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2005 Annual Report

ACHIEVEMENTS

ENFORCEMENT-BASED LAW AND PRACTICE REFORM

The Commission's goal in this key result area is that the regulatory environment is relevant and effective.

Responsibilities

make recommendations for law reform
review and comment on securities law and practice

Achievements this year

made submissions on
- the Securities Legislation Bill
- International Financial Reporting Standards
- New Zealand Equivalents to International Financial Reporting Standards
- reform of the Financial Reporting Act 1993
- consultation papers of the Financial Intermediaries Task Force
continued the review of the Securities Regulations

5% of expenditure

Securities Legislation Bill

The Securities Legislation Bill was introduced in November 2004. The Bill proposes reforms relating to

insider trading;
market manipulation;
investment advisers;
substantial security holder disclosure;
application of securities trading law; and
penalties and remedies.

The Commission has worked with the government on the policy development of this Bill. We made a submission generally supporting the Bill to the Commerce Select Committee. The Select Committee reported back on 15 June 2005 recommending the Bill be passed. The Commission has also commented on aspects of drafting of the proposed legislation.

Financial Reporting Standards

The Commission commented on seven exposure drafts issued by the International Accounting Standards Board and the Financial Reporting Standards Board.

Financial Reporting Act 1993

The Commission commented on the Ministry of Economic Development's discussion papers about reform of the Financial Reporting Act 1993.

Financial Intermediaries Task Force

The Commission made submissions on the Issues Paper and the Options Paper published by the Task Force. The Commission has previously commented on the need for reform in this area, and considers the work of the Task Force is extremely important.

Securities Regulations

A main aim of the Commission's review of the Securities Regulations 1983 has been to simplify compliance by generally aligning the financial reporting rules for prospectuses with those of the Financial Reporting Act. This work has been delayed because of a legal impediment to these regulations incorporating financial reporting standards by reference. An amendment to the Securities Act to remedy this is included in the Securities Legislation Bill. Once this Bill is passed we intend to complete this project promptly.


Karen Barnes	Julie Myers	Liam Mason

Financial Sector Review

The Minister of Commerce announced a review of the financial sector in late May. This review will assess the current regulation of superannuation, managed fund products and securities offerings, and the regulation of non-bank financial products and providers such as insurance companies, credit unions, friendly societies, building societies, finance companies, and industrial and provident societies. Working groups have been established to progress this review. Commission staff are involved in the work being done by these groups.

Life Insurance Discussion Paper

The Commission made submissions on a discussion paper on life insurance. Subsequently the Law Commission produced a report recommending a number of regulatory and legislative changes to life insurance products which may impact on the work of the Commission. The Government recently announced that the recommendations would be considered within the wider context of the recently initiated Review of Financial Products and Providers.

Other Matters

The Commission also:

worked with government departments and agencies on recommendations arising from the Financial Action Task Force's inspection of New Zealand's anti-money laundering and anti-terrorist financing laws;
made submissions on Reserve Bank discussion documents relating to disclosure and policies for banks; and
provided comment to the Ministry of Economic Development on reforms to the credit union legislation and the proposal for trans-Tasman mutual recognition of securities offerings.

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