Cross-border financial services regulation is on the cards for Australia and New Zealand after the chairmen of the Australian and New Zealand regulators met in Melbourne recently. NZ’s insurance industry is relatively regulation-free, but this is likely to change as the two countries bring their regulatory regimes closer together.

Australian Securities and Investments Commission (ASIC) Chairman Jeff Lucy says globalisation of securities markets makes development of “co-operative regulatory arrangements” important. His NZ counterpart, Securities Commission Chairman Jane Diplock, was formerly ASIC’s national director for infrastructure and strategic planning, as well as regional commissioner for NSW.

The NZ Government is in the process of deciding whether to implement regulatory legislation similar to Australia’s Financial Services Reform Act. Not surprisingly, the NZ insurers believe they don’t need a regulatory regime as stringent as Australia’s. They are opting instead to develop government-approved self-regulation – which may be difficult to achieve given the global push for tighter regulation of the financial services.

Brokers and insurers are working together to formulate their own responses. Insurance Council of New Zealand CEO Chris Ryan says discussions are centred on the life insurance and financial planning sectors and are not likely to affect general insurance.

ASIC says the discussions coincide with rising cross-border investment. The two commissions agreed at the Melbourne meeting to strengthen co-operation and share information on cross-border scams. Joint enforcement policies and investor education programs are also being discussed.

The Australian and NZ governments have released a proposal for mutual recognition of securities, allowing offers to be made to investors in either country. New Zealand Securities Commission and ASIC have discussed the proposal and have agreed to work on the detailed regulatory arrangements.