Australia: ASIC's guidance around Records of Advice

ASIC has released guidance around the use of Records of Advice (ROAs). You can find the guidance at this link, including some examples of ROAs. I draw your attention to the example insurance ROA at this link. These should not be considered a direct guide to meeting regulatory requirements in New Zealand, of course. Working through the detail you can see how much more prescriptive and detailed the ASIC approach is - and consequently how much easier it would be to fail to meet some aspect of the specific guidance while arguably doing a good job of meeting the principles of our Code and licence requirements. They can, however, be considered some useful context and give ideas about how to meet those principles in practice.

Legal and regulatory update for the life and health insurance sector

3 Sept 2021 – RBNZ sought views on its proposal to reduce risky mortgage lending by further reducing the amount of high Loan-to-Value Ratio (LVR) lending by restricting the amount of lending banks can do above an LVR of 80 percent to 10 percent of all new loans to owner-occupiers, down from 20 percent at present, with submissions closing on 17 Sept 2021.

Legal and regulatory update for the life and health insurance sector

31 Aug 2021 – RBNZ released an IPSA consultation titled Options Paper 2, Policyholder Security under the Insurance (Prudential Supervision) Act Review. Submissions close 15 November 2021.

31 Aug 2021 – The Advertising Standards Authority released a consultation on the draft ASA Financial Advertising Code. Submissions close 12 October.

Legal and regulatory review for the life and health insurance sector

13 May 2021 - Overseas Investment Amendment Bill (No 3) completed second reading in Parliament.

14 May 2021 – Government announced the new default KiwiSaver provider arrangements, which will take effect once the terms of the current providers end on 30 November 2021, noting a reduction in default providers from nine to six, with the providers from 1 Dec 2021 including Bank of New Zealand, Booster, BT Funds Management (Westpac), Kiwi Wealth, Simplicity and Smartshares (NZX). Relevant weblinks follow:

14 May 2021 – The Department of Internal Affairs published comment on its use of targeted compliance assessments that focus on the effectiveness and implementation of specific AML/CFT obligations in practice, noting the recent use of this approach to focus on the requirement for a reporting entity to have an independent AML/CFT audit conducted every two years.

Legal and regulatory update for the life and health insurance industry - updated

12 May 2021 – Government announced its next steps to reduce merchant service fees that banks charge businesses when customers use a credit or debit card to pay by introducing a Retail Payments Systems Bill later this year to:

  • require reductions in interchange fees as soon as possible
  • enable direct intervention by the Commerce Commission using a broad suite of powers to regulate different participants in the retail payment system
  • introduce a disclosure and reporting requirement to enable the Commerce Commission to monitor the retail payments system.

    We think this of great interest - as with several other discussions, including FMA comments on 'reasonableness' of fees for managed investment schemes and comments from     government coalition partners calling for rent controls, there seems to be a far greater willingness to contemplate direct intervention in markets. While we all like to think we are     reasonable people, the difficulty is forming a common view around what is reasonable. The marketplace has some powerful built-in stabilisers that usually work quite well. My view is     the regulation supporting the operation of the market is preferable.

A copy of the Cabinet paper, and the submissions received, can be found on the Ministry of Business, Innovation and Employment (MBIE) website at the following link:

12 May 2021 – The Privacy Commissioner welcomed the signing this week of a memorandum of understanding with the UK’s Information Commissioner establishing a framework for cooperation between the Office of the Privacy Commissioner and the Information Commissioner’s Office for cross-border cooperation and to foster international collaboration. The framework sets out broad principles of collaboration between the two regulators and the legal framework governing the sharing of relevant information and intelligence between them but excludes the sharing of personal information.

12 May 2021 – The RBNZ published an analytical note titled, “An overview of the distributional effects of monetary policy - Low interest rates - who are the winners and losers?”

Asteron Life underwriting enhancements, and more daily news

Asteron life announced that as of 5 May 2021 enhancements have been made to the Underwriting Rules Engine (URE) within AsteronConnect. Asteron Life has said that the implementation of these new rules will mean more new business applications will be issued immediately through AsteronConnect.

Changes include:

  • Improvements to straight through acceptance rate for both advisers and customers
  • More assessments and acceptance of mental health conditions
  • More acceptance of Covid-19 related answers

“At 9pm on Wednesday 5 May we’re making some enhancements to our Underwriting Rules Engine (URE) within AsteronConnect. With these enhanced URE rules, more new business applications through AsteronConnect will be able to be issued immediately.

