COMPLIANCE NEWS – INSURERS
SEPTEMBER ISSUE | 2021
Reserve Bank seeking consultation on insurance policy security consultation
As part of the Insurance (Prudential Supervision) Act (IPSA) review currently in progress, the Reserve Bank is seeking consultation on whether the current legislation adequately protects policy holders.
The consultation paper includes a review of the information insurers publish with a focus on whether that information enables policy holders to assess the financial stability of insurers before making the decision to purchase a policy. The paper also considers the arrangements protecting life insurance assets and whether these types of protections could be extended to other types of insurance.
The Reserve Bank is also interested in ascertaining whether the current solvency capital requirements for insurers is adequate to serve as a buffer when required.
Submissions can be made until 15 November 2021 either using the online consultation form or through the consultation document process. More information on the consultation paper can be found on the Reserve Bank’s website.
TSB charged with breach of AML/CFT Act breaches
TSB Bank Limited has recently been ordered by the Wellington High Court to pay civil penalties of $3.5m for non-compliance with the Anti-Money Laundering/Combating the Financing of Terrorism Act (the Act). The penalties are based on TSB’s non-compliance with the Act for failure to:
- Have adequate procedures and controls in place for managing compliance with its AML/CFT obligations;
- Review and maintain their AML/CFT programme;
- Conduct risk assessments in respect of the Bank’s real estate operations;
- Have regards to certain countries it deals with when reviewing its 2017 risk assessment
TSB had previously been issued a formal warning of non-compliance from the Reserve Bank in 2016. Their failure to respond to the warning was recognised by the court as an aggravating factor in determination of the penalties imposed.
This is the first time the Reserve Bank has proceeded with civil proceedings under the Act since it came into effect in 2013. The case serves as an important prompt to take seriously any formal warnings issued by the Reserve Bank such as the one recently issued to Westpac Banking Corporation in August.
Changes to the Fair Trading Act
The Fair Trading Amendment Bill 2019 was passed by Parliament last month. The Bill amends the Fair Trading Act 1986 (the Act) to include some significant changes including:
- An addition of a list of factors to consider when determining whether conduct is “unconscionable” for the purposes of ascertaining unconscionable conduct. The list is not-exhaustive, however includes whether unfair pressure or tactics were used, any undue influence, and whether parties acted in good faith;
- Consumers can direct uninvited direct sellers to leave or not enter their property.
The changes will come into force on 16 August 2022. This gives insurers enough time to review their practices to ensure compliance with the changes.
Please get in contact with us if you would like a review of your business’ practices to ensure compliance with the Bill prior to the changes coming into effect next year.
Financial Markets (Conduct of Institutions) Amendment Bill
The Finance and Expenditure Select Committee reported on the
Financial Markets (Conduct of Institutions) Amendment Bill on 7 August.
The Bill now awaits its second reading.
Insurance Contract Law Review
The exposure draft Bill for consultation was anticipated to be released mid-2021. We will continue to provide updates as they are released.
Financial Sector (Climate-related Disclosure and Other Matters) Amendment Bill
The Financial Sector (Climate-related Disclosure and Other Matters) Amendment Bill is currently awaiting its second reading.
Disclaimer: The information contained in this newsletter is provided for general purposes only, and should not be construed as legal advice on any matter.
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Laura Sookahet/Senior Associate
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Andrew Goble/Senior Solicitor
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