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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Legal and regulatory update for the life and health insurance sector

3 Aug 2021 – APRA released the results and key learnings from its stress testing of on life and general insurers during Covid19 in 2020. https://www.apra.gov.au/news-and-publications/stress-testing-insurers-during-covid-19-results-and-key-learnings

3 Aug 2021 - Finance Minister Grant Robertson and Reserve Bank Governor Adrian Orr announced that they have updated the Memorandum of Understanding (MoU) on macro-prudential policy to further protect the financial system and support the Government’s housing objectives. https://www.beehive.govt.nz/release/finance-minister-and-rbnz-governor-agree-update-mou-macro-prudential-policy

3 Aug 2021 – RBNZ announced that it will soon begin consulting on ways to tighten mortgage lending standards, including:

  • restricting the amount of lending banks can do above an LVR of 80 percent to 10 percent of all new loans, down from 20 percent at present, to come into effect on 1 Oct 2021.
  • implementing Debt-to-Income (DTI) restrictions and/or interest rate floors in an effort to provide further comfort that borrowing is sustainable, to be introduced at a later date.

https://www.rbnz.govt.nz/news/2021/08/reserve-bank-considers-tighter-mortgage-lending-standards


nib launch Kids Cover Free, and more daily news

nib announced the launch of Kids Cover Free, a new nibAPPLY platform campaign. Kids Cover Free is intended to help New Zealanders prioritise health by offering a free base cover for a child under 21 for 12 months with every adult insured under a new Easy Health, Ultimate Health or Ultimate Health Max policy through nibAPPLY. The offer is available through nib’s adviser partner network. nib CEO, Rob Hennin, has said that the offer reflects nib’s mission of improving the health of New Zealand families. Hennin also highlighted that the campaign is intended to improve the peace of mind of parents. The campaign is valid from today until 31 October 2021.

“Leading health insurer, nib New Zealand (nib), has today launched a new campaign via its nibAPPLY platform, to help Kiwis better prioritise the health of their families. The Kids Cover Free offer is available through nib’s adviser partner network and provides free base cover for one child for 12 months with every adult insured under a new policy.

nib Chief Executive Officer, Rob Hennin, said the special offer reflects nib’s mission to support the better health of Kiwi families and aims to provide members with greater peace of mind, knowing their child’s health is cared for.

“As a parent, taking care of the health and wellbeing of your children is one of your greatest priorities, and biggest concerns. We know from our own 2020 State of the Nation Parenting Survey, that at least three-quarters of Kiwi parents are more mindful of their family’s physical health because of COVID-19,” Mr Hennin said.

“Investing in private health insurance for your children is one way parents can significantly reduce these sorts of stresses, giving them the peace of mind that their child’s regular check-ups or unexpected healthcare needs are likely to be covered and that they’ll have access to timely and efficient care. We hope our Kids Cover Free offer helps take this burden off Kiwi parents, especially after a really difficult year,” he added.

Research from BNZ in 2018 estimates that the average cost of raising a child in New Zealand is just under $16,000 annually or around $285,000 up until the age of 18. Furthermore, IBISWorld uncovered that childcare, clothing and footwear costs had increased by up to 60% from 2013/2014 to 2018/2019.

nib’s own claim statistics also show that the number of healthcare claims for children has increased by 5% in the past 12 months* at a cost of more than $10 million.

The most common claims for children during the period* were:

  • Specialist services (consultations including seeing a dermatologist about skin issues such as eczema, dermatitis or an ENT specialist due to tonsils or ears issues) – 3,500 claims, totalling $915,000
  • Treatment by General Practitioner – 1,300 claims, totalling $45,000
  • General diagnostic –700 claims, totalling $205,000

And individual claims for children can be quite large. nib’s three largest claims for members under the age of 21 during the period* were:

  • Fusion to treat scoliosis - $90,000
  • Jaw surgery - $69,000
  • Electrophysiology and ablation to treat racing heart and restore normal heart rate - $58,000

“We know raising a child doesn’t come cheap, even more so if you’re faced with the need to pay for unexpected healthcare costs out of pocket. Common conditions such as grommets can often set parents back between $2,200-$3,500 and wisdom teeth extraction can cost on average $3,500 - $5,200.

