Legal and regulatory update for the life and health insurance sector

2 June 2022 – NZ Police Financial Intelligence Unit released The Suspicious Activity Report for April 2022. https://www.police.govt.nz/advice-services/businesses-and-organisations/nz-financial-intelligence-unit-fiu/fiu-reports

2 June 2022 – The Companies (Levies) Amendment Bill was introduced into Parliament, to create a new regulation-making power that will enable regulations to be made that impose levies on certain users of the registers administered by the New Zealand Companies Office. https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_124080/companies-levies-amendment-bill

2 June 2022 – RBNZ announced it is normalising the process for banks setting dividends by removing the restrictions placed on the country’s registered trading banks at the height of the COVID-19 pandemic. The removal of restrictions will take effect from 1 July 2022. https://www.rbnz.govt.nz/news/2022/06/end-of-dividend-restriction-requires-ongoing-prudence


Legal and regulatory update for the life and health insurance sector

20 May 2022 – Under an extended Parliamentary session from 19 May 2022, the following Bills were passed through all their stages in Parliament under urgency.

  • Taxation (Cost of Living Payments) Bill

https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_123884/taxation-cost-of-living-payments-bill

  • Income Insurance Scheme (Enabling Development) Bill

https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_123885/income-insurance-scheme-enabling-development-bill

  • Companies Office Registers Funding Validation Bill

https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_123888/companies-office-registers-funding-validation-bill


Legal and regulatory update for the life and health insurance sector

19 May 2022 – Takeovers Panel issued updated Guidance on Schemes of Arrangement and also issued comment on “Deal Protection Devices”. https://www.takeovers.govt.nz/

19 May 2022 – IRD advised of the introduction into Parliament of the Taxation (Cost of Living Payments) Bill and the Bill was passed through all Parliamentary stages under urgency in an extended Parliamentary session.

https://www.taxpolicy.ird.govt.nz/news/2022/2022-05-19-tax-bill-introduced

https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_123884/taxation-cost-of-living-payments-bill

19 May 2022 - Companies Office Registers Funding Validation Bill introduced to Parliament to amend 13 different Acts to retrospectively validate fees that have been collected under those Acts that have been, or will be applied under any register administered by the New Zealand Companies Office. https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_123888/companies-office-registers-funding-validation-bill

19 May 2022 – The Ministry of Business, Innovation and Employment (MBIE) reported that the Government has agreed through Budget 2022 to increase the Financial Market Authority (FMA) annual operating funding from $60.805 million to $76.401 million in 2025/26. As part of the new funding arrangement, the Government has agreed to set new industry levies following consultation last year. The levy increase will be phased in over 4 years to minimise the burden on the financial sector. The levies have also been apportioned by entity size and type, to ensure smaller entities are not unduly burdened with high costs. Currently, the majority of the FMA’s funding is recovered from market participants through the FMA levy (83%), with the Crown contributing the remaining 17%. The proportion of the Crown’s contribution is decreasing slightly to 16% from 2025/26. Through Budget 2022, the Government has agreed to contribute all capital funding and some operational funding for CoFI and CRD towards the FMA, which will provide some cost relief to entities. While MBIE and the FMA also consulted on funding requirements for the Insurance Contract Law (ICL) regime, decisions about funding for this regime will be made at a later date. Any levies for this regime will take effect after the Insurance Contracts Bill has been passed by Parliament. https://www.mbie.govt.nz/about/news/government-to-increase-fmas-funding-and-set-new-levies/

20 May 2022 – Under an extended Parliamentary session from 19 May 2022, the Income Insurance Scheme (Enabling Development) Bill was read a first time, with the Second Reading continuing while writing this. https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_123885/income-insurance-scheme-enabling-development-bill


Number of advisers on FSPR decreases, and more daily news

It has been announced that the Companies Office has deregistered advisers that were registered as financial advisers on the FSPR. Although the number has decreased from the initial number recorded in March 2020, it has increased from the figured reported in March 2021. Currently are there 9236 registered financial advisers. Bolen Ng, MBIE national manager of business registries, has said that 458 FSPs were registered under s18(1)(b) of the Financial Service Providers (Registration and Dispute Resolution) Act 2008. 550 letters were sent out to FSPs who weren’t linked to a FAP. Individuals had 20 working days to update their registration. FAPS now have until 15 March 2023 to apply for their full licences. Click here to read more

“As of July 29, there are 9236 financial service providers (FSPs) registered as financial advisers (FAs) on the Financial Service Providers Register (FSPR).

This number is down 80 from March 15, 2020, but up 58 from March 15, 2121.

FSPs on the FSPR:

- FSPs registered as financial advisers on the FSPR as at 15/03/20: 9316

- FSPs registered as financial advisers on the FSPR as at 15/03/21: 9178

- FSPs registered as financial advisers on the FSPR as at 29/07/21: 9236

Ministry of Business, Innovation & Employment national manager of business registries Bolen Ng says the Companies Office has deregistered 458 FSPs under s18(1)(b) of the Financial Service Providers (Registration and Dispute Resolution) Act 2008.

"These are the FSPs that became financial advisers under the new financial advice regime on March 15, but hadn’t linked to a financial advice provider within three months of that date," Ng says.

In June, the Companies Office sent about 550 letters to FSPs who had not linked themselves to a financial service provider (FAP) warning them of imminent deregistration.

FSPs had a 20 working day objection period within which to update their registration.

FAPs now have less than two years to apply for a full licence by the cut off date of March 15, 2023.”

These reductions are not as great as feared by some through the implementation of the new regime. However, it may be too soon to declare that the necessary balance has been struck between raising standards and sustaining access to advice for the greatest number of clients. As the process of gaining a transitional licence did not require passing much of a threshold many advisers that may leave the industry may have entered the new regime with little or no intention of obtaining a full licence. Insurers report levels of new business production have fallen substantially. That suggests that the industry has sustained a serious blow not fully described by these numbers. 

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