Legal and regulatory update for the life and health insurance sector

15 Sept 2020 – NZX provided an update on various Listing Rules class waivers granted in March 2020 in relation to Covid-19.

15 Sept 2020 - Minister for Climate Change, James Shaw, announced New Zealand will be the first country in the world to require the financial sector to report on climate risks. The new regime will be on a comply-or-explain basis, based on the Task Force on Climate-related Financial Disclosures (TCFD) framework. Businesses covered by the requirements will have to make annual disclosures, covering governance arrangements, risk management and strategies for mitigating any climate change impacts. If businesses are unable to disclose, they must explain why. If approved by Parliament, financial entities could be required to make disclosures in 2023 at the earliest. The new climate reporting requirements will apply to:

  • All registered banks, credit unions, and building societies with total assets of more than $1 billion
  • All managers of registered investment schemes with greater than $1 billion in total assets under management
  • All licensed insurers with greater than $1 billion in total assets under management or annual premium income greater than $250 million
  • All equity and debt issuers listed on the NZX
  • Crown financial institutions with greater than $1 billion in total assets under management, such as ACC and the NZ Super Fund

https://www.beehive.govt.nz/release/new-zealand-first-world-require-climate-risk-reporting

 


Planning for the new disclosure regime - what to do:

With the publication of new disclosure regulations, each transitionally licensed Financial Advice Provider must now develop a process for implementing these to take effect from 15 March 2020.

This change means engaging with systems people, reviewing websites, reviewing statements of services, and reviewing statements of advice. Outlined below is a more detailed process for designing and implementing a new disclosure procedure. It is significant.

The core work involves:

  • Identification, review and development of the disclosure content required:
    • To be publicly available on the Financial Advice Provider website, and
    • To be delivered to consumers
      • When the nature and scope of advice is known
      • When advice is given
      • When a complaint is received
    • Determining how the required disclosure is to be given to a consumer (verbally or in writing, while noting that a consumer can always request written disclosure)
  • Development of an implementation plan to ensure introduction of the disclosure changes as and when required (15 March 2020)
  • Development of a compliance and compliance assurance plan to provide comfort to the Financial Adviser Provider Governance Structure (e.g. Board) that the legal disclosure requirements are being met, or, in the event of a failure, any such instances of failure are identified and remedied.

The regulations also contain further information on other matters that should be considered, such as:

  • The requirement to consider materiality when considering what should be disclosed
  • When information must be given about a person as well as about the Financial Advice Provider
  • When reference to publicly available information will be sufficient to fulfill the disclosure requirement, rather than having to specifically provide a disclosure direct
  • When reliance can be given to past disclosures already completed until or unless a material change occurs

If you would like to discuss how Chatswood Consulting Ltd may be able to support you during this change, please call.