Financial Markets Conduct (Conduct of Financial Institutions – ACS (NZ) Limited) Exemption Notice 2024

Summary

The Financial Markets Conduct (Conduct of Financial Institutions - ACS (NZ) Limited) Exemption Notice 2024, exempts ACS (NZ) Limited (ACS), an insurer that is a Financial Institution from the requirements under the Financial Markets Conduct Act 2013 (as amended by the Financial Markets (Conduct of Financial Institutions) Amendment Act 2022) (the Act) to:

(a)           be licensed as a financial institution; and

(b)           establish, implement, maintain, and comply with an effective fair conduct programme, and make information about the fair conduct programme available.

The exemption comes into force on 31 March 2025 and is revoked on the close of 30 March 2029.

The exemptions are subject to a number of conditions including to the effect that ACS:

• must not enter into any new consumer insurance contracts or any life or health insurance policies;
• has a contract in place with the Manager that provides for the Manager to handle any claims made by or complaints received from Policyholders on behalf of the Insurer;
• through its arrangements with its business manager, ACS ensure that policyholders are treated fairly, that any claims or complaints of policyholders are reviewed by the board of the manger, and notified to ACS; 
• must ensure that policyholders are provided with information to ensure that they are aware of the exemption and what arrangements are in place for them to manage their claims and complaints;
• must also provide the FMA with regular updates on its progress towards ceasing to carry on an insurance business in New Zealand, including details of any complaints, any new claims or potential claims, and the progress of any outstanding claims;

The key reasons for granting the exemption (as set out in full in the Statement of Reasons in the Notice) are that –

• where an insurer is in run-off with remaining liabilities under a very small number of consumer insurance contracts, the costs of becoming licensed and complying with fair conduct programme obligations under the Act are likely to outweigh the benefits for consumers;
• given the very small number of consumer policyholders ACS should be in a position to manage any claims or complaints in a bespoke manner, specific to those consumers; and
• ACS will have appropriate contractual arrangements in place with Ansvar Insurance Limited to ensure the conditions of this notice of exemption are met.
• the FMA is satisfied that the granting of the exemptions is desirable in order to promote the purposes of the Act, specifically to avoid unnecessary compliance costs.

The FMA is further satisfied that the extent of the exemptions are not broader than reasonably necessary given that—

• the exemptions are limited to the provision of relief where an insurer is in run-off with liabilities under a very small number of consumer insurance contracts and has only a short, expected time remaining before it ceases to carry on insurance business in New Zealand; and
• the limited application of the exemptions, and conditions that restrict the insurer from entering into any new consumer insurance contracts.

Download the Financial Markets Conduct (Conduct of Financial Institutions - ACS (NZ) Limited) Exemption Notice 2024