MR No. 2014 - 041
20 November 2014
Delivering implementation of largest change in financial services in 30 years
The Financial Markets Authority (FMA) has published its 2014 annual report for the year ended 30 June 2014. During this period the FMA began implementing the largest statutory change in financial services in 30 years. Engaging with the industry to implement the Financial Markets Conduct Act 2013(FMC Act) was one of six major achievements outlined in the report, as the FMA continued to deliver its ongoing regulatory responsibilities.
Rob Everett, Chief Executive of the FMA, said that in completing its third year of operations the FMA was now established as a respected regulator. “This reporting period has seen the FMA become a fully-fledged financial markets conduct regulator. Our focus remains on building confidence in the robust framework that supports the financial markets. We’ve built our capability, processes and expertise so we can administer the FMC Act over the long term.”
Further significant results highlighted in the report included achievements in enforcement, investigations, supervision, compliance and constructive engagement with the industry. Some of these were:
Enforcement activity including reaching final settlements in the civil cases over Strategic Finance Limited, Bridgecorp Limited, and Lombard Finance and Investments Limited. All settlements led to payments to investors, which is a priority for the FMA. Successful investigations leading to criminal convictions in the cases of David Ross and Hugh Hamilton.
Regulating and monitoring the activity of the NZX and publically listed firms; launching New Zealand’s first market manipulation case.
Undertaking extensive monitoring and supervision of authorised financial advisers, Qualifying Financial Entities, brokers, financial services firms, auditors, and accredited bodies, to ensure compliance with regulations. In many instances, the issues and themes emerging from this compliance work have been publicly reported to assist all regulated firms and professionals to improve standards of conduct and performance.
Establishing the requirements, processing applications and approving licenses for the first wave of equity crowd funding and peer-to-peer lending service providers.
Mr Everett said, “I want to acknowledge the contribution of the people working for the FMA as we delivered on our core responsibilities throughout the year, alongside the implementation of the new FMC Act. The FMA has taken on staff to work directly on implementing the FMC Act, including an extensive engagement programme with businesses and professionals within the sector. The FMA has delivered a huge programme of work and managed to do this within our budget.”
The FMA is steadily building its capability, in terms of its people, its core systems and processes. A major focus is on using market intelligence and insights to help set a risk-based strategy for delivering FMA’s regulatory role.
“We’ll be regulating more than 11,000 businesses, professionals, or savings and investment schemes – to varying degrees - from 1 December this year. We need to have systems that enable us to do our job, so that we can give those firms, professionals, and investors the support they anticipate.”
Mr Everett said, “We’re heading into a further two to three years of evolution within the financial services sector, as the demands of the new regulations bed-in. I’m confident the FMA is in a good position to lead that change and that the sector understands what we want to achieve.”
Read FMA's Annual report here.
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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 supervision of financial market participants and for enforcement of the FMC Act and other financial markets legislation.
This regulatory oversight includes:
Fund managers, KiwiSaver providers, superannuation schemes, the NZX, publicly listed firms and issuers, Qualifying Financial Entities, financial advisers, futures dealers, Discretionary Investment Managements Service providers, derivatives issuers, equity crowd funding platforms, peer-to-peer lending platforms, securities trustees and statutory supervisors, auditors of issuers and independent trustees.
The FMA implemented Phase 1 of the FMC on 1 April 2014 with Phase 2 due to be implemented from 1 December 2014.