1. About us
  2. What we do
  3. How we regulate
  4. Making compliance easier

Making compliance easier

Our work aims to encourage confident and informed participation in New Zealand’s financial markets.  

Regulation of financial markets is necessary. It protects the public from harm and helps deliver the Government’s objectives of a prosperous, economically stable New Zealand.  Strong regulatory standards underpin the integrity of our financial markets and boost investor confidence.

We recognise that the burden of complying with financial regulation imposes cost, which is borne by those who participate in our market, be they businesses or consumers. However, lack of strong regulation can harm investor confidence and informed participation. It is all about finding a balance so that businesses are able to comply with the law, and also focus on their day-to-day business activities.

We want to work closely with you to make sure regulatory burden does not outweigh the benefit from fair, efficient and transparent markets.

About this section

In this section you can find out more about what causes regulatory burden in financial markets, the work we are doing to reduce it where we can, and where to go for more information.

Regulatory burden and its causes

This is the cost of compliance with regulation. It affects businesses, consumers and the community.

The cost of regulation can be obvious, such as an application fee for a licence, or less obvious and indirect.

Regulatory burden can include:

  • time and money spent on compliance
  • barriers to entry or innovation
  • opportunity costs (activities or work that couldn’t happen due to regulation).

Regulation will always carry some level of ‘burden’ for businesses. However, the design of a regime may cause unnecessary costs when:

  • legislation applies in an unintended way
  • requirements are unclear or misinterpreted
  • requirements become outdated and no longer achieve the outcome intended.

The way we monitor and enforce the regulatory regime can also create or increase regulatory burden. This may happen if we:

  • don’t take a coordinated, efficient approach
  • don’t act consistently in relation to like situations
  • fail to communicate our expectations clearly
  • take a heavy-handed approach to regulation that is inconsistent with the statutory intent.

Ways we make compliance easier

There are a number of ways we can help make your compliance burden a more comfortable fit.

Getting the rules right

Working with other regulators and law makers

We work closely with the Ministry of Business Innovation and Employment on policy and law reform that affects financial markets legislation. Ensuring regulatory burden is appropriate is a key focus, whenever legislation is developed or changed.

In 2016, in the Financial Markets Regulatory Charter  we committed to ensuring that:

  • gaps and overlaps in mandates identified are addressed
  • the regulatory system is effective and efficient
  • each agency has clearly defined roles and responsibilities.

We made this commitment with other members of the New Zealand Council of Financial Regulators.

We have also been a member of the Asia Region Passport Fund initiative since 2016. This initiative streamlines regulatory requirements between participating countries, minimising additional regulatory requirements, wherever possible.

Using legislative notices to reduce burden

Reducing your legislative load

We have legislative and administrative notices we can use to modify legal requirements when appropriate. They let us right-size requirements that would otherwise impose unnecessary compliance costs and help make compliance reasonable and cost effective. We can also clarify details about how requirements must be met. This can provide more certainty for businesses about how to comply.

 These notices are:

Notices and waivers that ease unnecessary regulatory burden

The legislative notices and levy waivers we have granted have directly reduced unnecessary regulatory burden for some businesses.

Typically, individual notices help one business. They reduce the costs which the business may pass onto its clients. Class notices have a wider impact - they can affect a larger number of businesses and their clients, and can be relied on by many businesses in the same class.

The table below shows how our class notices have reduced unnecessary compliance burden for businesses.

How class legislative notices relieve regulatory burden (as at 30 June 2018)

Type of relief
Class notices

Recognise alternative regime or remove   duplication

12

Vary financial or other disclosure   requirements

8

Vary governance requirements

5

De-regulate or modify regulatory   regime, make it fit for purpose

4

Support low-cost offer paths

4

Support efficiency of financial   adviser regime

4

Right-size transitional obligations

3

Support effective secondary markets   compliance

2

Prescribe detailed requirements

1

The next table shows class notices granted across different market sectors.  Some notices help more than one sector.

Main sectors in which class notices relieve regulatory burden (as at 30 June 2018)

Market sector
Class notices

Debt or equity issuers

14

Managed investment schemes

14

Brokers or custodians

5

Financial advisers

5

Derivatives issuers

3

Banks or insurers

2

Check information on our class legislative notices.  We have also granted a number of individual notices. These are available on our website

Guiding and helping businesses

Being clear about what we expect

Our Strategic Risk Outlook, Annual Corporate Plan and the Good Conduct Guide tell the market about where we see the most potential for risk or harm, where we intend to focus our resources, and why. We also provide information on our intended approach.

Timely guidance

Clear, timely guidance can offer immediate relief from regulatory burden. We recognise that the guidance we publish needs to cover the right topic at an appropriate time. To do this we need to:

  • listen to the market and consult appropriately
  • identify emerging practices which indicate widespread misunderstanding or misinterpretation of requirements
  • weigh up our priorities in providing guidance using a risk-based approach
  • give guidance that is easy to understand and concise. 

