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 


Australia: adviser numbers heading further down

David Chaplin's Investment News has this piece on the adviser numbers in Australia after their recent regulatory changes. Numbers are almost a third down in 2018. Although the article quotes some slightly more upbeat news from those that are getting qualifications ahead of full implementation they make worrying reading for those that take a view more based on client access to advice and with half an eye on efficient markets. Advisers that choose to remain can look forward to a lot less competition due to reduced numbers - while clients will have to hunt around for advisers with the range of services to meet their needs, and those not able to pay the high fees becoming increasingly common will have to make do with DIY and direct. 


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/


Implications of approval of Australian advisers operating in NZ, and more daily news

The Financial Markets Conduct (Australian Licensees) Exemption Notice 2020 issued by the FMA allows Australian licence holders and representatives to operate in New Zealand. Although MinterEllisonRuddWatts special counsel Alistair Robertson says there is nothing to worry about, some advisers have expressed their concerns about allowing Australian advisers to enter the market at this time. Robertson has clarified the terms of the exemption saying that Australian advisers that choose to move to New Zealand will be able to continue servicing Australian clients.. The exemption doesn’t allow Australian advisers to service New Zealand clients. Australian advisers looking to achieve the exemption will need to:

  • “Hold a current Australian financial services licence, be in the business of providing a financial service in Australia, and not have a New Zealand place of business.
  • Be registered as a financial service provider in New Zealand, and be a member of a dispute resolution scheme.
  • Take all reasonable steps to ensure its representatives submit to the New Zealand courts in respect of the relevant financial services.
  • Give the FMA written notice that it intends to rely on the Exemption Notice.
  • Have procedures that give reasonable assurance that the licensee and its representatives comply with relevant Australian regulatory requirements when giving regulated financial advice to a New Zealand retail client under the Exemption Notice.”

“The FMA released an updated exemption that allows Australian financial service licence holders and their representatives will be free to operate in New Zealand without a local licence, following the rubber stamping of the Financial Markets Conduct (Australian Licensees) Exemption Notice 2020.

The move, which came at around the same time that politicians were scrambling to finalise a trans-Tasman travel bubble, was the finalisation of a proposal first put forward to the industry in August 2020.

Some advisers may be worried that allowing Australian advisers into the New Zealand market at such a tumultuous time of regulation change could cause trouble.

Alistair Robertson, special counsel at MinterEllisonRuddWatts says that New Zealand advisers have nothing to be worried about.

“The exemption is limited in scope. It does not allow Australian financial advisers to solicit New Zealand retail clients. It generally allows Australian advisers to continue to service Australian clients if they, the adviser, move to New Zealand without having disruption to those clients and without complying with the New Zealand licensing regime.” Click here to read more

In other news

From Goodreturns: Barry Kloogh not forced to pay reparations

From Stuff: Mortgage adviser client upset at $2500 bill

From Stuff: Covid-19 ended my flight attendant career, but it also taught me resilience


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/


Legal and regulatory update for the life and health sector

10-11 Dec 2020 – Government announced it is moving ahead with plans to regulate the bank payment system to make merchant service fees on debit and credit card fees fairer and less of a burden for Kiwis and businesses. MBIE published an Issues paper: “Regulating to reduce Merchant Service Fees”, with submissions closing at 10 a.m. on 19 Feb 2021. https://www.mbie.govt.nz/have-your-say/regulating-to-reduce-merchant-service-fees/

10 Dec 2020 - The Australian government announced its intention to expand the operation of the Financial Services and Credit Panel (FSCP) within the Australian Securities and Investments Commission to encompass the functions of a single, central disciplinary body for financial advisers. The Australian government further proposed that the standard-making functions of FASEA would move to Treasury. The remaining elements of FASEA’s legislative functions, including administering the adviser examination, are proposed to be incorporated into the FSCP’s expanded mandate. Legislation implementing these reforms is intended to be introduced into the Australian Parliament in the first half of next year. https://www.fasea.gov.au/government-proposal-to-simplify-the-regulatory-framework-applying-to-financial-advisers/

10 Dec 2020 – Treasury released the Annual statement by the Trans-Tasman Council on Banking Supervision. https://www.treasury.govt.nz/publications/information-release/trans-tasman-council-banking-supervision-2020-statement-release


Legal and regulatory update for the life and health sector

28 Oct 2020 – Financial Services Council media release at the time of the AGM advised of a solid year of member growth and increased revenues. https://www.fsc.org.nz/site/fsc1/Media%20Releases/Financial%20Services%20Council%20-%20Annual%20General%20Meeting%20-%20Media%20Release.pdf

30 Oct 2020 – RBNZ signed the ‘IBOR (Inter-bank offer rates) Fallbacks Protocol’ published by the International Swaps and Derivatives Association (ISDA). https://www.rbnz.govt.nz/news/2020/10/rbnz-signs-isdas-ibor-fallbacks-protocol

30 Oct 2020 - The Commerce Commission published a statement of preliminary issues relating to an application from Aon plc seeking clearance to acquire Willis Towers Watson Public Limited Company as part of a global transaction. https://comcom.govt.nz/case-register/case-register-entries/aon-plc-and-willis-towers-watson-public-limited-company

30 Oct 2020 – AMP announced the receipt of an indicative, non-binding, conditional proposal from Ares Management Corporation, a US-based company, to acquire 100 per cent of the shares in AMP Limited by way of scheme of arrangement. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AMP/362281/333930.pdf


Core services focus by banks sees them exit insurance

Current economic conditions are accelerating a recent trend in banking - a focus on core services - as evidence, we offer this series of announcements:

Alongside this, traditional branch services are being cut or slimmed down. This shift to digital was given a further shove by lockdowns so the time is right to re-appraise the value of each branch in the network. In addition to that, the value of each service in the branch is being reconsidered as well. With the decision by ANZ to withdraw from offering cash foreign exchange services being announced: https://www.stuff.co.nz/business/123131192/anz-to-stop-offering-foreign-currency-citing-drop-in-demand-due-to-covid19 

Although perhaps this is not just about economic conditions, but also competitive ones. Digital disruption is coming to the world of banking. A slew of online and consumer lenders has been grabbing attention (and high valuations) on the ASX. More challengers are likely to come. This is prompting a strategic rethink by several banks. The regulatory environment is shifting as well, creating more space for the change: