Rob Everett spoke to the Infinz AGM in Auckland yesterday, at which he said the regulator would be setting high expectations of conduct for the industry.

He said conduct regulation in financial services was new to New Zealand, but that there was a steadily increasing focus on quality conduct, to build consumer trust, as a result of the Financial Markets Conduct Act.

Everett said the FMA had identified priority areas to tackle, where there was the potential for low-quality conduct and lesser-quality outcomes.

They included variable quality of advice to consumers and investors, including among QFEs, AFAs sand RFAs, constraints on access to advice for consumers and investors, including when making KiwiSaver decisions, and shortcomings in investors’ understanding of products.

“Areas you should anticipate us focussing on – under this priority – are practices that encourage churn or switching, including in KiwiSaver and insurance… RFA and AFA conduct… and remuneration arrangements including commissions,” Everett said.

The FMA could also see risks in distribution models that exacerbated conflicts, incentives to mis-sell or churn products including conflicted remuneration arrangements, and poor quality disclosure about fee sand risks.  Everett said: “Areas you should anticipate us focussing on – under this priority – are distribution models that lead to conflicted advice and that could also lead to mis-selling. Fee-driven conduct that leads to lesser-quality outcomes for investors. And ensuring systems that provide the proper custody of assets.”

Everett said conduct and consumer confidence should be seen as one and the same by those operating in the financial markets.  

"Conduct and confidence are a two-way contingency. You can’t get one without the other. That’s the opportunity we are presented with in New Zealand as we enter 2015. Financial services and capital markets where we can rely on quality conduct, in order to provide confidence for all of us.“