The Financial Services Council (FSC) has called for government to delay the introduction of the planned ‘culture and conduct’ regime originally slated for later this year.
In a note published last week, the FSC, headed by Richard Klipin, says its submission on the Financial Markets (Conduct of Institutions) Amendment Bill – currently at select committee phase – should be “postponed and a new timetable developed when Covid-19 is controlled, there is better understanding of its financial consequences and following the commencement of the new financial advice regime in early 2021”.
“This will allow businesses to focus on supporting customers during a period of economic uncertainty and when the financial advice regime is fully embedded before this further overlapping regime is implemented,” the FSC says.
The new financial advice regime has itself been held back for at least nine months following the coronavirus disruption to most regulatory programs. Scheduled to go live on June 29 this year,
adviser business transitional licensing under the Financial Services Legislation Act (FSLAA) has been pushed out to March next year at the earliest.
Submissions on the financial institution conduct legislation, which will impose new client-care and product-suitability duties on banks and insurers (among others), closed on April 30 after the select committee granted a one-month extension in March.
The FSC has also highlighted a number of interim regulatory measures enacted to ease business for financial businesses during lockdown conditions including a new exemption allowing online statutory declarations.
Designed to free up applications for KiwiSaver hardship applications and other legal affirmations the ‘Epidemic Preparedness (Oaths and Declarations Act 1957) Immediate Modification Order 2020’ enables ‘stat decs’ to be “taken using an audio-visual or audio link”, the FSC note says.
Any such online declaration would be valid only if:
- the person taking the declaration is satisfied the applicant signed it during the link; and
- as soon as practicable after signing it, the applicant sends the declaration (or a photograph or scan) to the person who took the declaration, for their signature.
“The Order also enables a declaration to be taken by a duly authorised officer or employee of the manager or supervisor rather than by a lawyer, JP or other usual witness,” the FSC says. “In the restricted scheme context this enables a duly authorised trustee or trustee director (but not an external administration manager) to take the declaration.”
Elsewhere, the Financial Markets Authority (FMA) continued its COVID-19 regulatory relaxation program last week with an update on statement of investment policies and objectives (SIPO) rules for licensed fund managers.
The FMA says while licensed managed investment scheme (MIS) providers must in general abide by existing SIPO reporting obligations there was scope to adjust settings given the current market dislocation.
“Recent market volatility may have revealed some disconnects between the SIPO limits and the fund’s investment strategy,” the FMA update says. “In that case, it may be appropriate to make changes to SIPO limits to ensure the manager has sufficient flexibility to manage the fund according to the investment strategy in the SIPO. But it is generally not appropriate to change SIPO limits solely to reduce the likelihood of limit breaks occurring under volatile market conditions.
“If a SIPO changes materially, the manager should provide sufficient notice to current investors to allow them to make an informed decision as to whether the scheme or a fund is still suitable for them.”