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Govt to review non-bank financial products

Sunday 15th May 2005

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The government has announced a review of how a number of non-bank financial products, and providers of them, are regulated.

The aim of the review is to improve the efficiency of financial markets by ensuring that there is a consistent and effective framework for the regulation of products and providers.

The review will comprise an assessment of the current regulation of: superannuation, insurance, managed fund products, and securities offerings. It will also look at the regulation of non-bank providers such as insurance companies, credit unions, friendly societies, building societies, finance companies and industrial and provident societies.

Commerce minister Pete Hodgson says "it will seek to identify areas where existing arrangements could be improved. The review consolidates a number of separate reviews already planned or being carried out.

"It will build on the work of the Financial Intermediaries task force and consider the recommendations of the Law Commission report on life insurance.

"Effective regulation is key to maintaining confidence in, and promoting, a sound and efficient financial sector. Providers, products, services, markets and the needs of consumers change over time and it is important that the regulatory environment evolves to accommodate that change. This review is designed to help ensure that the regulatory environment remains robust and responsive to the market's needs," he says.

The review will also look at how New Zealand's non-bank regulation takes account of international developments and any appropriate coordination opportunities with Australia.

The Ministry of Economic Development will lead the review, taking an open and consultative approach and encouraging participation by the financial sector.

Treasury will lead concurrent work on the how the regulatory regime can best be administered, including whether any changes to the existing domestic regulatory bodies are needed.

Policy decisions on the review are anticipated towards the end of 2006 with any changes implemented through legislation in 2008.

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