MR No. 2016 – 22
28 July 2016
The Financial Markets Authority (FMA) has released a guide to how it will examine whether financial services providers are demonstrating good conduct under the Financial Markets Conduct Act (FMC Act). The guide is open for consultation today.
The conduct guide describes for financial service providers how conduct will be the FMA’s ‘lens’, through which it will examine what providers do, how they do it, and how that translates to what their customers experience.
Conduct is at the core of the FMC Act, as good conduct is vital to fair, efficient and transparent financial markets. A mandate to focus on conduct shifts the FMA’s emphasis from compliance with regulations, including disclosure – both of which remain necessary, but not sufficient for good conduct – to assessing whether providers can show that they consistently and purposely deliver good outcomes to their customers.
Rob Everett, Chief Executive said “The guide is not a checklist or a manual. It is principles-based guidance about how we view conduct. It will inform how we license, supervise, monitor and enforce. It will affect, for example, how we consider incentive structures and customer complaints.”
“We draw a strong link between good conduct and good business. So we hope senior leadership of providers will find this guide useful when considering what they do, how they do it, and whether they need to change anything so that they can show us how they demonstrate good conduct,” Mr Everett said.
The FMA is seeking feedback from providers licensed under the F MC Act and also welcomes submissions from others in the financial services industry.
Mr Everett said: “Conduct is a debate but also a core part of how we plan to operate. So we are particularly interested to hear providers’ views on whether the guide is a useful contribution to the debate; and whether it also makes sense on a practical level.”
A copy of the guide and submission form can be seen here. Given the importance of the subject matter, the FMA has decided a longer consultation period is appropriate so submissions will be accepted until 31 October.
Editor’s information – A JPG of the Good conduct profile framework can be supplied.
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