Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Culture Shift For Financial Services As Conduct Of Financial Institutions Bill Passes

The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko welcomes yesterday’s announcement from the Minister of Commerce and Consumer Affairs, confirming the Financial Markets (Conduct of Institutions) Amendment Bill, has been passed in Parliament. The Bill introduces a new legislative regime for banks, insurers, and non-bank deposit takers (NBDTs), which will now require a licence from the FMA for their conduct towards consumers.

Under the new law banks, insurers, and NBDTs will need to comply with a “fair conduct principle” to treat consumers fairly. They will be required to establish, implement, and maintain a fair conduct programme designed to ensure compliance with the fair conduct principle and take all reasonable steps to comply with their programme.

The new law will enable regulations to be made to prohibit target-based sales incentives, and financial institutions will also have obligations in relation to how they design and manage other types of incentives.

Samantha Barrass, FMA Chief Executive, said: “This will enhance the culture of core financial services in New Zealand, with a focus on putting conduct and the fair treatment of customers at the heart of every business. Firms will be held to account by the FMA for the way they sell products and look after their customers. This brings New Zealand into line with comparable countries overseas.

“It is critical that consumers get the financial products and services they need throughout their life and receive fair treatment in all their dealings with financial institutions. Consumers should have trust and confidence that the institutions who sell products and services to them will always do the right thing,” Ms Barrass said.

Regulatory gaps now filled

The FMA, alongside the Reserve Bank of New Zealand, identified a significant gap in the regulation of financial services through their joint Conduct and Culture reviews, commenced in 2018. The reviews found that banks and insurers did not have sufficient systems and controls to monitor the risks of poor conduct or poor customer outcomes in their businesses.

The new law will amend the Financial Markets Conduct Act 2013 and expand the FMA’s remit to the conduct regulation of core banking and insurance services. “While fund managers, derivatives issuers, and advice providers are already subject to FMA licensing, the same supervision and monitoring powers will now apply to banks, insurers and NBDTs,” Ms Barrass said.

“This will bring all these firms’ engagement with consumers of their products and services into the FMA’s remit. We will be evolving our regulatory approach and embracing the opportunity to encourage and nurture a trusted financial sector which treats all consumers in Aotearoa New Zealand fairly.”

Working with industry to implement the new law

The FMA will continue its established approach of open engagement and consultation with the industry to prepare for the new licensing requirements. Applications are expected to open in mid-2023. The Ministry of Business, Innovation and Employment will also develop supporting regulations. The regime is expected to come fully into force in early 2025.

The new conduct regime is outcomes-focused with requirements that are intended to be flexible and non-prescriptive. It is not a rules-based regime that prescribes how outcomes must be achieved. The intention is that this will drive positive industry behaviour change to ensure the fair treatment of consumers. The new law applies to a range of financial institutions and needs to be workable across a diverse range of business models. The FMA expects firms to avoid a tick-box compliance approach and adopt good practice to achieve good conduct risk management and fair consumer treatment and outcomes.

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Statistics: Food Prices Increase 7.4 Percent Annually
Food prices were 7.4 percent higher in July 2022 compared with July 2021, Stats NZ said today... More>>



REINZ: Market Activity And Prices Continue To Ease, First Home Buyers Start To Return To The Market

New Zealand’s winter property market continues its recent trend, slowing from the pace of sales and price rises of last year — properties stay on the market longer and median prices dip... More>>

FMA: Cigna Admits Making False And Misleading Representations
Cigna Life Insurance New Zealand Limited has admitted to making false and/or misleading representations to customers in proceedings brought by the Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko... More>>



Retail NZ: Welcomes Return Of Cruise Ships

“Cruise visitors were big spenders in retail prior to COVID-19, and retailers in Auckland will be celebrating the arrival of P&O’s Pacific Explorer this morning... More>>



ASB: Full Year Results: Building Resilience Today And For Our Future

In its 175th year, ASB has reported a cash net profit after tax of $1,418 million for the 12 months to 30 June 2022, an increase of $122 million or 9% on the prior year... More>>


Commerce Commission: Draft Determination On News Publishers’ Association’s Collective Bargaining Application
The Commerce Commission (Commission) has reached a preliminary view that it should allow the News Publishers’ Association of New Zealand (NPA) to collectively negotiate with Meta and Google... More>>