The FMA has released its annual corporate plan outlining the organisation’s priorities for the next 12 months.
CEO Rob Everett, who announced in March he was preparing to leave the FMA in September, says areas of focus in the insurance sector include preparation for the introduction of CoFI and updated contract law regimes including:
- Providing policy input as part of the legislative process
- Engaging with industry participants and other stakeholders to build its understanding of the banking and insurance sectors
- Developing a licensing approach for CoFI
- Developing a monitoring and enforcement approach for when the regimes are in force
Everett says: “A review of insurance contract law is also underway, with a focus on ensuring the law facilitates well-functioning insurance markets that enable customers to effectively protect themselves against risk.
“Industry consultation on a draft bill is expected to take place later in 2021. The proposed reform will give the FMA powers to monitor and enforce compliance with the new requirements.”
Also among the regulator’s scope of work is what it calls a refresh of its Conduct Guide for the “existing regulated population and those we will oversee in the future”.
In addition, cyber and other operational resilience, including expectations for the management of cyber and operational risks by regulated entities, will also come under increasing focus by the regulator.
Everett says the FMA is evolving its organisational model, core processes, and capabilities to deliver on its expanded mandate.
“However, Covid-19 has clearly highlighted the importance of being flexible and responsive to developments, so continued monitoring of the financial sector and working with our regulatory counterparts to identify threats and opportunities will remain central to our approach,” he says.
Meanwhile, the Financial Markets (Conduct of Institutions) Amendment Bill (CoFI) is progressing through Parliament and is expected to pass before the end of the year, with the regime anticipated to come into force from 2023.
Once passed into law, banks, insurers and non-bank deposit takers will need to be licensed in respect of their general conduct towards consumers.
“Licensing, monitoring, and supervising these sectors is a significant expansion of our remit and will require major investment in capability and systems,” says Everett.
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