sales-model-for-add-on-insurance-products/ The last item will be of particular interest to banks, credit card issuers, airlines, and other organisations where insurance is commonly sold as an add-on. 


Australia: "ASIC boss should enforce rules not fantasise about setting them"

The Sydney Morning Herald had that powerful headline in a revealing piece about the future direction for ASIC as it enters upon the search for a new CEO. Link: https://www.smh.com.au/politics/federal/new-asic-chief-must-enforce-rules-not-fantasise-about-setting-them-hartnell-20210221-p574cs.html 


Legal and regulatory update for the life and health sector

12 Feb 2021 - FMA release advising that ANZ admits breaching FMC Act for misleading representations over credit card insurance charges. A hearing to determine the penalty was held today at the High Court at Auckland. https://www.fma.govt.nz/news-and-resources/media-releases/anz-admits-breaching-fmc-act/

12 Feb 2021 – ASIC announced that six of Australia's largest banking and financial services institutions (AMP, ANZ, CBA, Macquarie, NAB and Westpac) have paid or offered a total of $1.24 billion in compensation, as at 31 December 2020, to customers who suffered loss or detriment because of fees for no service misconduct or non-compliant advice. https://asic.gov.au/about-asic/news-centre/find-a-media-release/2021-releases/21-023mr-asic-update-compensation-for-financial-advice-related-misconduct-as-at-31-dec-2020/

11 Feb 2021 – MBIE published updated guidance to help lenders comply with their responsible lending obligations. Most of the updated Code will come into effect on 1 October 2021, at the same time as the law changes it references. The new Chapter 12, which contains guidance on missed payments and repayment difficulties, will come into force four months later. https://www.mbie.govt.nz/about/news/updated-responsible-lending-guidance-published/

11 Feb 2021 – FMA announced its General Counsel, Nick Kynoch, had resigned and would leave the regulator in late February. Director of Regulation Liam Mason would become the FMA’s Acting General Counsel. https://www.fma.govt.nz/news-and-resources/media-releases/fma-announces-senior-leadership-change/

11 Feb 2021 – RBNZ released a paper focused upon the extent to which economic researchers use improper methods to produce more “starry” results. For example, researchers often have to decide whether to delete suspicious-looking data points. If researchers use that freedom to favour “starry” results, their work will suffer from exaggeration. https://www.rbnz.govt.nz/research-and-publications/discussion-papers/2021/dp2021-01