“Making sure your children are insured early means that many of these conditions may be covered, as they have a policy in place before they become pre-existing conditions - which are excluded from most health insurance policies. That’s a huge benefit and one that enables parents to provide greater certainty around their child’s access to quality healthcare for the future,” Mr Hennin said.

The Kids Cover Free is valid for one designated child (under the age of 21) per every adult insured under a new nib policy between now and 31 October 2021. The offer which applies to base cover only is applicable for new members who apply for nib’s Easy Health, Ultimate Health or Ultimate Health Max policies through nibAPPLY (usual underwriting conditions and terms and conditions apply).

In addition to the special offer, nib also provides child only cover options for families looking to cover just their children.

For more information and to view the terms and conditions advisers can visit nib.co.nz/adviser/ or contact their nib Adviser Partner Manager.” Click here to read more

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Legal and regulatory review for the life and health insurance sector

29 July 2021 – Privacy Commissioner release confirming that Covid-19 vaccination status is personal information and so falls under the protections laid out in the Privacy Act 2020. https://privacy.org.nz/blog/the-covid-19-vaccination-and-privacy-rights/

30 July 2021 – RBNZ released an Op-Ed from the Reserve Bank Assistant Governor, Simone Robbers, titled “Sustainable Business: Working together on a path to a climate-resilient future.” https://www.rbnz.govt.nz/news/2021/07/working-together-on-a-path-to-a-climate-resilient-future

28 July 2021 - Minister of Commerce and Consumer Affairs, Hon David Clark, June 2021 diary released with the following potential financial services sector related meetings noted:

  • 10 June 2021 – Financial Markets Authority (Mark Todd, Chair; Rob Everett, CE)
  • 22 June 2021 – Takeovers Panel (Andy Coupe, Chair; Andrew Hudson, Chief Executive)
  • 24 June 2021 – Retirement Commissioner (Jane Wrightson, Retirement Commissioner)
  • 30 June 2021 - Chartered Accountants Australia and New Zealand (Peter Vial, NZ Country Head; Charlotte Evett, Government Relations Lead)

https://www.beehive.govt.nz/sites/default/files/2021-07/Hon%20Dr%20David%20Clark%20Proactive%20Diary%20Release%20June%202021.pdf

29 July 2021 – FMA release advising that AIA admits false and misleading representations to customers in FMA fair-dealing proceedings. https://www.fma.govt.nz/news-and-resources/media-releases/aia-misleading-representations-to-customers

29 July 2021 – FMA released cyber resilience information sheet for financial advice providers. https://www.fma.govt.nz/news-and-resources/media-releases/fma-releases-cyber-resilience-info-sheet-for-financial-advice-providers/

29 July 2021 – RBNZ advised that it will be holding a webinar on the interim Solvency Standard for insurers at 10 a.m. on Thursday, 5 August 2021, via Microsoft Teams. https://www.rbnz.govt.nz/regulation-and-supervision/insurers


AIA self-reported breach details, and more daily news

After AIA reported their shortcomings to the FMA as part of their submission for the FMA/RBNZ conduct and culture review of life insurers, the FMA filed charges in the Auckland High Court claiming that three causes of action under the Fair Dealing provisions (Part 2) of the Financial Markets Conduct Act 2013 (the FMC Act) were breached. The FMA based their case on:

  • purported enhancement of policy benefits
  • charging premiums after the termination of a policy and treating policies as terminated when they should have remained in force, and,
  • incorrect inflation adjustments.

AIA has said that a Notice of Admission will be filed and has agreed to admit to the breaches. A penalty hearing before the High Court will be held where the FMA will ask that AIA should be ordered to pay $700,000 as penalty.

“Life insurer AIA has admitted making false and/or misleading representations to customers in proceedings brought by the Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko.

The case was filed in the Auckland High Court and alleges three causes of action under the Fair Dealing provisions (Part 2) of the Financial Markets Conduct Act 2013 (the FMC Act).

AIA has agreed to admit all causes of action and will file a Notice of Admission of the breaches in the High Court.  The matter will proceed to a penalty hearing before the High Court where the FMA will seek declarations of contravention, and where the parties will submit that AIA should be ordered to pay a pecuniary penalty of $700,000.

