11 Nov 2020 – RBNZ announced a delay to the start of increases in bank capital until 2022 to allow banks continued headroom to respond to the effects of the COVID-19 pandemic and to support the economic recovery. In December, the Reserve Bank will consult about re-instating loan-to-value ratio (LVR) restrictions on high-risk lending with effect from 1 March 2021. Further, the restrictions on dividends and redeeming non-Common Equity Tier 1 (CET1) capital instruments put in place in April 2020 will be retained until 31 March 2021, or later if required. The Reserve Bank has also written to insurers to advise it has updated expectations on dividends. The Reserve Bank expects that insurers will only make dividend payments if it is prudent for that insurer to do so, having regard to their own stress testing and the elevated risks in the current environment. https://www.rbnz.govt.nz/news/2020/11/further-regulatory-steps-to-promote-cashflow-confidence-and-stability

11 Nov 2020 – RBNZ Monetary Policy Committee agreed to provide additional monetary stimulus to the economy in order to meet its consumer price inflation and employment remit. The Committee agreed that the additional stimulus would be provided through a Funding for Lending Programme (FLP), commencing in December. The FLP will reduce banks’ funding costs and lower interest rates. The Committee will also continue with the Large Scale Asset Purchase (LSAP) Programme up to $100 billion, and retain the Official Cash Rate (OCR) at 0.25 percent in accordance with the guidance issued on 16 March. https://www.rbnz.govt.nz/news/2020/11/more-monetary-stimulus-provided

11 Nov 2020 – NZX confirmed 10 Dec 2020 as the date for the Exchange’s new separate regulatory agency, NZ RegCo, being a stand-alone, independently governed, agency performing all frontline regulatory functions in support of NZX’s statutory obligations as a licensed market operator.” Implementation required various amendments to be made to NZX’s market rules and the NZCDC settlement system rules, also coming into effect on 10 Dec 2020. https://www.nzx.com/announcements/363019

5 Nov 2020 – The Ombudsman published a new guide today on the OIA’s privacy withholding ground.  The new guide explains how the privacy withholding ground works, and the factors to consider in deciding whether to withhold official information on privacy grounds. https://www.ombudsman.parliament.nz/news/new-privacy-guide-and-case-notes

5 Nov 2020 – NZX announced that the USA regulatory agency the Commodity Futures Trading Commission (CFTC) has granted a Part 30 Exemption Order to NZX in its capacity as a Foreign Board of Trade, thereby allowing New Zealand-based NZX Derivatives Participants to solicit US-based clients and trade on their behalf on NZX's dairy derivatives market, without registering with the CFTC as a futures commission merchant. https://www.nzx.com/announcements/362737

6 Nov 2020 – FMA released the final Standard Conditions for full financial advice provider licences, together with details of the three classes of financial advice service for full financial advice provider licences and a Regulatory Impact Statement. Seven standard conditions for a full licence include: record keeping, internal complaints process, regulatory returns, outsourcing, business continuity and technology systems, ongoing requirements, and notification of material changes. Note that the proposal in the earlier consultation to require Professional Indemnity Insurance does not appear. The FMA Consultation webpage contains links to the three key documents released today as follows:

• Standard conditions for full financial advice provider licences https://www.fma.govt.nz/assets/Consultations/Standard-Conditions-for-full-FAP-licences.pdf
• Classes of financial advice service for full financial advice provider licences https://www.fma.govt.nz/assets/Consultations/Classes-of-financial-advice-service-for-full-FAP-licences.pdf
• Regulatory Impact Statement https://www.fma.govt.nz/assets/Consultations/FAP-standard-conditions-full-licence-RIS.pdf

1 Oct 2020 – RBNZ released its 2019-2020 Annual Report. https://www.rbnz.govt.nz/about-us/annual-reports/2020-annual-report

1 Oct 2020 – FMA released its 2020 KiwiSaver report. https://www.fma.govt.nz/assets/Reports/Kiwisaver-Annual-Report-2020.pdf

2 Oct 2020 – NZX announced changes to the NZX Listing Rules relating to the disclosure requirements for Profile documents for direct listings. https://www.nzx.com/announcements/360828

