E ngā mana, e ngā maunga, e ngā hau e whā, tēnā koutou katoa
Nō Ingarangi ōku tupuna
Nō reira, ka mihi ki te whenua o Greenwich me te awa Thames.
Ko Ngāti Rānana ki te Pitonga te iwi
I whānau mai au i Rānana
Engari i te wā e tamariki ana ahau, i tipu ake au, ki Ōtautahi
Ko Te Whanganui ā-Tara taku kāinga noho nāianei
Ko Samantha Barrass taku ingoa
Ko taku mahi ki Te Mana Tātai Hokohoko, ko te Mana Whakahaere
Nō reira, tēnā koutou, tēnā koutou, tēnā koutou katoa
Ka huri au ki te reo Ingarangi
By way of a brief, very loose translation:
My personal story is that of a child of South-East Londoners, who worked in the factories and built the docks, and wanted better lives for their children. In pursuit of this better life, my family moved to Aotearoa when I was a little girl and we thrived.
And although I have pursued a career and had my family in the UK & Europe since my late twenties, it is my absolute pleasure to be back here in New Zealand, reconnecting with friends and making new ones.
My thanks and congratulations to the Financial Services Council for arranging such a successful event.
This is my first FSC conference and if the last couple of years have taught us anything, it’s the value of taking the time to meet in person, to kōrero. It has been a pleasure to meet so many of you over the last few months, and I am delighted to be able to speak to you today.
‘Growing financial confidence and wellbeing in Aotearoa’ is the aim of this conference. It’s a good aim, and it’s an aim that can be best achieved by both the FMA and all of you working together to help people lead the lives they want to live, enabling opportunity and improving their wellbeing.
By putting consumers at the heart of what we do, we can support Kiwis and improve their lives. This is an outcome we can all get behind, and it is to the outcomes I want to achieve, and how they will grow financial confidence and wellbeing, that I want to talk to today.
Period of change
We are in a period of significant change for regulators, for the industry, and for consumers.
The new requirements for financial advice aim to give consumers better access to quality financial advice.
The climate related disclosures requirements mean those businesses affected will need to publish climate statements.
And the Conduct of Financial Institutions regime will require banks, insurers and non-bank deposit takers to treat customers fairly.
Consumers are looking for greater accessibility, for seamless digital experiences that they reach through their preferred channels. Many want to invest in products that take environmental, social and governance factors into account.
Combine this with global economic conditions where we have rising and volatile prices, fragile supply chains and rapid monetary tightening by central banks. You can see the strains being placed on economies the world over.
With all this going on, it’s important not to lose sight of the outcomes we want to achieve and the value we look to deliver for New Zealand.
The FMA’s focus: fair outcomes
Regulators around the world are increasingly recognising that regulations and rules are a means to achieve fair outcomes for consumers and markets, rather than an end in themselves.
The outcome I want for New Zealand is a genuinely fair financial system, with more New Zealanders than ever believing the financial sector is working well for them.
For me, that means consumers will be getting better, competent advice on products they have confidence in, understand, are priced fairly, and are suited to their needs.
Our approach will be driven by the principle that the firms you run, the Boards and Management, are better placed than regulators to determine the actions needed to achieve this objective.
You know your business better than we do. That means we must genuinely share the common purpose of a fair financial system that works for all and share a strong understanding of the outcomes that will get us there.
There will need to be greater engagement and mutual understanding between the FMA and Industry, building on what we have today
We’ll be defining the outcomes and it is for you to find the most effective way of delivering them.
I want to guarantee everyone can access essential financial services, while securing strong protection for vulnerable customers. I want to build the FMA’s understanding of all consumers perspectives and experiences; Māori, Pakeha, Pasifika, all the peoples and cultures of our communities.
I see our role as kaitiaki - guardians of conduct in financial services for Aotearoa.
This is our vision for the long-term. The FMA is in the early stages of its Te Ao Māori journey, and we’re encouraged that so many of you are already embarking on yours. Internally, we are deepening our understanding of the Māori economy and looking at ways to improve access to, amongst other things, capital, building on our relationships with colleagues across government and the industry.
It is likely that we will be reaching out to some you for assistance. So, please do help us with your knowledge and understanding.
An outcomes-based approach – what does it mean for you?
So, what does an outcome-based approach mean in practice and how does it help deliver financial confidence and wellbeing?
