COVID-19: Financial services operating under Level 4

This webpage was updated as at 4.45pm 31 August 2021.

New Zealand moved to Level 4 of the COVID-19 alert system from 11.59 pm on Tuesday 17 August 2021, as provided by the COVID-19 Public Health Response (Alert Level Requirements) Order (No 9) 2021 (Order). See our latest alert on which businesses can operate at Alert Level 4 for more information.

The Order provides that financial services are not included “Alert Level 4 businesses or services”. This is a change from the previous Alert Level 4 situation, where financial services were considered essential (as discussed in our note of March 2020).

However, there is now an exemption for registered banks and licensed non-bank deposit taking entities (NBDTs) and an exemption for a list of specified other financial services .

The FMA is releasing updates on the change in the role of financial services here.

We intend to update this page as further information is released.

What do they cover?

Exemption for registered banks and NBDTs

Registered banks and NBDTs carrying out “critical financial services” may now operate as an “Alert Level 4 business or service”. In summary, critical financial services include those:

  • processing and maintaining systems for processing financial transactions and services;
  • providing consumer and business access to credit and lending services;
  • ensuring provision of funding for ATMs, and to move currency and payments; and
  • providing necessary banking support for customers who need assistance from carers and/or are unable to use remote banking services, as required.

This exemption is subject to conditions – relating to physical distancing requirements, limiting customer interactions, hygiene and protection, and following all Government and WorkSafe guidelines for doing business safely at Alert Level 4.

Financial services which may operate as Alert Level 4 businesses or services

Further exemptions have been made for the following financial services to operate as Alert Level 4 businesses or services:

  • non-bank lenders
  • licenced insurers;
  • money remitters and money transfer operators;
  • financial product market operators;
  • broking services;
  • payment and settlement system providers;
  • custodians;
  • registry services;
  • EFTPOS infrastructure and management services;
  • payments architecture services; and
  • credit bureaus.

This exemption is also subject to conditions – relating to physical distancing requirements, limiting customer interactions, hygiene and protection, and following all Government and WorkSafe guidelines for doing business safely at Alert Level 4.  In particular, face to face customer interaction continues to be permitted for “critical financial services” only.

The exemption provides guidance on what is considered a “critical financial service”, which includes, processing and maintaining systems for processing critical financial transactions and services, facilitating critical financial and capital markets and funding for ATMs. A full list of critical financial services can be found here.

Other financial service business

All other businesses must close their offices during Alert Level 4 unless the business is an “Alert Level 4 business or service” and is “operating in compliance with the Alert Level 4 requirements”.

The FMA notes:

  • Firms may go on-site to maintain critical systems / infrastructures which cannot be completed remotely (in accordance with exemption in cl 18 of the Order). “This includes back-office functions, Treasury, payment, settlement, and registry functions, or other similar activities.”
  • Financial services firms not covered by an exemption may not provide any services face-to-face to the public. However, they can continue to work from home where this is possible.
  • In all cases, if employees need to work on site, they should be strictly limited.

Our view

The further exemption for financial services which may operate as Alert Level 4 businesses or services and the increased clarity and guidance on what is considered to be a “critical financial service” are welcome and will give comfort to some in the financial services industry.

However, given the scope of the exemptions are narrower than those in March 2020, financial service providers should take steps to ensure they understand how the new Order and exemptions apply to their businesses. For example, while fund managers and investment management, KiwiSaver providers, administration support services and licenced supervisors fell within the ambit of essential services last year, they no longer do. Financial service providers should ensure they do not simply apply last year’s rules during the current Alert Level 4 lockdown.

What next?

The period for which the lockdown will apply is not fixed. Currently, Alert Level 4 will continue in Auckland until 11:59pm on Tuesday 14 September 2021, in Northland until at least 11:59pm on Thursday 2 September and the rest of New Zealand until 11:59pm on Tuesday 31 August 2021.

We will keep you updated by continuing to update this alert should there be further guidance from the FMA on financial services operating under Alert Level 4.

MinterEllisonRuddWatts Level 4

At MinterEllisonRuddWatts, our people, systems and processes have responded well to the change in Alert Levels. While our physical offices are closed, we are fully open for business and remain available to support you and your business throughout this period.

If you have any questions, please contact one of our experts.

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