The FMA case is based on three core breaches regarding incorrect and misleading communication to customers holding various life insurance and associated policies:

  • purported enhancement of policy benefits
  • charging premiums after the termination of a policy and treating policies as terminated when they should have remained in force, and,
  • incorrect inflation adjustments.
  1. Passback benefits:

AIA wrongly told certain customers they were entitled to passback benefits (cover enhancements to an existing policy), without clarifying that the benefits only applied to post-2003 policies. The information customers received in anniversary letters misrepresented the benefits, and in some cases misled them about their policies.

  1. Termination Dates issues:
  • Premiums beyond termination: AIA continued to charge premiums when customers had no cover. Letters were sent to certain customers with policies approaching the end of their duration, specifying when cover would cease, but the letters contained the incorrect date.
  • Cover Cessation: AIA wrongly ceased cover for certain customers while their policies remained in force, which resulted in some customers, whose claims had been accepted, being underpaid on those claims. Customers were informed by cover cessation letters.
  1. Inflation Adjustments: AIA applied incorrect inflation adjustments to premiums. Many AIA customers choose to have their sum-assured adjusted in line with inflation, with premiums increased accordingly. Policy anniversary letters were sent to customers where the inflation adjustment had been incorrectly applied, and, as a consequence, some customers were charged excess premiums.

AIA self-reported the breaches to the FMA, when asked to provide information as part of the joint FMA/Reserve Bank of New Zealand conduct and culture review of life insurers in 2018. AIA has told the FMA that remediation for affected customers has been completed, and the FMA will be seeking confirmation of this as part of the process.

In deciding to bring this action, the FMA took into account a number of factors, including AIA’s self-reporting, its remediation efforts, the nature of the alleged misconduct, and the number of affected customers.

The FMA considered the seriousness of the breaches, and the length of time it has taken to deal with impacted customers, warranted enforcement action. The FMA is determined to hold such misconduct to account and send a strong message of deterrence to the market. The FMA case only captures breaches that occurred from 1 April 2014 – when the FMC Act came into force – but some breaches occurred prior to this and continued after the Act came into effect.” Click here to read more

AIA have emphasises that they self-reported the issues and completed remediation: 

AIA NZ and the Financial Markets Authority (FMA) have reached an agreement with regards to issues that AIA NZ self-disclosed to the FMA in June 2018 at the commencement of the joint FMA/RBNZ Conduct and Culture Review.

“After conducting an internal review, we found a small number of instances where we may have fallen short of our own standards and commitment to being as transparent as possible with our customers.  Since self-disclosing these issues to the FMA, we have worked relentlessly to remediate these complex issues, whilst engaging and cooperating with the FMA throughout. We have also worked swiftly with the FMA to come to a resolution” says Nick Stanhope, AIA NZ CEO. 

“Our remediation process is complete and, if a customer was impacted by one of the issues, they have already heard from us directly and we have put the issue right.  As part of this remediation, we have also reviewed our systems and processes to ensure this does not happen again. We always strive to do the right thing by our customers and community, and this situation is no different,” concludes Stanhope.

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RBNZ: Review of the Insurance Solvency Standards webinar to be held on 5 August at 10am

FMA: FMA pings adviser for unauthorised advice

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From Good returns: CoFI debate back on agenda


RBNZ announce insurer Solvency Standard consultation

The Reserve Bank has announced that a consultation will be opened until 1 October 2021 for the interim standard that considers upcoming changes to accounting rules (IFRS 17). The feedback will be incorporated into the current solvency standards. Changes will be made effective at the beginning of 2022. The started is intended to assure policyholders that insurers will be financially capable of meeting promises. Geoff Bascand, RBNZ deputy governor and financial stability general manager, has said that RBNZ will work to understand the capital impact on insurers through further analysis via an industry consultation.

“The Reserve Bank of New Zealand (RBNZ) is asking for feedback saying the interim standard is needed to take account of upcoming changes to accounting rules (IFRS 17) and to incorporate feedback into its current solvency standards.

The Interim Solvency Standard consultation will be open for 10 weeks until October 1, 2021, will take effect from early 2022 and be in force for around three years.

The standard has been designed so policyholders can be comfortable that an insurance company has enough funds to meet its promises to policyholders, even if it fails, RBNZ deputy governor and financial stability general manager Geoff Bascand says.

