Questions are being raised around whether the Reserve Bank of New Zealand (RBNZ) should be the entity conducting the review of the legislation that gives the central bank its mandate.
Some submissions to the central bank about the review of the Insurance (Prudential Supervision) Act 2010 (IPSA) feel the scrutiny of the legislation should be conducted by an independent agency. However, the RBNZ “does not see a strong case” for this.
It said: “The current Review is being under taken by the Reserve Bank under terms of reference agreed by Cabinet. The Review will be completed transparently and with wide consultation.
“Any legislative changes recommended from the Review will happen only with due Parliamentary process i.e. any legislative change would ultimately require the support of and be the responsibility of the relevant Minister (currently the Minister of Finance is responsible for IPSA) and Parliament.”
The central bank said: “The focus for the IPSA Review is that the legislation continues to allow for a risk-based approach to regulation and supervision, and permits a range of supervisory approaches to be taken by the Reserve Bank within the limits of its resources.”
The RBNZ says stakeholders generally believe IPSA has improved the soundness of the insurance sector “without unduly restricting competition or innovation”, or introducing “inappropriate compliance costs”. They acknowledge there’s room for improvement, but do not believe any fundamental changes need to be made to the legislation as a whole.