Monitoring and thematic reports

Monitoring and thematic reports give feedback on what we think is good and bad conduct, and our response to that. These reports can also encourage businesses to tell us about emerging issues, understand our approach and tell us about any further need for guidance.

Having clear standards and processes for licensing

Licensing can impose a substantial regulatory burden for businesses. It is important this is appropriate so that licensing does not become an unnecessary barrier to entry. 

As our licensing approach is risk-based, applicants who may present the greatest harm will receive greater scrutiny than an entity which is viewed as lower risk. Applying a risk-based approach to licensing allows us to assess applications efficiently, lessening the need for further engagement with lower risk applicants.

We recognise that clear licensing guides are needed to step applicants through the licensing process. We are continually working to improve our licensing guides, so they are clear and easy to understand. 

Using a proportionate approach to enforcement

 When businesses are unclear about our expectations and objectives, this can lead to ‘gold-plated’ compliance and associated compliance costs. We signpost our particular areas of regulatory focus in our Strategic Risk Outlook.

Our enforcement approach is published in our enforcement policy and regulatory response guidelines, which guide our decision-making and are useful resources for businesses and individuals.

Working smarter

Efficient and effective

We aim to be efficient and effective in all our interactions with the market.

Our staff have regulatory training, alongside other public sector agencies, to improve how we work.  Our staff training includes training about regulatory burden, what it is, and the role that regulators play in it. We will think about regulatory burden in everything we do.

Better information gathering

We rely on information and intelligence to detect noncompliance and wrongdoing. We have a number of information gathering powers and tools such as section 25 notices and regulatory returns. 

Section 25 of the Financial Markets Authority Act 2011 empowers the FMA to issue notices requiring delivery of requested information to the FMA.

Our section 25 notice process requires us to minimise regulatory burden. We must make sure the information sought and the timeframes for complying are reasonable.  We also aim to:

  • make sure we understand any constraints or difficulties before we issue a notice, especially for businesses that receive repeat requests from us
  • contact the business where we have made a significant request to discuss how we can make compliance easier for them.

Simplifying the regulatory returns process

When we develop regulatory returns we keep some very clear principles in mind to try to reduce regulatory burden. These are to:

  • not collect data twice
  • try to obtain information from other sources first
  • only ask for information we intend to use
  • only ask for information that’s readily available to a business (e.g. as part of its normal financial reporting/board information)
  • consult and seek market feedback before we create regulatory returns
  • seek feedback on our regulatory return process so we can improve it.

Improving our monitoring

Our monitoring approach recognises that we have limited resources. Given this, we need to focus our resources on the areas of greatest risk and where we can provide the most benefit. This helps ensure that regulation is proportionate to the risks mitigated, and the benefits to be achieved.

As we evolve and improve our monitoring approach, we try to ensure that monitoring activities are not more burdensome than they need to be. Here are some improvements we have put in place:

  • reduced monitoring visits for businesses (one combined visit for different regulatory obligations)
  • development of closer relationships with the key businesses we regulate
  • combined monitoring visits with other regulators (e.g. NZX, the Reserve Bank), where possible.

We would like feedback on your dealings with us or any suggestions you have to help shape our thinking and improve what we do.

If you would like our Policy team to get in touch, or have any feedback, email consultation@fma.govt.nz. Please put ‘regulatory burden’ in the subject line. 

Policies making compliance easier

We have a suite of tools we can use to reduce unnecessary regulatory burden including legislative and administrative notices and guidance.

Our decision making

When we make a decision to use one of these tools, we always carefully consider all the relevant information about the relative benefits, risks and costs of the proposal to make sure we take relevant matters into account.

We rely on feedback from those we regulate to help us quantify the costs and benefits, and make informed decisions.

We must also ensure our decisions:

  • align with our mandate and the underlying policy of the legislation
  • meet any statutory requirements.

How we develop policies

The diagram below shows the process we follow when we develop our regulatory policies.

How we evaluate our progress

The feedback we get from the businesses we regulate is really valuable to us. It helps us understand and evaluate how our work is having an impact on reducing the burden of regulation.

Feedback from consultation on specific proposals tells us whether our idea will, actually, produce the intended benefit and where appropriate, reduce relevant compliance costs.

Surveys

Each year, we ask our stakeholders about our effectiveness and efficiency in the FMA Ease of Doing Business Survey. The results tell us, more generally, how easy the market finds doing business with us. It also tells us their opinion about whether they believe financial services regulation is striking the right balance.  In the 2017 survey, 60% of respondents agreed that it was easy doing business with us. That tells us that there are areas in which we can improve.

Notices

The work we do to directly reduce unnecessary regulatory burden can be measured by looking at our legislative notices and waivers.

Let us know your feedback  

We want to hear from you about:

  • how we are doing at making compliance less of a burden
  • ways we can improve our interactions with you
  • what market guidance would be useful to you
  • any requirements imposing unnecessary compliance costs.

If you would like our Policy team to get in touch, or have any feedback, email consultation@fma.govt.nz. Please put ‘regulatory burden’ in the subject line. 

Current initiatives 

Consultation