Welcome to our first issue of Tirohanga:[1] Financial Services Quarterly Outlook for 2023!
The team is feeling refreshed from our time off, and excited to dive into another year of engaging legal work, which is off to a busy start.
We are proud to have been reconfirmed as the leading Financial Services team in New Zealand with both Partners Lloyd Kavanagh and Jeremy Muir personally ranked Band 1 by Chambers Asia-Pacific in December, and the team as a whole maintaining its Band 1 position. The directory said:
MinterEllisonRuddWatts' Financial Services department retains its position as an outstanding funds group servicing an impressive roster of New Zealand's major banks, fund managers and investors.
This is satisfying recognition that the Financial Services team continues to be at the forefront of development in this constantly changing and highly regulated sector, which is reinforced by both Lloyd and Jeremy being ranked by Legal 500 in its Hall of Fame for Investment Funds.
In this issue of Tirohanga, we look back on what the team has been busy with since our last October issue, and then direct our attention ahead to the challenges and opportunities we expect in 2023.
What we’ve been up to
The end of 2022 was an exceptionally busy period for the team. Looking back on the year, it was a demanding but rewarding one, with all members of the team developing their skills and knowledge of new practice areas. The introduction of a variety of law reform including the Climate-Related Disclosures Regime (CRD Regime) and Conduct of Financial Institutions Regime (CoFI Regime) gave us new material to get to grips with, and the involvement of our practice in the FinTech industry continues to grow. Examples of a few of our key transactions include:
Sharesies Kiwisaver Fund
In December 2022, our longstanding client Sharesies announced the launch of the Sharesies Kiwisaver Scheme. This is a major step forward and we were pleased to be able to help them with our experience in establishing funds and advising on the regulation of Kiwisaver offer documents, which are tightly regulated. This was a wide-ranging engagement as Sharesies will be offering conservative, balance and growth style funds, as well as an ethical focus. The funds will be officially launched in the first half of this year.
Dai-ichi buys Partners Life
On 30 November 2022, our client Dai-ichi Life closed its NZ billion-dollar purchase of New Zealand’s second largest life insurer, Partners Life. This closing was the culmination of a major project involving extensive due diligence and negotiation, as well as engagement with the Overseas Investment Office and Reserve Bank of New Zealand (RBNZ), to obtain the required approvals.
To read more about the work we did for Dai-ichi Life please click here.
Blackstone’s investment in Resolution Life
In October 2022, our client Blackstone Partners announced one of its funds had agreed to invest in and undertake investment management for Resolution Life Insurance, whose assets include the closed books of AMP Life in Australia and New Zealand, as well as books in the United States and elsewhere. The transaction is expected to close in 2023 after Blackstone has arranged additional investors participation, and regulatory approvals in Bermuda, New Zealand, Australia, the United Kingdom and the United States have been obtained. We have assisted with due diligence, and application for regulatory approvals.
New wholesale funds
A theme of 2022 was the establishment of private equity and venture capital funds – an encouraging trend in the face of global economic challenges. This included the GD1 Web3 Fund, which intends to invest specifically in Web3 technologies and digital assets. The investment focus of this fund introduced new elements to be considered in the fund documents and has allowed the team to further develop our acumen in servicing clients involved in the new and emerging frontiers of technology and digital finance. We have several projects carrying over into the new year, keeping the team’s finger on the pulse of developments in the market, as well as persistant market standards.
Presentations
In late November Senior Associate Bryan Ventura (Financial Services) along with Partner Simon Akozu (Tax) presented on digital assets and decentralised finance (DeFi) at the Credit Law Symposium. This presentation focused on decoding the current and future developments in digital assets and DeFi that will affect the credit and banking sector in New Zealand. In particular, Bryan and Simon discussed the use of cryptoassets, NFTs and stablecoins, collateralising real world assets, the role of Decentralised Autonomous Organisations and how traditional finance is currently using DeFi.
Law Reform
Partner Jeremy Muir was appointed, along with Alexandra Sims (University of Auckland), as a special advisor to the New Zealand Parliament’s Finance & Expenditure Select Committee (Committee) in relation to its Inquiry into the current and future nature, impact, and risks of cryptocurrencies. This Inquiry involved reviewing and considering submissions from the public, researching developments and issues in relation to crypto, blockchain, Web3 etc, then drafting the final report. This report included recommendations to the Committee on how to approach regulating these sectors in New Zealand.
