Commerce Minister Andrew Bayly has scheduled KiwiSaver reforms as back of the queue in sweeping changes to the financial services system announced last week.
In a speech at a Financial Services Council (FSC) event last week, Bayly dropped a KiwiSaver teaser, noting an intention to change the regime settings “to help New Zealanders save more for their retirement”.
He said the government would consider how to encourage more KiwiSaver investment into NZ businesses as well as changes to reporting of fees.
Pre-election last year, the now-Minister championed a policy to allow members to belong to multiple schemes while other National proposals mainly centred on allowing easier early access to retirement funds.
But any shake-up to the $100 billion KiwiSaver market remains a second-order priority for the National-led government.
“… this is a future workstream, and more information on this will come at a later date,” Bayly said, with a review penciled-in for the second half of 2024.
Instead, the government has slated Financial Markets (Conduct of Institutions) Amendment Act – or COFI – and the Credit Contracts and Consumer Finance Act (CCCFA) for immediate revisions.
While details remain under wraps, he said COFI would be revised to place the responsibility for ‘fair conduct programmes’ squarely on individual firms while requiring the Financial Markets Authority (FMA) to “issue clear guidance for smaller institutions to meet minimum requirements of conduct”.
“I do not want to discard CoFI, but rather perform a targeted reform to ensure that good conduct obligations are proportionate and fit-for-purpose, acknowledging the positive general framework.”
The move brings some certainty to the financial services sector after Bayly had campaigned on scrapping the conduct legislation outright.
“I realise many of you have already begun preparing fair conduct programs for the introduction of the regime by 31 March 2025,” he told the FSC event. “You need to continue to do so.”
The Minister also flagged a significant restructure of the regulatory system under a proposal that would hand more power to the Financial Markets Authority (FMA) as the single “conduct regulator” with the Reserve Bank of NZ (RBNZ) handing prudential duties.
In particular, the FMA would take over CCCFA responsibilities from the Commerce Commission.
“The FMA could issue a single licence covering conduct issues for financial institutions, while also clearly defining obligations within the Financial Markets Conduct Act, meaning easier reference for financial institutions as they grow and contract their businesses,” Bayly said.
Currently, he said large financial services firms may require multiple licences from the FMA and the RBNZ, “adding to the operational burden”.
“For example, a large, diversified financial institution may have to apply for up to five licences from the FMA (such as Financial Advice Provider, Discretionary Investment Management, Managed Investment Schemes),” Bayly said.
Further information on the mooted reforms “will be announced in the coming months”.