The Financial Markets Authority (FMA) has outlined its priorities for 2018/19, following the release of its Annual Corporate Plan.
The Plan identified eight strategic priorities and associated outcomes the FMA is aiming for, with the first three being:
- Governance and culture
- Sales and advice
- Conflicted conduct
Under governance and culture, the FMA said it is looking for outcomes of an organisational culture within firms that holds customer interests at the core of their business.
Risks and harm the regulator intends to address include:
- Poor culture in financial services firms that may result in failures to manage conduct risk, and in some cases may drive conduct risk
- Ineffective governance, accountability or systems and controls that may result in harm to customers and/or market integrity
- Ineffective governance and/or poor culture in publicly listed companies that may result in failures to manage business risks, including disclosure failures
When it comes to sales and advice, the FMA stated it wants to see practices that are designed to meet the needs of customers. Providers also need to exhibit appropriate capability and due care, diligence and skill.
The regulator will be addressing risks including those sales and advice processes and practices which do not align to good customer outcomes and sales and advice providers which are not undertaking due care and diligence.
“The regulator will be addressing…sales and advice processes and practices which do not align to good customer outcomes.”
Around conflicted conduct, the FMA stated it is looking for incentive structures and practices which focus on customer outcomes and that any conflict of interest risks are appropriately identified and actively mitigated by firms.
FMA CEO, Rob Everett said that the regulator’s planned resource allocation will shift as circumstances evolve, an example of which is the reallocation of resource to the Conduct and Culture Review in progress.
“As you would expect, our work programme continues to reflect our focus on conduct, and on the governance, systems and processes that deliver good conduct. We intend to drive improvements in those areas, to ensure customers are treated in a way that exceeds the standards and minimum requirements in the law,” Everett said.