FMA's workload increasing

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The Financial Markets Authority expects to be doing more with less over the next four years, its latest Statement of Intent reveals.

Wednesday, June 25th 2014, 6:00AM 2 Comments

The regulator has outlined its direction for the period between 2014 and 2018.  It describes the coming years as a period of transition with a significant growth in the scope and depth of regulation of New Zealand financial markets, particularly due to the introduction of the Financial Markets Conduct Act.

But the regulator says while its scope of operation and mandate are getting bigger, its bank account is not and it expects to face increasing financial challenges.

When the FMA was established, it had access to funding for transitional costs. That funding is no longer available.

The regulator said because of the burden of implementing the FMC, it forecast small deficits in each of the four years covered by the statement of intent.

“The widened scope and discretionary powers are both welcomed and challenging as we implement the new legislation while needing to maintain the current regimes until they are phased out,” the report said.

The FMA said it would need to prioritise its work to address conduct that posed the most harm.

“We have concentrated on accessing better information about market activities through regulatory reporting by participants, surveillance and monitoring activities, complaints and tip-offs. FMA is still reliant on hearing from market participants about potential misconduct and harm in the market. Lack of willingness to report misconduct poses a risk to our effectiveness and to the market.”

It would continue to consult with participants before any significant change.

“We will provide guidance where we believe important aspects of market participants’ direct responsibilities are not well understood or where standards of market conduct could be improved… FMA will be transparent and proactive in our approach when dealing with compliance issues, and prioritise those that present the greatest likelihood of harm to the functioning of fair, efficient, and transparent financial markets. Where we identify a possible breach of a participant’s responsibilities, we will act in a timely, effective and proportionate manner.”

It said it would work with the Code Committee to maintain and update the Code of Professional Conduct for Authorised Financial Advisers.

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