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The FMA releases 2016 Annual Report

Media release
MR No.2016 – 29
10 October 2016

The Financial Markets Authority (FMA) 2016 annual report highlights the fact the FMA has now moved from transition mode to establishing itself as a fully-fledged conduct regulator.

In addition to operating those parts of its regime already in place, the FMA has been busy this past year preparing for the final pieces of the Financial Markets Conduct (FMC) Act to come into effect in December.  Chairman Murray Jack notes in the report that the sense of transition has now passed to the financial services industry as they respond to the requirements of the FMC Act. Providers will take time to get used to the new ‘business as usual’ of dealing with a fully fledged conduct supervisor.

Rob Everett, FMA Chief Executive said “The broad scope of the regulatory changes introduced since the FMA was established in 2011 has been reinforced over the past 12 months.  We’ve worked with the industry to prepare them for the end of various transition periods and to implement the last major piece of the licensing framework - for managed funds - in December. 

“The framework is now in place with a broader range of providers operating under a new licensing regime and the FMA using the full suite of its powers to drive good conduct within the regulated sphere.  So this is where we are shifting through the gears to demonstrate how we will focus on culture, conduct and customer outcomes. For us it has been important over this past year to give the industry an insight into how this will work in practice through supervision and monitoring and through enforcement where necessary.”

Some of the key activities the FMA has focused on this year include:

  • Extensive engagement with Boards and senior management of regulated providers on  our conduct and governance expectations;
  • Substantial work with investors to understand their interactions with and expectations of the products they buy and the providers they purchase them from;
  • A comprehensive review of sales of life insurance through intermediaries  which identified some areas for  further monitoring and investigation and which prompted providers to review their incentives structures;
  • Licensing 38 managed investment schemes (38) by 30 June (53 as of today), DIMS providers (45) and helping to negotiate and implement the Asia Region Funds Passport.
  • We   also removed or actively dissuaded 66 overseas companies from registering on the FSPR, investigated and issued civil proceedings in relation to market manipulation and saw six Directors from three companies plead guilty to various charges laid by the FMA;
  • Improving frontline regulation through regular engagement with supervisors, review of high-risk audits performed by NZ audit firms and increased interaction and collaboration  with the NZX ;
  • Investor information and insights – publishing a cross-government white paper on investor behaviour, producing 14 investor guides and highlighting the need for over-50’s to plan for their retirement.

A substantial piece of work conducted during the past financial year and this one has been to prepare for the International Monetary Fund (IMF) assessment of New Zealand’s financial regulatory framework and oversight regime.

The IMF is conducting a Financial Sector Assessment Program (FSAP) review - last done here in 2003 - of the regulatory regime in New Zealand and the activities of the regulators within that framework. Preparing for this and responding to the assessment work of the IMF team has been a significant undertaking for the FMA but the resulting report, due in the first half of 2017, will provide  a strong indication as to  how our regulatory system stands up against global best practice.

A copy of the full report may be seen here.

ENDS

Contact:
Andrea Birtwistle
Ph: 021 847 192 or 09 3000465
Andrea.birtwistle@fma.govt.nz

Background:

The FMA is an independent Crown entity, established in 2011 as the main conduct regulator for New Zealand’s financial markets.  The FMA is responsible for licensing and supervising a range of financial market participants and for enforcing the FMC Act and other financial markets legislation.

*The IMF assessment involves a joint effort between the RBNZ, the FMA, Treasury and MBIE.  To find out more, please see our website www.fma.govt.nz