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FMA boss predicts cultural shift

The Financial Markets Authority is expecting a change in the way providers do business under the new Financial Markets Conduct Act.

Thursday, May 1st 2014, 10:11AM

The FMA’s new chief executive spoke at the parliamentary and industry Ombudsmen’s conference in Wellington today.

He said there were positive signs that public confidence in New Zealand’s financial markets was improving.

“However, service providers and regulators need to work harder to improve consumers’ understanding of how complaints are heard and resolved by industry ombudsmen or alternative dispute resolution schemes. Consumers need to know what they are entitled to and what recourse they have through dispute resolution schemes, if they feel things have gone wrong.”

He said the FMA was anticipating a shift in the way providers conducted themselves.

“The Financial Markets Conduct Act brings in a new fair dealing provision – a catch-all provision that applies across all financial services – that prohibits misleading or deceptive conduct, and false or misleading representations.

“I anticipate over the next five years this will promote a major cultural shift in financial services. These fair dealing provisions will transform the conduct of professionals. We’re saying to the industry, ‘The bottom line is, this act requires you to put the concerns of the consumer first. Always.’”

He said truthfulness was a minimum requirement. The Act would require financial services providers to go further.

He said: “[They need to ask] themselves questions like: ‘Is this really the right product or service for this client?’ ‘Does this client really understand the downside risk and what that might mean to them in a material sense if that risk comes to book?’ ‘Should I be advising this client on other actions they can take, such as risk mitigation?’”

Everett said a Ministry of Business, Innovation and Employment survey showed  60% of financial services providers were unsure of the value of being part of an external dispute resolution service.

“We have to build confidence in the [disputes resolution] schemes among providers so that consumers can enjoy their benefits.”

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