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Regulation slowing: Is FSLAA next?

The Government and regulators have dialled back much of their regulatory work at the moment and are now facing pressure to extend the deadline for transitional licensing.

Sunday, March 22nd 2020, 10:07PM 3 Comments

The spectre of prolonged periods when people are asked to stay at home to avoid spreading Covid-19 is already sending shockwaves through the economy, and inevitably, to the financial system. 

Regulators have been asked for ways to ease the burden. Although nothing like as impressive as a big interest rate cut and a large package of fiscal stimulus, they are trying to help limit damage by easing regulatory and compliance burdens wherever they can.

Good Returns understands that calls have been made to Kris Faafoi, MBIE and the FMA to delay the start of transitional licensing.

With the Covid-19 pandemic advisers need to focus on their clients rather than go through a licensing process and transition their business to a new regulatory environment.

Below is a list of changes made in the past week:

March 17, 2020 – IRD released details of tax measures to support businesses affected by the coronavirus outbreak, this being part of the wider government support package announced today.

March 17, 2020 – The International Accounting Standards Board (Board) announced that it had decided that the effective date of the amendments to IFRS 17 Insurance Contracts standard will be deferred to annual reporting periods beginning on or after January 1, 2023. The Board also decided to extend the exemption currently in place for some insurers regarding the application of IFRS 9 Financial Instruments to enable them to implement both IFRS 9 and IFRS 17 at the same time. Although not directly related to Covid-19 the deferral relieves life insurers of the need to run two systems simultaneously for a couple of years. Which is helpful when your accounting and actuarial teams may be working from home a lot.

March 18, 2020 – The Office of the Privacy Commissioner announced the introduction of a Supplementary Order Paper into Parliament on March 17 setting the start date for the Privacy Bill provisions to be November 1, 2020, when the Bill is enacted, extending the time available for change.

March 19, 2020 – RBNZ announced that it will delay or slow down most of its regulatory initiatives for an initial period of six months, including:

  • Review of the bank liquidity thematic review (and subsequent review of the liquidity policy (BS13))
  • Review of the Insurance (Prudential Supervision) Act 2010
  • Standard terms for Residential Mortgage Obligations
  • Cyber resilience guidelines for all regulated entities
  • Revisions to banks’ disclosure of regulatory breaches
  • Review of the stress-testing framework and planned bank stress-tests
  • Revising the process for approving banks’ internal capital adequacy models for credit risk
  • Future of cash – standards for banknote-processing machines
  • Alongside these deferrals, the Reserve Bank will also be extending the transition period for its revised outsourcing policy by 12 months. Affected banks will now need to be fully compliant with the new requirements by October 1, 2023.

March 19, 2020 – FMA released a media statement that it is working closely with the Council of Financial Regulators (CoFR), which includes Treasury, the Reserve Bank, the Commerce Commission and MBIE, as well as frontline regulators, NZX, supervisors and audit bodies to ensure a co-ordinated response in relation to the impact of Covid-19 on the industry, and providing details of some relief from obligations such as more time for regulated entities to publish their audited annual financial statements, and delaying the FMA’s planned thematic review on liquidity for managed investment schemes.

The FMA also offered advice for KiwiSaver managers, to lean against the tendency of savers to switch funds: “Recognising that some people might need the money immediately for a first home, switching funds during market turbulence forces the sale of investments at lower prices and gives up the prospect of gains when those investments start to recover.

“KiwiSaver providers should be providing general (class) advice to members at this time.”

Written by Philip Macalister and Russell Hutchinson

Tags: Covid-19 Financial Services Legislation Amendment Act FSLAA licensing regulation

« KiwiSaver switching soarsLicensing won't start until next year »

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Comments from our readers

On 24 March 2020 at 8:30 am JPHale said:
The prudent approach would be to extend it. However, that needs law change to implement from the understanding I have.

With no confirmed disclosure rules we’re going to have a crunch on requirements even those licensed will struggle to meet.
On 24 March 2020 at 1:47 pm Seehydenorhair said:
My understanding is under the state of emergency laws Cabinet can delay the law start dates via an order in council.
On 26 March 2020 at 9:12 pm Murray Weatherston said:
Announcement this afternoon that start date deferred until at least March 2021.

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Last updated: 31 March 2020 8:55am

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