After numerous delays and lengthy consultations, the Financial Markets (Institutional Behavior) Amendment Bill (CoFI) is returning to Congress.
Tuesday, July 27, 2021 6:00 AM
Parliament began a second reading of the bill on June 10, with two lawmakers speaking before the debate was interrupted. It will resume on Tuesday, August 3rd.
However, the Financial Markets Authority (FMA) has announced that in New Zealand Insurance company is not ready To implement the bill, general insurers have stated that “… the understanding and commitment to good behavior and cultural practices is not widespread.”
In June, Minister Potto Williams began a second reading, stating that the bill had undergone some changes as a result of discussions.
Williams said 59 submissions were made and the majority supported it in principle, but after the second round of consultation Williams said there would be further amendments.
The minister said it was important for the bill to fill the legislative gap and ensure that consumers were treated fairly. She said there could be a power imbalance between institutions and customers.
“The Special Committee has clarified the minimum requirements for a fair action program and recommends that it be included in the bill,” Williams said.
“This is in response to submitter feedback that leaving the details of the action program to regulation would make the regime uncertain.”
Under the bill, the Minister has the authority to make regulations related to incentives. The Cabinet has already banned incentives based on value or quantity, and the Minister has a list of things to consider.
In addition, intermediaries such as financial advisors do not have to comply with the financial institution’s behavioral program.
Concerns were raised that regulators were too broad. In response, the minister said the group of intermediaries to which this authority extends was narrowed.
MBIE is currently discussing the intermediary provisions of the bill “… to ensure that the intermediary obligations are of the right size and actually work.”
The majority of those submissions upheld the intent of the bill, but most of those submitters said it was too broad and needed explanation.
Parliamentarian Nicola Willis criticized it as “… a compliant, box-tickling movement.”
Willis said her party is against the bill, but “… financial institutions, banks, insurers, etc. need to manage to focus on the best interests of their customers.” Admitted.
In its submission, AIA NZ said it was concerned that the proposed scheme would be too broad and in some cases overlap with existing licensing schemes.
“The wide range creates complexity in the financial services industry, where the cases that create and impose commercial uncertainties on market participants are only partially resolved or recently introduced legislation is in force. Create an additional layer of cost. “
AIA NZ said the addition of commercial uncertainty and bureaucratic formalism could have increased costs and adverse effects on New Zealand consumers.
Meanwhile, Consumer NZ said the bill wasn’t well-developed and wouldn’t make the desired changes to the industry.
“We remain concerned about the potential harm to consumers from the sales incentives used to reward industry staff and sales reps.”
He also said that a fix review is needed within two years of the changes being implemented to properly address the issue.
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CoFI debate returns to the agenda
Source link CoFI debate returns to the agenda