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Spotlight on insurance business

Rob Everett, Chief Executive, FMA


We have been busy over the last few months and the output of some of that work is now emerging.


Insurance and financial advice


Our recent report on insurance replacement business - following our 2016 Replacing life insurance report - generated significant comment. In May, we will release a soft commissions report followed later by a QFE replacement business report. When viewed alongside the Minister’s review of insurance, this is a connected body of work in this sector.


Investor capability


In our investor space, our research report about issuers’ product disclosure statements, out this week, informs issuers and their advisers about our expectations of clear disclosure. We’ve also used findings from the report to create some tips for investors.


This work aligns with the consumer focus of the new KiwiSaver annual statement requirements, from 1 April, for fees to be shown in dollar value.


Encouraging KiwiSaver members to be more aware about what providers are doing with their money is always a good thing. To build awareness, during May and June, we’ll be running a targeted campaign to help members understand what these important changes to KiwiSaver mean for them.


Enforcement action


As always, we are busy with a number of cases progressing through the courts currently. On Viaduct & Mutual (the last of the finance cases), after the original trial was aborted, a retrial is scheduled for July. In addition, judgement was handed down on a costs application by the defendants. One of the parties has appealed this decision.


On the ERoad insider trading criminal case, one defendant pleaded guilty, and there was a hung jury on the charges laid against the other defendant. The Crown has sought a retrial which is scheduled to start in September.  We also pursued charges under the Financial Services Providers legislation and obtained guilty pleas from a defendant at the Christchurch District Court. Our enforcement mandate is of critical importance to us and we have other issues either before the courts or likely to end up there.


Australian Royal Commission


We are paying close attention to the Royal Commission into the financial services industry, to see what lessons we can learn from it. Although many of these issues have been aired before, examining the full range of conduct issues in one place, at one time, will certainly focus attention. We work closely with ASIC, and we will consult extensively with them about any regulatory moves which flow out of the commission’s discussions or its final report.


Rob Everett

Chief Executive

Better understanding investors’ information needs in PDSs


Our report  Product disclosure statements: understanding investors’ information needs  released this week, shows product disclosure statements (PDSs) have improved investor decision-making in areas such as key information summaries and the terms of the offer. However, in other sections of PDSs, there are still some improvements to be made to enhance investor understanding and make information less complex.


The report covers our findings, what issuers should do to make improvements and 5 lessons people can learn from these investors.


Consultation reminders


11 April 2018

Consultation: Content of regulatory returns for licensed DI, MIS managers and DIMS providers – submissions close Wednesday 11 April. More >


30 April 2018

Consultation:  The Financial Advice Code Working Group is requesting submissions and feedback on the proposed Code of Professional Conduct for Financial Advice Services. More >


15 May 2018


Consultation: MBIE is requesting submissions and feedback on addressing misuse of the FSPR. More >


25 May 2018


Consultation: MBIE is requesting submissions and feedback on new disclosure requirements for financial advice. More >


Guidance updated for care, diligence and skill obligations


Following our report into insurance replacement business and conflicted conduct, we’ve updated our online information for financial advisers outlining their obligations of care, diligence and skill under the FA Act.  The updates reflect the report’s findings and our Conduct guide.


Department of Internal Affairs (DIA) updates AML/CFT guidance

In March, DIA updated two of its AML/CFT guides.  The first one helps accountants better understand the AML/CFT Act, and how it affects them. It also offers guidance as to what they should do before 1 October 2018 when new legislation comes in. The second guide outlines how phase 2 reporting entities should prepare their annual report.


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Exemptions update


MIS market index exemption/guidance

We expect to grant an exemption for managed investment schemes managers in April. They will no longer have to publish a market index in their quarterly fund updates if there is no appropriate broad-based securities index.  The exemption has conditions attached - one of which is that managers use a peer group index instead, if this is useful for investors. We will publish guidance and the exemption notice at the same time.



Incidental Offers exemption notice updated

The Incidental Offers exemption notice was amended on 6 April. The amendments are technical, and are intended to extend the scope of the exemption’s application to be aligned with the policy intent. See NZ Legislation website for more information.


Intending to become an AFA?

If you are going to use the old National Certificate in Financial Services (Financial Advice) Level 5 to become an AFA, please submit your application no later than 1 November 2018. See our website for more details.


What’s coming up?

Get a heads up on what we’re releasing soon



Quarterly fund updates report

Our General Stocktake of Quarterly Fund Updates report looks into whether fund managers were meeting their legal requirements to produce updates that are both easy to find and easy to read for investors. Our findings will be published next week.



MIS manager valuation and pricing practices

This report, to be published next month, presents our view of the valuation and pricing practices of Managed Investment Scheme (MIS) interests. Where applicable, we have also commented on practices where there are some opportunities for improvement.


Soft commissions and incentive structures in the insurance industry

In May the soft commissions and incentives report will be published. That will be followed by a report of a thematic review of insurance replacement business practices at QFEs. Later this year we will publish a report into our review of bank incentive structures.


Compliance Assurance Programmes guide

We will soon release a best practice guide for Compliance Assurance Programmes, to assist FMC Act licensees and applicants.


Upcoming consultation


Licensees’ annual declaration and updating standard conditions

We will  publish a consultation on a proposal for all licensees to make an annual declaration of compliance as part of their regulatory returns. We want feedback about  updating the current standard conditions; and the process for making minor amendments to future regulatory returns.


Length limit exemption for dual-language PDSs

We will be consulting on exemption relief from prescribed length limits for product disclosure statements of issuers who want to include another language.  In particular, we are seeking feedback on whether the relief should apply only to English and te reo Māori, or to other languages as well.


FMA news

10 AprilInvestors provide valuable insights for issuers


27 March - KiwiSaver fees to be shown in dollar figures for first time


22 March - FMA publishes review of adviser conduct in life insurance


16 March - Guilty pleas for holding out as being in the business of providing financial services and obstructing FMA investigation


15 MarchFair dealing in advertising: guidance for crowdfunding and peer- to-peer lending published


All news
Industry insights

Senior Investor Vulnerability - IOSCO



Rebuilding trust – a conduct regulator’s perspective - ASIC



RegTech in Securities and Markets Regulation - Colm Kincaid, Director of Securities and Markets Supervision - Central Bank of Ireland


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