Clare Bolingford, FMA executive director of regulatory delivery who is responsible for licensing and monitoring outlined the regulator’s near term strategy at the Financial Services Council Conference recenty.

With the Financial Markets Conduct Act coming up to its 10th year, the last decade has seen real signs of growing confidence and maturity in the investment management sector, she said.

There has been a 500% growth in KiwiSaver funds, surging interest in retail investment, and  investor confidence has reached 75% according to the watchdog’s latest investment sentiment survey. Having CoFI and  the new financial markets infrastructure in place, brings New Zealand more in line with international jurisdictions, said Bolingford.

With CoFI licensing now open she invited firms to begin considering applications now and get them in as early as possible. 

Next on the agenda

The first key priority is to develop a more outcomes-focused approach to supervision and monitoring. Later this year the FMA will share a proposed set of consumer and market outcomes for consultation and feedback.

Bolingford said a review of the 2017 conduct guide found it is still fit for purpose and the principals of culture, controls, capability, conflicts, and communication should still be a consistent compass for financial services providers.

The second strategic priority is to better understand market drivers, and provider and consumer behaviour. Bolingford said the FMA needs evidence, insights and data from firms, and other regulators.

“We will then have an evidence base to decide where to focus our discretionary effort; a feedback loop to evaluate the impact of those actions; and core intelligence data to improve our practice.”

Responding to threats and harms on the FMA’s perimeter - the borderline of its formal powers - is the third strategic priority. 

“Most obviously this perimeter boundary is where we see criminal activity that causes harm to the public and erodes confidence in the system – this is why we are so alert to scams and frauds.”

Bolingford said ensuring it is rigorously policed, supports confidence across the board and recognises the efforts firms have invested in complying with their obligations. “No-one wants to see scammers undermining public confidence in a system designed to protect them.”

Bolingford said harm that originates overseas stretches the FMA to the limits of its domestic powers and jurisdiction.  “Our recent stop order against Validus shows, I hope, that we will do all we can to meet this challenge.  We were not surprised that Validus appealed against our decision. We were prepared for this and have welcomed the court’s judgement on the use of our powers. We hope our action sends a signal here and abroad.”

Bolingford says enforcement alone will not be enough and the industry can expect to hear more from the FMA in the months ahead. She asked for the sector to share its alerts and warnings, and promote FMA resources to help raise awareness among the public.

Back inside the perimeter, deterring misleading value propositions – the FMA’s fourth strategic priority – will see it continue to assess inappropriate advertising, value for money, poor disclosure, and increasingly under CoFI, the design and distribution of everyday financial products.

Meanwhile National’s Commerce and Consumer Affairs spokesman Andrew Bayly has said he will scrap CoFI if his party is voted into Government in the October election.