FMA Grows Impatient With ‘Patchy’ Approach to Customer Outcomes in Financial Services

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The Financial Markets Authority (FMA) has described the extent of the understanding around customer outcomes, as to what is required and how to achieve it, as ‘patchy’ across sectors and within financial services firms.

The FMA/RBNZ Conduct and Culture Review currently in progress is scrutinising the New Zealand financial services industry for any traces of similar behaviour to that exposed in Australia during the Banking Royal Commission.

FMA CEO, Rob Everett

Speaking at a media briefing for the release of the FMA’s annual corporate plan, Chief Executive, Rob Everett, says the regulator has become increasingly impatient with those sectors of the industry where there have been instances of lack of attention to better customer outcomes and strong conduct frameworks.

“While the FMA continues to foster a collaborative approach with industry, firms have now had sufficient time to understand their obligations and our expectations under the new regulations introduced over the last few years,” said Everett.

He said over the coming year, the FMA expects firms to deliver ‘concrete evidence’ of efforts made in implementing good conduct outcomes as a priority of their business.

Everett mentioned that one of the opportunities for the FMA around its work in the Conduct and Culture Review was in working closer with the Reserve Bank than it has in the past, with the Reserve Bank taking a close interest in behavioural and conduct issues that he said perhaps may previously have been left to the FMA.

“We’ve got some real leverage here to go in and have really detailed inspections and conversations [with institutions] that might have taken us quite a long time to do without the burning platform that the Australian Royal Commission created,” said Everett.

Licensing 

FMA Director of Regulation, Liam Mason

FMA Director of Regulation, Liam Mason, says he hopes the transitional licensing process will give the FMA a better idea of the numbers of financial advisers that they are dealing with.

“When it comes to the current situation with the mostly unregulated financial advisers, we just don’t have a very good picture of the population,” he explained.

“We haven’t got a regular supervisory relationship with most advisers and so we are having to estimate what sort of numbers we’re going to see coming through, where we’re having to prepare a licensing process that is essentially scalable.”

“…we’re going to be licensing more people and firms than in any other area that we’ve ever licensed.”

Mason said they expect to get a better picture once the legislation has been passed.

Everett added that they do not yet know the resource requirements for financial advice at this point but said, “…it’s going to be a major piece of work for us – we’re going to be licensing more people and firms than in any other area that we’ve ever licensed”.

The FMA stated its strategic priorities remain the same as last year, with the addition of perimeter misconduct as a stand-alone priority.

A developing theme is also the current legislative reviews of the financial markets eco-system that could affect the FMA.

Click here to read the FMA Annual Corporate Plan in full.