On Sep. 25, UK Lloyds informed market of new conduct requirements.
UK Lloyds informed the market of new conduct requirements implemented in New Zealand under the Conduct of financial institutions regime in accordance with the Financial markets conduct (conduct of institutions) amendment regulations 2023.
Follows NZ GVT Jun. 2023 gazetted the commencement order 2023, see #65412.
New Regime
The new regime amends the Financial markets conduct act 2013 (FMC Act) to introduce a licensing requirement for financial institutions and a new conduct regime.
Aimed at ensuring financial institutions treat consumers fairly by requiring institutions to establish, implement, maintain and comply with an effective fair conduct program.
UK Lloyd’s underwriters are exempted from the licensing requirement, however that exemption is subject to prescribed terms and conditions which must be complied with by Lloyd’s, a Lloyd’s underwriter, or a Lloyd’s managing agent as the case may be.
Many of the provisions have been specifically drafted to apply to managing agents.
Coverholders do not fall under financial institution so not eligible to apply for a license.
Obligation on managing agent to ensure business written through coverholders and claims managed by delegated claim administrator, complies with fair conduct principle.
Next Steps
Programs do not need to be implemented until Mar. 2025, have to be created before.
Most managing agents will already have existing policies and systems which comply with and constitute most of the minimum requirements for a fair conduct program.
Managing agents should start the process of identifying which existing policies etc, are relevant to minimum requirements of a fair conduct program and documenting that.
Process used to identify where gaps are between the existing policies and processes and minimum requirements so areas are identified that require further development.
Effectiveness
The conduct of financial institutions regime comes into force on Mar. 31, 2025.
