Each year regulators such as the FMA, Department of Internal Affairs, and the Commerce Commission say they will increase their regulatory activities. However, 2022 may be the year when this really happens.
This is just one of the predictions made by Strategi‘s Executive Director Dave Greenslade who points to the FMA’s higher staffing levels.
“The FMA has significantly increased staff levels, it has a new CEO in Samantha Barrass and there have been numerous speeches and reports from the FMA signalling a reduced tolerance for non-compliance,” says Greenslade.
He advises those working across the financial advise sector to pay more attention to regulatory risk.
“Regulatory risk should be given an increased ‘likelihood’ rating by all financial services businesses and businesses are encouraged to undertake a compliance assurance review sooner rather than later to identify any compliance gaps,” says Greenslade.
“Financial advice providers, FMA licence holders and finance companies all have specific governance requirements. Invest now in high quality defendable governance education for your directors. This should ideally provide a recognised qualification.”
Greenslade also says the Omicron Covid-19 virus “…or some other variant” will likely require businesses to have some or all staff working from home for some of the year.
…firms will want to provide a more holistic service to clients…
“This will require those companies which are still paper based to move to digital storage and invest in laptops and video communication between staff and with clients,” says Greenslade.
“Businesses will also need to undertake more transactions using digital applications and the provision of remote advice.”
Greenslade also predicts an increasing number of business consolidations as the year unfolds.
“There will always be a space for the sole operator but increasingly, firms will want to provide a more holistic service to clients, and this will necessitate businesses with multiple advisers with different Level 5 specialist strands enabling the provision of investment, personal risk, general insurance and lending advice,” he says.
“Older advisers may start to implement their retirement plan and sell their books or merge their business with younger advisers who are keen to grow.”
And talking of younger advisers, Greenslade also points to the current tight labour market that is touching all industries across the country – 3.4% unemployment is putting pressure on employers to raise wages to retain and attract staff.
“There is a national shortage of skilled financial services staff,” says Greenslade. “Companies will need to invest in recruiting, training and maintaining the right staff. This takes time and money.
“Ideally staff need to have a career plan which includes the Level 5 qualification, ongoing CPD and where appropriate, specialist compliance and governance training.”