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New Zealand to introduce new financial conduct regime

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New Zealand to introduce new financial conduct regime

New Zealand's government on Sept. 25 announced plans to introduce a new financial conduct regime that includes a licensing regime for banks, insurers and nonbank deposit takers and a ban on incentives that are based on meeting sales targets.

The announcements follow joint reviews done by the Financial Markets Authority and the Reserve Bank of New Zealand in late 2018 and early 2019 into the conduct and culture of banks and life insurers in the country. The reviews identified a number of issues with bank and insurer conduct, and gaps in how they are regulated.

The government said it plans to draft and introduce legislation by the end of the year to implement the new regime.

The FMA will grant licenses to banks, insurers and nonbank deposit takers under the new regime. It will also have the ability to direct institutions to change their behavior, improve their systems or suspend or vary the conditions of a license. Further, financial institutions will face strong penalties for breaching their obligations under the regime.

The regime would also require licensed entities to meet high standards of customers treatment, implement effective policies, processes, systems and controls to meet the fair treatment standard and make licensed entities accountable for sales to consumers by contracted intermediaries who are not financial advice providers, according to the statement.