The FMA’s CEO Samantha Barrass (pictured) told those attending the FSC’s Outlook 2024 conference that her organisation will not review company’s fair conduct statements.
Addressing a capacity audience of 400 attendees at the Hilton, Auckland, on Wednesday 31 January, she said: “It’s not for us to go through your fair conduct programme line by line. We’re not going to be signing them off.
“The responsibility for these programmes sits with the board of the institutions. It is for you to right-size your fair conduct programme or your CoFI application for your business, especially for smaller firms.”
Barrass said the FMA will be flexible and respond to different business models throughout the licensing process, and in its supervision and monitoring approach.
“The FMA has never had a one size fits all approach to its work,” she said.
“Whenever a funding and levy review of the FMA has taken place in the last few years, the sector has been largely clear that it is this approach – of being flexible, engagement-led – that is preferred over a rules-based, enforcement-led approach.
“Yes, this means greater costs for the FMA – that industry largely pays for – but critically firms benefit from a more efficient regulatory regime.”
…we are alert to any practices by providers that lead to high pressure sales, not just commissions…
Barrass also spoke to her concerns of so-called ‘tick box’ regulation, saying it could contribute to regulators failing to spot emerging risk, “…despite their unique cross-sector vantage point”.
“It increases the extent to which regulation can cut across innovation, including changes that improve outcomes for consumers, markets, and society,” she said.
“Unfortunately, it allows some to design technical compliance models that fail to achieve the consumer and market aims of the regulatory model.
“We don’t need to go back too far to recognise the market failures that have cut across consumer outcomes.
“We made it clear last year that we are alert to any practices by providers that lead to high pressure sales, not just commissions, not just sales-based remuneration.”
Consultation
Turning to the regulator’s current Fair Outcomes consultation, Barrass said that, in the first instance, it is “something for us”.
“It is about our regulatory approach and the judgment we bring to our work as a regulator,” she said. “It is about forward looking supervisory judgement that is risk-based and outcomes-focused.
“The consultation is seeking your views on the outcomes that will guide our approach to exercising our regulatory powers and responsibilities. It will be risks to these outcomes that first and foremost guide our decision-making on how we use our resources.
“For our supervisory approach, we will use these outcomes, not detailed compliance requirements, to frame our discussions with and assessments of providers.”
Barrass said it was her intention that industry engagement with the FMA’s monitoring teams will begin to see a palpable shift to outcomes rather than rules and compliance with rules.
“In so doing we want to shift the focus to outcomes for consumers and markets and innovation for firms,” she said.
See our report: FMA Fair Outcomes Consultation