MR No. 2017 – 16
9 May 2017
The FMA today welcomes the publication of the International Monetary Fund’s Financial System Stability Assessment (FSSA) for New Zealand.
The FSSA is the IMF’s headline report from their 2016 review of New Zealand’s financial system. This review is known as a Financial Sector Assessment Program (FSAP) and included two IMF missions in August and November 2016. Detailed documentation was examined and meetings held with the FMA, the Reserve Bank, MBIE and the Treasury. The IMF teams also met with industry participants and trade associations.
Alongside the FSSA, the IMF is intending to publish several supporting documents from the FSAP covering the specific areas that the review focused on - banking, insurance, securities regulation, crisis management, financial markets infrastructure and macro-prudential policy.
The IMF notes that securities regulation in New Zealand has undergone a “major overhaul” with the establishment of the FMA and the introduction of the Financial Markets Conduct Act 2013 (FMCA). The FMA now has a much broader mandate than the previous regime under the Securities Commission, including the licensing or supervision of a number of new sectors. In addition, the FMA has a range of new powers and responsibilities under the FMC Act. They also noted the review of the Financial Advisers Act.
The previous FSAP in 2003/2004 identified a number of material deficiencies in New Zealand’s framework for securities regulation.
Rob Everett, Chief Executive of the FMA said: “The regulation of NZ’s financial markets has been significantly enhanced over the last decade and this has required significant work from the industry, the FMA and MBIE. It is good to see the IMF’s assessment clearly reflects that.”
The IMF has, as expected, put forward some recommendations for further enhancement of the regulatory regime for consideration. These recommendations touch on a number of areas including supervisors, custodians, the wholesale asset management sector and issues around conduct in the insurance industry.
The FMA is considering these proposals alongside its fellow regulators, the Reserve Bank, MBIE and the Treasury.
More information can be found at the FMA’s website here
The IMF’s FSSA can be found here
The RBNZ's media release can be found here
The underlying technical notes will be published by the IMF in due course.
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