“Through our review of the standard, we have modified some of the ways that we require insurers to calculate their capital needs. This is to ensure greater consistency and clarity in our requirements and to deal with new accounting standards for the insurance industry,” Bascand says.

“This will bring our method for capturing risks into line with international standards. We will undertake further analysis, in consultation with the industry, as we are keen to understand the capital impact on insurers. We strongly encourage them to engage with the consultation.” Click here to read more

 

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Partners Life: Naomi Ballantyne will be addressing Women in Insurance Summit 2021 attendees with her “Leadership in the 21st century,” presentation

Asteron Life: Claire Sutton will be a featured speaker at the Women in Insurance Summit 2021

nib: Rob Hennin will be a featured speaker at the Women in Insurance Summit 2021

AIA: Brynlea Hunter-Morpeth will be a featured speaker at the Women in Insurance Summit 2021


Legal and regulatory update for the life and health insurance sector

26 July 2021 – In a webpage post, the FMA released the “Top five tips for becoming a fully licensed Financial Advice Provider.” https://www.fma.govt.nz/news-and-resources/fma-stories/top-five-tips-for-becoming-a-fully-licensed-financial-advice-provider/

26 July 2021 – RBNZ announced that, from today, it will publish new breakdowns for residential mortgage lending by loan-to-valuation (LVR) ratios in the C30 web table. https://www.rbnz.govt.nz/statistics/c30

26 July 2021 – RBNZ & FMA sought feedback on implementing new law, the Financial Market Infrastructure Act enacted in May 2021, to safeguard the ‘plumbing’ of the financial system, with feedback closing on 20 Sept 2021. https://www.rbnz.govt.nz/news/2021/07/reserve-bank-and-fma-consult-on-new-law-to-safeguard-the-plumbing-of-the-financial-system

26 July 2021 – IRD released a set of questions and answers to support the Government’s policy proposals on interest limitation for residential property investors. https://taxpolicy.ird.govt.nz/publications/2021/2021-other-interest-limitation-and-bright-line-rules-q-and-a

27 July 2021 – RBNZ released research looking at the distributional effects of monetary policy and the household cash flow effects of low interest rates in New Zealand. https://www.rbnz.govt.nz/news/2021/07/incomes-rise-for-mortgage-holders-as-interest-rates-fall

27 July 2021 – Financial Services Council released research looking at what New Zealanders think about KiwiSaver, the role it plays in their retirement preparedness, and where it needs to head in the future. https://www.fsc.org.nz/bulletin_display/x_blog_code/2153.html


Legal and regulatory update for the life and health insurance sector

22 July 2021 – FMA released a report on Insurance conduct and culture: Fire and general insurers update. https://www.fma.govt.nz/news-and-resources/reports-and-papers/fire-and-general-insurers-update/

22 July 2021 – The latest FMA update included information on a report released in June titled “Filing of financial statements: review findings and guidance. https://www.fma.govt.nz/assets/Reports/Filing-of-financial-statements-review-findings-and-guidance.pdf

22 July 2021 – The FMA update also included advice that:

  • The FMA will be consulting in the third quarter of 2021 on proposals for exemptions to provide relief for insolvent FMC reporting entities that are in liquidation, receivership or administration from certain financial reporting requirements under the FMC Act to determine whether a class exemption is required.
  • AML/CFT reports for the period 1 July to 2020 to 30 June 2021 are due by 31 August 2021. AML/CFT supervisors have released updated guidance designed to help reporting entities complete their annual AML/CFT report.

https://www.fma.govt.nz/compliance/guidance-library/annual-amlcft-report-user-guide/

  • Updated the AML/CFT content on the FMA website to include information for Financial Advice Providers and Authorised Bodies.

https://www.fma.govt.nz/compliance/amlcft/faqs/#fapaab

  • A reminder of the new AML/CFT regulations that came into effect on 9 July 2021 and the availability of guidance on the new regulations available on the FMA website.

https://www.fma.govt.nz/compliance/guidance-library/amlcft-regulations-update-2021

22 July 2021 – RBNZ announced a consultation on an interim Solvency Standard for insurers, which will determine the minimum amounts of capital that insurers must hold, with submissions closing 1 October 2021. https://www.rbnz.govt.nz/news/2021/07/reserve-bank-consults-on-interim-insurance-solvency-standard

