Overview of decisions
Changes arising from the reviews will mean a comprehensive modernisation of the regulatory frameworks that apply to all non-bank financial institutions, participants and products. The intent is to achieve a more effective and consistent regulatory environment while keeping any necessary compliance costs to a minimum and improving consumer confidence in the sector. The changes will also ensure that New Zealand meets its international obligations, especially those arising from the Financial Advisory Task Force (FATF) to mitigate money laundering and the financing of terrorism.
Cabinet has agreed to a two phased approach to introducing legislation to implement the findings of the reviews of Financial Products and Providers, and Financial Intermediaries.
The Phase 1 decisions are to:
- register all non-bank financial institutions. This is necessary to provide an initial means of identifying and monitoring financial institutions and is a critical first step in the implementation of other review proposals. It is also necessary to achieve compliance with international obligations;
- strengthen the current model of trustee supervision that applies to debt issuers, non-bank deposit takers, and collective investments schemes, by licensing trustees and providing for their supervision by the Securities Commission. This is necessary to achieve compliance with international obligations;
- strengthen the prudential regulation of non-bank deposit takers by providing for corporate trustees to work to minimum prudential standards that would be developed and monitored by a single prudential regulator that would also regulate insurers;
Cabinet's earlier in principle decision that the Reserve Bank of New Zealand be the prudential supervisor has been confirmed;
- provide for more comprehensive regulatory oversight of financial intermediaries by a government regulator (in conjunction with industry professional bodies). This is necessary to improve consumer confidence in the sector and to achieve compliance with IOSCO (International Organisation of Securities Commissions Organisations) Objectives and Principles of Securities Regulation;
- provide for effective consumer dispute resolution and redress across all parts of the sector. This is necessary to improve consumer confidence in the sector.
Further policy work (Phase 2) will be reported back by 30 November 2007 to finalise additional proposals from the Review of Financial Products and Providers to:
- enhance the trustee supervision model for collective investment schemes and debt issuers. The focus of this work is on improving the consistency of supervision by Trustee's of collective investment schemes and debt issuers by setting in law minimum requirements for supervision and ensuring that trustee's have appropriate duties and powers to perform their roles;
- simplify disclosure requirements for issuers of securities. The focus of this work is on clarifying the definition of public investors to which disclosure laws apply and simplifying the current two document disclosure regime so as to reduce compliance costs on issuers while ensuring that public investors are adequately informed in their investment decisions;
- modernise regulation of insurers in terms of both their prudential operation and their conduct. The focus of this work is on ensuring a consistent approach to the regulation of insurers through licensing and supervision by a single prudential regulator and improved market conduct requirements;
- improve governance of entities utilising a mutual form. The focus of this work is on the development of base level corporate governance requirements for mutuals that would be set in a single statute;
- regulate platforms and portfolio management services. The focus of this work will be on ensuring minimum protections for consumers of platform and portfolio management services that perform advisory and custodial roles.
Where can I find more information?
You can read more about the Review of Financial Products and Providers on the MED website at:
http://www.med.govt.nz/templates/ContentTopicSummary____479.aspx
If you cannot find an answer to your question there, contact: FPPreview@med.govt.nz
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