1 Comment 1 Commentby Susan Edmunds
It has released its compliance focus report for this year, outlining its priority areas for monitoring.
Among them are how advisers build consumer trust, industry standards in general, the effectiveness of existing and new regimes, and KiwiSaver.
CEO Sean Hughes said it would give industry participants the chance to assess their activities and take steps to improve compliance.
“The document is not intended to be a complete list of all the work we will do but it outlines our priorities and overall regulatory approach. Priorities will evolve as we monitor financial markets and evaluate emerging risks but we’re anticipating that these themes will remain beyond 2013.”
The report says industry participants must build customers' trust by being fair and transparent in their dealings, and keeping customers' interests central to their activities.
It notes that low interest rates are pushing investors to look for higher yields. The FMA says what when a product has been designed to achieve higher yield, advisers must properly explain the product and any risks associated with it.
“Retirees are one group that may be affected by the search for higher yielding products, but are less able to recover from loss of capital. FMA expects participants to take into account the vulnerability of these customers when advising on, or delivering, financial products.”
The FMA says it expects industry participants to demonstrate behaviour that exceeds the bare minimum required, and to focus on ethics and integrity.
Advisers are encouraged to tell the FMA about any poor conduct on the part of any other industry participants.
It will look at securities exchanges and futures markets to ensure transparency. “FMA has conducted a number of inquiries into trading on registered securities exchanges, including some that revealed poor administrative proactive by substantial shareholders, directors and officers, resulting in delays in notifying the market of trading.”
It says visits to futures dealers have indicated some have poor compliance controls. And the FMA is concerned about a lack of focus on obligations to investors by some issuers and their directors.
It says advisers need to adapt to new regulatory regimes to get the benefits from them. A focus will be the Financial Markets Conduct Bill and the anti-money laundering legislation, both due this year.
Its fourth focus is KiwiSaver - the FMA says it has already taken a number of steps to raise standards in the market, and has issued warnings and taken action in relation to some sales practices.
"For many New Zealanders, KiwiSaver will be their first investment and will impact their future financial security."
FMA focus areas for KiwiSaver will be investments, unit pricing, disclosure, trustrees, advice and fees.
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Two of us advisers did just that and advised the FMA of behaviour of another adviser - we received a "thank you email" from the FMA. After hearing nothing more for a period of time, I emailed the writer and asked was our complaint justified, had they spoken to the adviser and what was the outcome? The FMA lady advised that none of that could be discussed with us! So I commented that even the Police get back to complainants and let them know the result of a complaint! She wasn't interested. So I won't be either in future - they can police the industry themselves.