Team news
Over the summer we have been given a boost of energy from Summer Clerks Darlene Hu and Shaun Lye, who have been rotating through the team on their Summer Clerkship programme. It has been a pleasure involving them in the exciting work we do.
Darlene Hu Shaun Lye
Also joining the team this year as Law Clerks is Hannah Cross and William Ma who will be away doing their Professionals course for admission to the bar until April. The team is very much looking forward to this expansion of the junior ranks.
Hannah Cross William Ma
The team is very proud of our Senior Associate Maria Collet-Bevan, who was also recognised as an Elite Women lawyer in 2022. Maria was a leader in many of the team’s most demanding work over last year, and this achievement acknowledges that. The hard work of Sam Short was also recognised with his promotion to Senior Solicitor.
We have been very pleased to welcome Zena Razoki back from Parental Leave in late 2022. Zena’s son Nicholas is now 15 months old and is thriving. It was with mixed feelings that we marked Alistair Robertson, Special Counsel’s move in October 2022 to major client ASB Bank. While we will miss Alistair’s wide experience and wry sense of humour, we know he will make good use of those qualities at ASB and are looking forward to continuing to work closely with him there.
Looking forward
As the year kicks off, we are turning our minds to what legal changes are to come.
Firstly, the RBNZ published their Issues Paper which focuses on the future of money and how New Zealand will navigate regulation of new forms of money. They have invited public feedback, with the aim of publishing responses by mid-2023. Read our Financial Services Update on this topic.
The Ministry for the Environment consultation on the impact of treating New Zealand Units as financial products ended last year, the responses to which will inform Emissions Trading Scheme market governance policy decisions. These decisions are set to be made in 2023 and will dictate how the New Zealand Unit market is regulated in the future. Read our Financial Services Update on this topic.
On the subject of the environment, the Aotearoa New Zealand Climate Standards which relate to the new Climate-Related Disclosures Regime have been released, and guidance on record keeping is expected to follow this July. The first climate statements are expected to be published in April of 2024. Read our FSU on this topic.
Regulation is also coming in the form of the CoFI Regime. Applications under CoFI are opening on 25 July 2023, though the regime will not take effect until December 2024. A suite of materials was released late last year on how entities can go about this process, and in the coming months we can expect the FMA’s draft intermediated distribution guidance to be released. Read our Financial Services Update on this topic.
In 2023, the RBNZ’s consultation on the Insurance (Prudential Supervision) Act 2010 will continue, with an omnibus consultation setting out its recommended reforms to be expected as a result of this process. Following the omnibus consultation, the RBNZ will aim to introduce a draft amendment bill to Parliament before the end of 2024. The timing for the implementation of the Bill has not yet been released. Read our Financial Services Update on this topic.
The progress of the Deposit Takers Act will also continue throughout this year after being introduced to Parliament in September 2022. The two key programmes of this Act are to create a Depositor Compensation Scheme that will protect deposits held in bank and non-banks, and strengthen the supervisory and enforcement powers of the RBNZ. The purpose of the proposed Scheme is to allow consumers to have confidence that their funds are safe if an entity fails, while the enhanced powers of the RBNZ are intended to enable action before an entity is under “inappropriate stress or risk of failure.” The Act is expected to come into force after receiving Royal Assent in mid-to-late 2023.
Finally, the RBNZ’s review of the OCR and inflation will be coming up at the end of February, with the monetary policy remit review closing on 27 January 2023. Globally, this year is expected to be economically challenging, but when looking back on our achievements last year and the engaging opportunities in the year ahead, we remain optimistic about what 2023 has to offer.
In case you missed it
We are continually publishing financial services updates on industry developments that we think our clients might be interested in. If you’ve missed some of our updates, below is a list of what we’ve published in the last quarter.
FMA
- FMA publishes various CoFI licensing materials
- Further MfE consultation on treatment of NZUs as financial products
- FMA warns InvestNow for AML/CFT deficiencies and failures
- FMA releases Thematic Review on the Wholesale Investor Exclusion
- FMA publishes MIS Sector Risk Assessment
Sustainability and Finance
- XRB publishes final Aotearoa New Zealand Climate Standards
- Greenwashing: The new due diligence environment
- FMA expectations on climate risks and audit files
Law reform
- The changing payments landscape in New Zealand and the Future of Money
- MBIE publishes insights on future of business for New Zealand
- Minister of Justice announces AML/CFT proposals and releases report on AML/CFT statutory review
Past Tirohangas
[1] Tirohanga is Te Reo Māori (New Zealand’s first language) for “view”, “viewpoint”, “perspective” or “outlook”.
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