Some of the key changes you will notice are:

  • The Straight Through Acceptance rate for Advisers & customers is being improved - including both standard and substandard outcomes (exclusions, % loadings and combinations thereof).
  • More Mental Health conditions will be assessable and accepted by the URE, rather than referring to an Underwriter.
  • We are enabling more Covid-19 related answers to be accepted through the URE, especially
    1. For employee applicants requesting income protection.
    2. For self-employed applicants impacted by Covid-19 related trading restrictions.
  • For applicants not currently receiving a Government Covid-19 wage subsidy or other business income support and not working in the hospitality, travel, tourism or the international student education sectors.
  • For applicants with intended foreign travel plans that do not require a 14-day quarantine period upon their return to New Zealand. 

Advisers using paper applications will still need to complete the Covid-19 supplementary questionnaire when applying for cover.”

In other news

Russell’s piece in Good returns: Sharing is caring - consumer data rights for the advice sector

RBNZ: The Future Is Māori

Strategi: top tips for FAPland

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Quotemonster and Advicemonster updates - live now

We have updated the quotemonster site, on Thursday, and made the following items live, for more detail see below:

  1. New SOA report content setting options allow you to create more customisations for your SOAs if you are an Advicemonster subscriber. To access these click settings, then SOA Setting, then Report Content Setting
  1. New SOA template for Need analysis recommendation note pad - bring through all your calculations from the recommendation notepad in Advicemonster to quote and to the SOA.
  1. New nib rates applied to the site
  1. FSP input validation for user setting and register form - so it is important that your FSP number matches your name and the entry on the FSPR. A reminder that sharing your login is a breach of our terms and conditions and unusual account activity (like switching user names) will be picked up and we will be contacting account-holders that actively share their logins. 
  1. Improved the health product breakdown table in the research report.
  1. Applied Fidelity level standalone trauma maximum level term rule
  1. Changed Partners Life IP and MP max-age to 57 - as we do not quote reduced commission versions of income protection
  1. Update Web version number to v 3.8.7

Congratulations to Albert, Doreen, and the whole team on a big package of updates. Our special thanks to the advisers sending us issues and suggestions for improvement of the Advicemonster process and the SOAs. 

QPR: Updates for Implementation of new FSLAA Regime

To help you prepare for the implementation of the Financial Services Legislation Amendment Act implementation on 15 March Quality Product Research Limited has made the following changes to the Quotemonster site:

  1. Prepared an outsourced provider statement. This provides you with information to meet the license conditions for a Financial Advice Provider to use a third party (us) as part of your advice process (for example: preparing comparison quotes and research reports). Subscribers to the research and advicemonster services will see an announcement when they next log in. A link to the outsource provider statement is included in the site in the About Us section. 

  2. Updated Advicemonster – an external review has been conducted, the draft statement of advice (SOA) has been updated, and the system for preparing the SOA has been improved. If you are an Advicemonster subscriber we suggest you run a new trial needs analysis to check out the new report – it is a more comprehensive and robust document that speeds up the process of creating new life and health statements of advice. If you don’t subscribe, or you would just like a quick refresher on how to use the system, click here to request a demonstration.

  3. Updated our terms and conditions – refer this link for details. Also, a link to the terms is included in the site in the About Us section, and on every page in the site. 

Coming up: there will be further changes to the adviser profile page to reflect changes to the FSPR due to the new license regime. We will update you on those next week. If you have any questions or concerns, please contact us or call (09) 480 6071. Thank you for being a customer of Quality Product Research Limited.

Legal and regulatory review for the health and life insurance sector

1 Feb 2021 – Minister of Commerce and Consumer Affairs, Hon David Clark, December 2020 diary released with the following potential financial services sector related meetings noted:

  • 2 Dec 2020 – Announcement of clearer lending rules (Attendees not listed)
  • 2 Dec 2020 – Meeting with NZ Bankers Assn (Chief Executive, Government Relations Director, Policy Director, of NZBA)
  • 4 Dec 2020 – Attendance at NZBA end of year luncheon
  • 9 Dec 2020 - Meeting with Commission for Financial Capability (Retirement Commissioner)
  • 10 Dec 2020 – Announcement about Merchant Service Fees (Attendees listed as “stakeholders”)
  • 10 Dec 2020 – Meeting with Financial Markets Authority (Chair, Chief Executive, Director Strategy, of the FMA)
  • 14 Dec 2020 – Meeting with Citizens Advice Bureau (Chief Executive of CAB)
  • 15 Dec 2020 – Meeting with Financial Services Federation (Executive Director, Board Members of FSF)