Hughes, who is preparing to leave his post with the regulator, spoke at the Workplace Savings NZ forum in Wellington.

He said the FMA's key goal was to restore investor trust and confidence in the sector, which had been eroded by a series of failures over recent decades that had left some people approaching retirement with very little savings left.

People were investing in property because it was perceived as safer, he said.

In the 119 weeks the FMA had been in existence, it had been a champion for change, he said. "With that came the desire to acknowledge the fact that New Zealand and New Zealanders have been poorly served... So to investors who have been left out of pocket, or been betrayed by the failings of market participants, I want to say I am sorry. You are entitled to feel let down and aggrieved... I will not walk away from the accountability that followed me into my role."

The FMA must accept responsibility for what happened on its watch or in parts of the market where it could or should have influence, he said.

But he said the regulator had to be forward-looking, and had taken the necessary steps to bring the guilty to account. "And we have been successful on every occasion."

It would continue to have a focus on willing, assisted compliance, he said. "Constantly waving sticks at people shows little respect. Dangling carrots is more effective."

The FMA was not keen on "tick box" regulation, he said, or regulation based on judgement.  "It should not be about 'is this sale legal' but 'is the outcome right for the customers'."

Hughes said the continuing delivery of the licensing regime for financial advisers was not without problems and it was not meant to be the "great wall of China".  But he said a mix of licensing, more professionalism and higher ethical standards would lift advisers out if a cloud of mistrust.

The Financial Markets Conduct Bill would mean another chance to modernise and lift standards. Hughes said the FMA was tired of whinging about regulation and market participants needed to adapt of leave the industry.  He said it was vital that work was done for the benefit of future generations.

New Zealand and Australia should strive to have integrated financial services markets, he said, with local rules as the exceptions rather than the norm.