The Financial Markets Authority (FMA) Chief Executive, Rob Everett, says the regulator is determined to “play its part” to make sure customer-centric conduct is “permanently embedded” in the culture of New Zealand’s financial sector.
The joint FMA/RBNZ Culture and Conduct Review of banks and life insurers was no small focus in the FMA’s recently published annual report for the financial year ending June 30 2018.
“The conduct-related events of the last year – driven by the Australian Royal Commission – have been extraordinary and are probably unprecedented. The importance of good conduct has been clearly underlined,” Everett said in his foreword of the report.
“Conduct regulation is no longer a new concept in New Zealand’s financial services sector.”
“Conduct regulation is no longer a new concept in New Zealand’s financial services sector. All market participants should be aware of their licence conditions and obligations. Where we see non-compliance, our response will be proportionate but lack of time or experience is not a valid excuse,” he warned.
However, he added that as a regulator, they intend to continue to be open and collaborative, preferring to encourage good conduct instead of responding to poor behaviour.
“However, that relies on regulated entities having the same attitude, and the same commitment to placing the interests of customers at the heart of everything they do,” Everett said.
The report stated the FMA will provide an update on the progress of its Review in early November.
The report also outlined the FMA’s work in the last year including:
- A series of reports on conflicted conduct in the insurance industry. Practices prevalent in the industry currently do not easily align with promoting customer interests
- For the first time, all KiwiSaver providers were required to tell each member exactly how much they have paid in fees in a dollar amount. This was supported by investor capability campaigns targeting younger KiwiSaver members
- Work on the quality of corporate governance and disclosure.
- The readiness of both organisations and individuals who give financial advice for the planned changes to the regulation of financial advice. The FMA has presented information on the upcoming reforms in a series of nationwide forums
- 250 supervision monitoring engagements with providers
- While we found audit quality has improved since 2013, there are still inconsistencies in the quality of individual audits.