1 Oct 2020 – RBNZ announced it is relaunching the review of the Insurance (Prudential Supervision) Act (IPSA) and commencing a review of the associated Insurer Solvency Standards. A paper has been released setting out the timeline for the Solvency Standards review project as well as the principles intended to guide the review and feedback is welcomed on this from interested parties. A second, substantive consultation paper outlining the RBNZ response to IFRS 17 and the structure of solvency standards is expected to be issued in December 2020. https://www.rbnz.govt.nz/news/2020/10/reserve-bank-relaunches-insurance-act-review

1 Oct 2020 – NZ Bankers Association launched guidelines to help banks serve customer needs outlining how banks will:

• Treat their customers fairly
• Recognise and prioritise customer interests
• Give customers clear, concise and effective information
• Design and provide products that meet customer needs
• Provide good customer care
• Identify, fix and learn from their mistakes

Link to NZBA release on Scoop news at https://www.scoop.co.nz/stories/BU2010/S00010/guidelines-to-help-banks-serve-customer-needs-launched.htm

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

After the NZX cyber-attacks, financial service businesses are being warned by the National Cyber Security Centre (NCSC). The high cyber security advisory that was issued addresses the current threat and details how attacks could happen. The NCSC has said that businesses should review current plans and systems in place.

“A high cyber security advisory has been issued by the National Cyber Security Centre (NCSC), warning financial services businesses about the current threat and outlining how the attacks could occur.

Affected entities have received ransom emails demanding payment in Bitcoin, along with a threat of a significant distributed denial of service (DDoS) attack against internet-exposed infrastructure if the ransom is not paid.

The NCSC said financial services firms should review their plans for responding to a DDoS attack to ensure they were up to date, and review their systems architecture to identify any potential points of failure. ”

Katrina Shanks has said that advisers need to avoid being complacent and instead need to know the strength of their current cyber security processes. She continued by saying that cyber-attacks affect consumer confidence and that there are many options for those looking to improve their cyber security.

“Financial Advice NZ chief executive Katrina Shanks said advisers would need to understand how up to date their cyber security processes were and what protections they had in place. And should avoid “being complacent”.

She said there were a lot of options available to businesses that wanted to improve their cyber security. “You do get what you pay for.”

She said there was a risk to consumer confidence when high-profile financial services firms such as the NZX, were repeatedly felled by the attacks.” Click here to read more

In other news

Level five isn't the big issue for advisers; It's something else

FMA: FMA releases new investor guide to bonds

Deloitte: Tricky to compare NZ insurance to other markets - report prepared for Partners Life

25 Aug 2020 – NZX decided to halt trading early as it “experienced a volumetric DDoS (distributed denial of service) attack from offshore, which impacted NZX system connectivity.”

26 Aug 2020 - ANZ Investment Services (New Zealand) Ltd announced it will stop accepting new investment into the Bonus Bonds Scheme and, following two further prize draws, will wind up the scheme over the next year.

https://news.anz.com/new-zealand/posts/2020/08/bonus-bonds-announcement

26 Aug 2020 – RBNZ advised that the Ministry of Health granted an exemption to enable registered banks and licensed non-bank deposit takers to carry out critical financial services at Alert Level 3.

https://www.rbnz.govt.nz/news/2020/08/banks-and-nbdts-under-covid19-alert-level-3-august-2020

26 Aug 2020 – Stats NZ reported that incomes fell for the first time since records started in 1998.

https://www.stats.govt.nz/news/incomes-fall-for-first-time-on-record

Stories From the Marketplace by Michael Larsen explores the history of at New Zealand’s Capital Market. The book focuses on the events that occurred within the past 30 years although it is initiated by the NZX to mark their 150th anniversary.

The book will include interviews with notable New Zealanders and industry figures. The book is available for pre-order and will be available in October. Over 100 individuals spoke about their experiences and gave their opinions on the events that have impacted the market during the past 30 years. 

Michael is an incredible talent,  with numerous works to his name. As he is a friend and neighbour here in the office I got to hear some of the stories and learn a bit about the process of putting this together - which has been a huge job. Congratulations to Michael and the NZX for the initiative.