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. 

 


Australia: ASIC set to ban cold calling

The Australian Securities and Investments Commission (ASIC) is set to ban cold calling for life and consumer credit insurance sales from January 2020. This has change has been justified as addressing poor sales practices that ASIC believes has led to unfair consumer outcomes. This ban will not apply if the marketer provides the person they are calling with personal advice. It is another sign of the shift in conduct expectations that creates an incentive for a financial provider to choose to step into advice provision and the supervisory regime that surrounds it. We may experience similar incentives in this market. Click here to read more

 


Australia: CommInsure pleads guilty to hawking charges

Lucas Baird at the Australian Financial Review writes that CommInsure has pleaded guilty to 87 breaches of anti-hawking laws:

"In all of the 87 calls charged, CommInsure did not comply with the requirement to offer the customer the option of having the information required to be included in the Product Disclosure Statement for Simple Life read to them prior to the offer to issue or sell the product," ASIC said in a statement.

The regulator said that in 14 of the calls charged, CommInsure also failed to give customers a product disclosure statement before becoming bound to acquire Simple Life; and failed to clearly inform the customer of the importance of using the information in the statement when making a decision to acquire Simple Life.

You can read the whole article at this link - although you may need a subscription. 


Australia: adviser negligence results in seven-year ban

Ian Victor Haisman, an Australian adviser has been banned from providing financial services for seven years by that Australian Securities and Investments Commission (ASIC). The ban was implemented as a result of his failure to act in the best interests of his clients. Ian Victor Haisman’s advice files were investigated by ASIC from 2016 to 2018. The investigation concluded that:

  • He didn’t adequately investigate his clients’ existing superannuation and insurance arrangement or provide product cost and risk comparisons when recommending an investment strategy which involved product switching
  • He recommended very high levels of insurance cover compared to his clients’ income and cases when he recommended life insurance policies to clients with no known dependents and no reasonable basis for the policies
  • He failed to provide statements of advice that were clear, concise, and effective to all his clients, the corporate regulator said

It is good to see regulators recognising insurance impacts in what are primarily investment decisions. That is a level of understanding of the interconnectedness of these issues which it would be good to see more of. It is important to focus on the comment about needing a reasonable basis for the policies. That was a major theme in a discussion I had yesterday with a bank and an insurer - the 'why' is important because it determines whether the customer will get benefit from owning the cover. Without it we are setting ourselves up for disappointment, lapse, claim failure, and damage to reputation. Everyone: not just insurers, but advisers too. Losing a licence, and therefore a livelihood, is no fun. 

Click here to read more