FSC won't comment on Nat plan to scrap Cofi
The Financial Services Council (FSC) is determined to remain apolitical and won't be commenting on any party's proposals.
Tuesday, September 19th 2023, 6:39AM 
5 Comments
by Jenny Ruth
That includes the National Party's plan to scrap the Financial Markets (Conduct of Institutions) Amendment Act (CoFI), which is set to kick in from March 31, 2025, if it wins government next month.
“The FSC is really interested in good policy outcomes that are beneficial to New Zealanders,” chief executive Richard Klipin says.
“In this campaign, all parties are coming to the table with policies that will impact the future of New Zealand, particularly with financial services plans,” Klipin says.
“We understand there's a concrete debate and contest of ideas going on.”
The FSC and the sector “have worked hard over years to get ready for” both licensing, which came into force earlier this year, and Cofi.
It introduces a new regulatory regime to ensure registered banks, licensed insurers and licensed non-bank deposit takers comply with the fair conduct principle when providing relevant services to consumers.
“The intention is to do the right thing by consumers and Cofi is the policy process around addressing that,” Klipin says.
“It's also the law of the land at the moment and we will continue to work with regulators and agencies as the law currently stands. Clearly, there's an election campaign going on and the FSC is apolitical. We will be keen to work with whatever government is formed,” he says.
“But until we know what the next government looks like, the FSC is watching with great interest. We will look to work positively with whoever forms the government and whatever policies they come to the table with.”
The FSC is “holding our council” and will not respond to every idea that gets into the public domain, Klipin says.
National's commerce and consumers affairs spokesman Andrew Bayly has argued that there is aleady sufficient legislation governing conduct and that the country doesn't need another overlay of legislation.
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Comments from our readers
Ok, gotcha, cool and normal then...
We need to be looking at the big picture when talking about the need to have additional regulation placed on the banks and insurers. Frankly, this industry is now suffering from regulation fatigue. I’m not convinced either that the New Zealand consumer is actually benefiting from what’s already being passed into law i.e. CCCFA changes. Inevitably the costs associated with this proposed CoFi law will get passed on to consumers. The only people who will likely benefit from CoFi being introduced are the Wellington bureaucrats charged with administering it.
Why is this current Government so insistent that the industry needs CoFi? When the Reserve Bank & FMA fronted up to the Finance and Expenditure Committee in 2021 and talked about the big review that they'd undertaken into the insurance and the banking sector the broad conclusion was "We've found no systemic issues." Of the billions of banking and insurance transactions that take place in New Zealand every year they found isolated cases but there was no systemic issue. The Government subsequently chose to ignore this advice from the Reserve Bank & FMA.
If the Government had wanted to beef up existing regulations to safeguard consumer protection, why not just strengthen the Banking Ombudsman's role etc? Why not give her some more responsibility, more funding, and more powers? She's already in place. Why not? CoFi is legislation orchestrated by a bunch of politicians whose ideology makes them have an instant distrust of industry. This is why Minister of Commerce Duncan Webb was quoted earlier in the year blaming the industry for not engaging with the Government and MBIE regarding the disastrous CCCFA changes. Recently we learnt that MBIE was in fact at fault overzealously rewriting the regulation and ignoring numerous warnings from the industry about the impact of the changes on credit worthy borrowers. Mr Webb’s predecessor was foolish enough to listen to MBIE’s advice, but he also chose to ignore the industry himself.
Let the regulations that exist now exist, there is no problem. There is no systemic issue as reported by the central bank and chief regulator of the industry. You only need to take a cursory glance at the type of complaints being received annually by dispute resolution schemes to see that the financial services industry is serving the vast majority of NZ consumers well.
I agree that the recent conduct of Southern Cross doesn’t do the industry any favours. Thankfully, this example is rare. It has been caused primarily by the insurer not providing guaranteed wording to its policy holders. Guaranteed wording has been available though elsewhere within the industry for over a decade now. Sadly, people with pre-existing conditions will be stuck unfortunately with Southern Cross for their health cover but many others still with good health will be able to change to another insurer who isn’t going to take benefits off them. I sincerely hope people with cover at Southern Cross do vote with their feet now wherever possible.
it was always the BEOT
always was, is and will be.
The GFC showed us that. The Aussie Hayne report showed us that in spades.
The conduct and culture stuff, the KiwiSaver review, the many remediations and investigations have added to the pile.
You are right though: the CCCFA changes were not what we needed. They aimed at a small target, and fired an RPG.
FSLAA was not what we needed. Because WE were never the problem.
Yes, we (advisers) have severe regulation fatigue.
But CoFI is what is needed. Period. There were "no systemic issues" yes. But there were, and continue to be issues at the BEOT, VIO level. That is what CoFI is for.
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The National Party leader accused Labour of six years of "economic mismanagement".
National has 25 measures that will "reduce red tape" including:
Reducing the scope of the CCCFA and repealing the Conduct of Financial Institutions Act CoFI.
Luxon said this means a "predictable and consistent" regulatory environment, with less red tape.