COMPLIANCE NEWS - INSURERS

SEPTEMBER issue | 2018

This month we look at the FMA’s annual corporate plan which sets out the FMA’s priorities for the remainder of 2018 and 2019, the new Canterbury Earthquake Insurance Tribunal Bill, and the recommended amendments to the Financial Services Legislation Amendment Bill. We also provide our general update on relevant legislation.

FMA RELEASES ITS PRIORITIES FOR 2018 AND 2019

The Financial Markets Authority (FMA) has released its annual corporate plan setting out its priorities for the remainder of 2018 and 2019. The FMA has identified eight priorities and associated outcomes it would like to see. These priorities and outcomes are:

  • Governance and culture – Boards and senior management delivering an organisational culture which places customer interests at the centre of their businesses.
  • Sales and advice – Sales and advice practices designed to meet the needs of customer. Advice providers exhibiting appropriate capability, due care, diligence, and skill.
  • Conflicted conduct – Incentive structures and practices designed with a focus on customer outcomes. Conflict of interest risks appropriately identified and managed.
  • Investor decision-making – Investors receiving clear, concise, and effective disclosure.
  • Capital market growth and integrity – Accessible and dynamic capital markets with resilient infrastructure allowing participants to act with integrity and investors to engage with confidence.
  • Frontline regulators – Contribution to regulated markets through effective oversight of relevant markets and participants.
  • Perimeter conduct – Swiftly identifying and dealing with abuse of the Financial Service Providers Register and the unauthorised provision of financial services to ensure confidence in the financial markets is not undermined. Identifying and addressing large scale misconduct outside the FMA’s regulating perimeter.
  • FMA effectiveness and efficiency – The FMAs continuous improvement to ensure it remains an efficient and effective intelligence-led regulator.

Please contact us if you have any questions on the FMA annual corporate plan.

NEW CANTERBURY EARTHQUAKE INSURANCE TRIBUNAL BILL IN PARLIAMENT

Parliament has introduced the Canterbury Earthquakes Insurance Tribunal Bill (Bill). The Bill intends to establish the Canterbury Earthquakes Insurance Tribunal (Tribunal). The Tribunal will provide speedy, flexible, and cost-effective services to help resolve insurance claims between policyholders and insurers, and insured persons and the Earthquake Commission.

The Tribunal will be an independent judicial body which provides policyholders and insured persons with an alternative pathway to resolve their insurance claims. Claims must relate to damage to residential buildings, property, or land caused by the series of Canterbury earthquakes which occurred in 2010 and 2011.

There are a number of provisions which may affect insurers. For example, the provisions of the Bill note that claims can only be brought to the Tribunal by policyholders and insured persons. Insurers and the Earthquake Commission are not able to file claims against policyholders and insured persons in the Tribunal. Additionally, the Tribunal will not be operating until 2019 (eight years after the Canterbury earthquakes).

Please contact us if you have any questions on the Bill. We will keep you updated on how the Bill progresses through Parliament.

FINANCIAL SERVICES LEGISLATION AMENDMENT BILL IN ITS SECOND READING

The Select Committee have provided its report on the Financial Services Legislation Amendment Bill (Bill) and recommend it be passed with amendments. The Bill is now in its Second Reading.

In addition to a number of recommendations, the Select Committee has recommended limiting the exclusions from regulated financial advice for ‘excluded occupations’ such as lawyers and accountants. The Select Committee’s recommendation ensures that the exclusion applies to ‘excluded occupants’ if giving the advice is an ancillary part of carrying out the principal activity of that occupation. For example, if giving the financial advice is ancillary to the providing of legal services.

Another recommendation from the Select Committee is broadening the definition of ‘financial advice’ to include the making of recommendations or giving of opinions about switching funds within a managed investment scheme including KiwiSaver.

Please contact us if you have any questions on the Bill or the report provided by the Select Committee.

PROGRESS REPORT

Review of the Insurance (Prudential Supervision) Act 2010

Further to our comments made in our April Issue, no new information has been released regarding the review of the Insurance (Prudential Supervision) Act 2010 (IPSA). As noted above, work on IPSA is deferred until the Reserve Bank of New Zealand has completed other initiatives which take priority over this review. 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. As noted above, the Select Committee recommend the Bill be passed with amendments. The Bill is now in its Second Reading.

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.

Privacy Bill

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.

Quick LInks

Bills before Select Committee

Daily Progress in the House

Insurance and Financial Services Ombudsman Decisions

Judicial Decisions of Public Interest

MBIE Consultations

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