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


Legal and regulatory update for the life and health insurance sector

22 Jan 2021 - RBNZ advised that it will be postponing publication of most statistical releases. It will provide an updated release calendar when it can but expect delays of 3-4weeks to most publications.
 
At this stage, statistics impacted by this delay will include:

  • Bank customer lending (C65 & C66): delayed from 12 January
  • Credit card balances and spending (C12 & C13): delayed from 26 January
  • New mortgage commitments - Loan to Valuation Ratios  (C30-C35): delayed from 29 January
  • Bank Balance Sheet (C5, C50-52, S10-41): delayed from 29 January
  • Non-bank Lending Institutions (T1,T4, T11, T21, T31): delayed from 29 January
  • Bank Liquidity  (L1-3): delayed from 5 February
  • Retail interest rates (B3, B6, B20, B21, B25-27): delayed from 5 February

Other publications scheduled for February and March are also expected to be affected, including the December 2020 quarter Bank Financial Strength Dashboard (scheduled for release on 3 March). Delays to publication are necessary because the file transfer software application, Accellion FTA, recently breached, was used for onboarding data from regulated entities and other suppliers into the RBNZ. The RBNZ will not be collecting data from these entities for statistical production until a new secure file transfer system is implemented. RBNZ expect the new system to become available in February 2021.

26 Jan 2021 – FMA published the findings of its obligations review of the ASX 24 derivatives market for the period of 1 July 2018 to 30 June 2020. https://www.fma.govt.nz/news-and-resources/media-releases/asx-24-derivatives-market-review-released/

25 Jan 2021 – ASIC announced that it became aware on 15 January 2021 of a cyber security incident affecting a server used by ASIC . Like the recent RBNZ breach incident, this incident related to Accellion software used by ASIC to transfer files and attachments. It involved unauthorised access to a server which contained documents associated with recent Australian credit licence applications. https://asic.gov.au/about-asic/news-centre/news-items/accellion-cyber-incident/


Legal and regulatory update for the life and health insurance sector

11 Dec 2020 – IRD advised that the US IRS have just issued an FATCA News & Information alert to remind NZ Financial Institutions (NZFIs) registered for FATCA that the Responsible Officer (RO) Certifications are due by 15 December 2020.

11 Dec 2020 – Further to its initial response to the Minister of Finance on 24 Nov, the Reserve Bank published a copy of its updated detailed response to the letter from the Minister on house prices and the role of the Reserve Bank. https://www.rbnz.govt.nz/news/2020/12/reserve-banks-response-to-minister-of-finance

11 Dec 2020 - ASIC releases regulatory guide on product design and distribution obligations in Australia. https://asic.gov.au/about-asic/news-centre/find-a-media-release/2020-releases/20-320mr-asic-releases-regulatory-guide-on-product-design-and-distribution-obligations/

11 Dec 2020 – FMA published “The Auditor Regulation Act (Prescribed Minimum Standards and Conditions for Licensed Auditors and Registered Audit Firms) Notice 2020.” https://www.fma.govt.nz/assets/Reports/Auditor-Regulation-Act-Notice-2020.pdf

13 Dec 2020 – Good Returns reports on a case heard before the Financial Advice Disciplinary Committee on 10 Dec 2020 on “record keeping” charges, with the Committee decision reserved and with details yet to be published on the FADC website. https://www.goodreturns.co.nz/article/976517952/adviser-appears-before-fadc-on-record-keeping-charges.html

14 Dec 2020 – FMA released guidance on financial products that incorporate non-financial factors, such as ‘green’ bonds and ‘socially responsible’ managed funds. https://www.fma.govt.nz/news-and-resources/media-releases/expectations-green-investment-products/


Cigna unveil product enhancements and new quoting software

Cigna has unveiled their new quoting software that allows advisers to generate quotes in real-time. Additionally, Cigna is looking to improve Assurance Extra, Business Assurance, Business Extra, and Agribusiness Extra product suites.

“Cigna New Zealand has rolled out a new online quote tool for its insurance advisers - the first in a series of planned improvements to help advisers work more efficiently.

CEO Gail Costa says the tool will allow advisers to obtain quotes in real time, giving them access to Cigna’s most up to date plans and pricing. It will also allow them to access both personal and business products at the same time.”

Gail Costa provided further insight about the software by stating that:

“This is a new kind of technology used for quotes, and it is an intuitive tool that uses all of the latest user experience ideas,” she explained.

“It also plugs into the medical database, and this makes it much easier for advisers to get accurate quotes for their clients, and also identify any other benefits they may need.”  Click here to read more

In other news:

Australia: ASIC cracks whip on three financial advisers

Suncorp: Suncorp reveals results and pandemic hit

Back to the office on Thursday (if you want)

Advisers complain about narrow rebate time limit

FMA: Cyber-resilience in FMA-regulated financial services


ASIC reminds Australian Industry the regulator is watching

ASIC has reminded life and general insurers that they are watching. In a recent letter (see this link: https://asic.gov.au/about-asic/news-centre/news-items/asic-letters-to-general-and-life-insurers-in-the-current-covid-19-environment/) they have offered some relief from immediate data demands, while reminding the industry of the need to meet conduct obligations. 

Here in New Zealand Minister Faafoi has been more friendly, which is perhaps more appropriate given the nature of our own conduct review.


Australia: Westpac penalised $9.15m for poor advice

Westpac in Australia has been fined $9.15 million after Sudhir Sinha, a former Westpac financial planner provided poor financial advice on multiple occasions. 

ASIC noted that the Court found Mr Sinha failed to act in the best interests of his clients, provided inappropriate financial advice, and failed to prioritise the interests of his clients, in four sample client files identified by the regulator.

Click here to read more.