Well, some things don’t change. You should always be asking ‘Am I treating my customers as I would expect to be treated?’. ‘Are my customers getting the outcomes from my products and services that they expect?’. These are the absolute basics.
One thing that strikes me in financial services is that it can be very easy to buy or purchase a financial product. I’d encourage you to pose yourselves the question as to whether it is as seamless to get out of a financial product, as it is to buy it in the first place.
The second is about ensuring that how a customer will experience a new product has been properly tested and understood before it is launched, rather than after. For example, having to build manual overrides for staff to enable a product to be offered appropriately is storing up problems for the future. These are the risks that we have seen crystalise into reality and remediation in the last few years.
And when you recognise, or hear, that some products are clearly low or poor value for large numbers of customers, work at pace to remove or replace them on your books.
Ask yourself, are you taking extra care to ensure consumers understand your product if it is particularly complex? How are you considering consumer behavioural biases like inertia?
For you and your teams, it means I am looking at moving beyond a mindset of regulation being for the compliance department. As I have said previously, it’s not about catching firms out. Instead, it’s about working with you to build trust in the delivery of outcomes that work for consumers. If you have done this work properly throughout your business the important steps to delivering regulatory requirements will be much easier.
This does not mean the FMA’s approach of credible deterrence is changing. It always will be there to tackle the most egregious examples of misconduct. When we take action, as we do and will, I want it to be in a manner that is seen as fair and proportionate. We will always be prepared to intervene with a deliberate and targeted response with the range of tools we have, to correct poor conduct, or persistent failures.
Part of that deterrence outcome includes driving out poor practices, eliminating the pressure for firms to sink to the lowest common denominator. Speaking at this conference four years ago, my predecessor observed industry attitudes of It feels a bit tacky, it feels a bit not ethical or right, but you know what, everyone else is doing it and we can’t afford to be left behind. We need to make sure these attitudes and practices are simply no longer seen as acceptable and left far behind in the past.
An outcomes-based approach is about the regulator and regulated working together to deliver the right outcomes for New Zealanders. I can think of nothing more that will deliver confidence in financial services than consumers understanding that both the regulator and the financial services industry are committed to a level of mutual trust where we ensure customers get the right products, at the right time, that meets their expectations.
Value for Money
I’ve been asked to touch briefly on Value for Money. My colleague Paul Gregory will be going into more detail on this later in the conference. I know this topic has attracted a lot of interest.
New Zealand is not an international outlier here. The idea of ‘fair value’ is driven through the UK approach, for example, which aims for consumers to receive fair price and quality.
In a speech last year, the Chair of the FCA in the UK noted that “firms need to demonstrate and be accountable to their customers for whether their funds really deliver value to their customers as an outcome”.
The outcome we are seeking to achieve here is the same. For fund managers to demonstrate to KiwiSaver members and other investors that they are delivering value for money based on the risk investors are taking and the fees they are paying.
There is value in financial advice, in helping people make good decisions, and avoid bad ones. We, as a regulator know this, and want to encourage financial advice. The outcome we all must seek is more knowledgeable consumers, with higher levels of financial confidence and greater participation.
Value for Money is not about driving an approach that is solely focused on low-cost passive funds. It is about driving an approach that delivers value for KiwiSaver members and investors, that ensures they meet their goals.
This delivers trust and confidence in the sector and is why the FMA as a regulator is committed to advocating for investors and looking after their interests.
Conclusion
At the start of my speech, I talked about how great it was that we can all be here together again. And it is.
But we are in the middle of a period of uncertainty. Interest rates are rising, there is war in Eastern Europe. The last few years have been difficult ones, wherever you have been.
That’s why it will be vital that you identify and look after your vulnerable customers in the months ahead. This will be critical to the building and maintaining of public confidence in your industry.
I am committed to engaging with you at all times. It is important to me that you are involved, engaged and feel heard, particularly when it comes to implementing the new regimes over the next few years. We will walk with you on this, and, we will hold you to account where necessary, as we also expect you to hold us to account.
We will continue to work closely with you, and the wider industry, as well as our CoFR partners on a financial sector that works well for everyone. It is only by working together that we can achieve our shared goal – growing the confidence and financial wellbeing of all New Zealanders.
Thank you - Ngā mihi - Tēnā koutou katoa.