22 July 2021 – APRA released its Private Health Insurance Annual Coverage Survey for 2020. https://www.apra.gov.au/news-and-publications/apra-releases-its-private-health-insurance-annual-coverage-survey-0

22 July 2021 - Retirement Commission released its latest survey into the financial capability of New Zealanders. https://retirement.govt.nz/news/latest-news/latest-financial-capability-study-proves-knowledge-is-power-with-positive-findings-for-maori/

22 July 2021 – In an article titled “England’s NHS data-sharing to third parties”, the Privacy Commission uses this to highlight the privacy issues relating to patient data that may need to be considered with the consolidation of New Zealand’s district health boards into a single agency called Health New Zealand. https://privacy.org.nz/blog/englands-nhs-data-sharing-to-third-parties/

Probably the two most interesting items here are the conduct report on general insurers and the Privacy Commission's interest in medical data sharing. So many of the options for modernising the sector rest on medical data sharing and banking data sharing that these are likely to be areas under continually increasing scrutiny. 


mySolutions full FAP application sessions, and more daily news

mySolutions are set to run full FAP application sessions in the coming months in Auckland, Hamilton, Wellington, and Christchurch. Those living in other cities have the opportunity to attend a session in their city as long as there are a minimum of eight attendees. Those wishing to attend sessions should email their interest to shelly@mysolutions.nz

Prices

mySolution members: $2,500 per FAP

Non-members: $2,850 per FAP

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AIA announce new AIA Vitality partnerships, and more daily news

AIA New Zealand has announced that Countdown has replaced New World as the AIA Vitality Active Rewards Grocery Partner. AIA Vitality members can receive a Countdown gift card when weekly Active Rewards targets are met. Members can earn up to $300 worth of Countdown gift cards each membership year when they continue making health-conscious decisions and remain active on AIA Vitality. New Balance has also joined the AIA Vitality partner network, offering members a 30% discount off full priced footwear and accessories. Additional AIA Vitality partnerships are set to be announced next month.

Chief Product and Vitality Officer Len Elikhis has said that it’s great to see the tangible benefits being delivered.  Elikhis shared that 25,000 members received over 164,000 Active Rewards, it was also revealed that members collectively took over 10 billion steps, claimed 3,400 free AIA Vitality health checks, and nearly 1,000 discounted MoleMaps..

“AIA Vitality members can turn their healthy habits into healthy food with the addition of a new Active Rewards Grocery Partner, Countdown.

Members can receive a Countdown gift card every time they reach their weekly Active Rewards target.

Countdown has replaced New World as a grocery partner and also joins Airpoints as an AIA Vitality Status Rewards partner, and members can earn up to $300 worth of Countdown gift cards each membership year by making healthier choices and continuing to engage with the AIA Vitality programme.

“We’re thrilled to have Countdown come onboard as our new Active Rewards Grocery Partner," says AIA NZ chief product and vitality officer Len Elikhis.

"With 180 stores nationwide, we are confident this is a benefit that members will be able to enjoy wherever they live in Aotearoa.”

Members can also get into gear with the addition of New Balance, who have joined the AIA Vitality partner network offering a 30% discount off full priced footwear and accessories.

“As we approach the second anniversary of AIA Vitality in New Zealand, it’s great to see the tangible benefits we’ve been able to deliver for Kiwis,” Elikhis says.

“Our nearly 25,000 members have received over 164,000 Active Rewards and improved their health by collectively taking over 10 billion steps.

“What’s more, our members have taken steps to learn more about their health and wellbeing, by claiming 3,400 free AIA Vitality health checks, and nearly 1,000 discounted MoleMaps.

"By regularly evolving the programme, we continue to motivate our members to live healthier, longer, better lives. With our latest partners, we’re set to take the programme to a whole new level."

Since launching in August 2019, AIA NZ has continued to enhance the AIA Vitality programme to deliver more value and rewards for members.”

In 2020 it launched the Apple Watch benefit, and in March this year welcomed new partner brands Samsung, Event Cinemas, and the Allen Carr Easyway Quit Alcohol programme.

More AIA Vitality partnerships will be announced in August 2021.” Click here to read more

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