AUGUST ISSUE | 2018
This month we look at the FMA’s findings from its review of replacement business processes in the life insurance industry, the Consultation Paper released by the Reserve Bank on Insurance Solvency Standards, a class exemption granted to financial advisers from the obligations under the AML/CFT Act, the stance taken by the FMA on the obligations of life insurers under the AML/CFT Act, and the upcoming annual insurance conference. We also provide our general update on relevant legislation.
FMA RELEASES FINDINGS FROM ITS REVIEW OF QFE INSURANCE PROVIDERS’ PROCESSES FOR REPLACEMENT BUSINESS IN THE LIFE INSURANCE INDUSTRY
The Financial Markets Authority (FMA) has released a report QFE insurance providers’ replacement business practices following its review of Qualified Financial Entity (QFE) insurance providers’ processes for replacement business in the life insurance industry.
The review assessed how QFE insurance providers’ policies and procedures are designed to ensure consumer protection at the point of policy replacement. The FMA found significant discrepancies among individual QFEs. The findings include that:
The FMA set out that it expects QFEs to address the following areas:
Please contact us if you have any questions on the report. We can assist with implementing ‘good practice’ processes and training as noted in the report.
THE RESERVE BANK SEEKS FEEDBACK ON A CONSULTATION PAPER
The Reserve Bank of New Zealand (Reserve Bank) has released a Consultation Paper on Insurance Solvency Standards and NZ IFRS 16 Leases. NZ IFRS 16 Leases is a new accounting standard for lease contracts. The Consultation Paper:
The Reserve Bank is seeking written feedback on the Consultation Paper by 5pm, Friday 24 August 2018. Please contact us if you have any questions on the Consultation Paper. You can also contact us if you would like us to provide written feedback on the Consultation Paper on your behalf.
CLASS EXEMPTION FROM AML/CFT OBLIGATIONS FOR FINANCIAL ADVISERS
As of 30 June 2018, all financial advisers who arrange for a manager of a retirement scheme to provide relevant services to a customer or an intended customer of a retirement scheme are exempt from the obligations under sections 10 to 71 of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act). This exemption expires on 30 June 2023.
The exemption does not apply to financial advisers to the extent that they provide a financial adviser service in respect to:
The exemption is made subject to a number of conditions including that the financial adviser must act as an agent of the manager of the relevant retirement scheme, and carry out the following obligations on behalf of the manager:
Please contact us if you have any questions in relation to the AML/CFT Act or if you would like to discuss applying for ministerial exemption from the obligations under the AML/CFT Act.
FMA’S STANCE ON REPORTING ENTITIES’ AML/CFT OBLIGATIONS
In a recent conference, the head of supervision at the Financial Markets Authority (FMA) has reiterated the firm stance FMA are taking on compliance with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act). The FMA expect reporting entities to comply with their obligations under the AML/CFT Act.
New Zealand is set to be subject to a mutual evaluation report by the Financial Action Task Force (FATF). The FATF will conduct a review of New Zealand’s AML/CFT Act framework which will include both desk-based and on-site components. The FMA note that compliance programmes have been a weakness because reporting entities fail to review and audit the programmes regularly.
INSURANCE COUNCIL CONFERENCE
Details of this year’s Insurance Council Conference 2018 has be announced. The Conference will be held in Auckland at the SkyCity Convention Centre on 20 November 2018.
The two themes for the Conference will be:
The Conference will present speakers providing local and international perspective on these themes. There will be a panel discussion involving some of the speakers on the challenges faced by climate change.
Speakers will discuss how to gain and maintain trust in a world full of online interactions, and provide insights on key legal issues which may impact customer trust in insurers in light of the major review of insurance law. The final speaker for the conference will be the Privacy Commissioner. The Conference will end with a reflection on the topics discussed during the Conference by a panel of chief executives.
Online registration will be available in August. More information on the Conference can be found here.
Review of the Insurance (Prudential Supervision) Act 2010
Further to our comments made in our April Issue, no new information has been made on the review of the Insurance (Prudential Supervision) Act 2010. As noted above, work on the Insurance (Prudential Supervision) Act 2010 (IPSA) is deferred until the Reserve Bank of New Zealand has completed other initiatives which take priority over the review of the IPSA. We will update you as new information comes to hand.
Financial Services Legislation Amendment Bill
The Financial Services Legislation Amendment Bill (Bill) is an omnibus Bill which makes amendments to the Financial Markets Conduct Act 2013 and the Financial Service Providers (Registration and Dispute Resolution) Act 2008. A number of regulations will need to be made to support the measures in the Bill.
Submissions on the Minister of Commerce and Consumer Affairs’ (Minister)’s Discussion Paper on disclosure requirements for those providing advice in the new regime closed on 25 May 2018. The Minister has not provided any feedback on the submissions received. Submissions on the Minister’s Discussion Paper on addressing the misuse of the Financial Service Providers Register closed on 15 May 2018. The Minister has not provided any feedback on the submissions received.
We will keep you updated as new information comes to hand.
Fair Insurance Code
The Insurance Council of New Zealand (ICNZ) is in the process of reviewing the Fair Insurance Code and the submissions received from the public. The ICNZ expects the new Fair Insurance Code will be introduced in 2019. We will update you as new information comes to hand.
Earthquake Commission Act 1993
The Earthquake Commission Amendment Bill (Bill) is currently before the Select Committee. The Bill makes changes to the Earthquake Commission Scheme to simplify and speed up the claims process. Parliament is currently reviewing the submissions received from the public. Any amendments to the Earthquake Commission Act 1993 are expected to come into force on 1 July 2019 after the completion of an independent inquiry of the Earthquake Commission.
We will update you when new information comes to hand after the submissions have been reviewed.
The Privacy Bill is currently before the Select Committee. Parliament is currently reviewing the submissions received from the public. We will update you when new information comes to hand after the submissions have been reviewed.
Disclaimer: The information contained in this newsletter is provided for informational purposes only, and should not be construed as legal advice on any matter.