tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Friday, July 19th, 7:20PM

News

rss
Latest Headlines

Disclosure a tool, FMA says

Financial services providers are being told to ensure they disclose information such as staff product sales incentives in a way that helps customers, not just provides the business with legal protection.

Monday, October 19th 2015, 6:00AM 1 Comment

by Susan Edmunds

Liam Mason, the Financial Markets Authority’s director of regulation, spoke at a recent INFINZ conference. 

He said the traditional approach to disclosure had been the assumption that if all information was available to them, investors would be fairly armed and react rationally.

But no account was taken of customers’ natural biases, avoidances or behaviour.

Under the Financial Markets Conduct Act that has changed to make disclosure a tool for investors, not a liability cover for service providers.

He outlined what the regulator expects from firms’ disclosure.

He said the FMA expected boards and senior management would be able to ensure conduct standards were met and would know how their products and services were being sold.

“[And know] what the overall results of that are for investors and consumers; where outcomes for investors or consumers are less than anticipated, we expect firms will act to rectify that,” he said.

“Conduct risk” is a key factor to consider – the risk that conduct might contribute to poor outcomes for customers.

“For financial services firms, embedding a strong culture that puts customer interests at the heart of the business is crucial to ensuring conduct that benefits both the business and consumers,” Mason said.

He said boards and senior management would be asked how they knew their organisation was focused on customer outcomes.

John Berry, of Pathfinder Asset Management, said it would mean that processes around staff product sales incentives became a test of what is fair to customers.

He said product disclosure would move from "disclose absolutely everything and let the investor figure it out" to "disclose to appropriately inform the audience”.

“It sounds a lot more like they are building a stronger barrier at the top of the cliff rather than being a sheriff walking round at the bottom of the cliff surveying the damage.  A focus on provider conduct and investor outcomes is the right focus.”

Most boutique fund managers were already operating in that way, he said.

David Ireland, a partner at Kensington Swan, said Mason’s message was consistent with others from the FMA. “Whether participant experience of FMA practice and the FMC Regulations themselves actually reflect this stated approach is another matter.”

 

Tags: FMA

« RAM fight heats upLVR restrictions to be reviewed »

Special Offers

Comments from our readers

On 19 October 2015 at 9:31 am Brent Sheather said:
The key takeaway here is Mr Mason’s comment that disclosure doesn’t work (in the second and third paragraphs) and the warning that disclosure was not a liability cover for fund managers. This is good stuff from the FMA and consistent with research in the US which says disclosure is frequently a waste of time. That would certainly explain why NZ’ers buy funds with patently unfair performance fees.

Let’s hope the next steps from the FMA will include making it more difficult for investors to make dumb decisions, as has been suggested in the US.

Brent Sheather

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Weekly Wrap

Previous News
Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 ▼7.45 ▼7.09 ▼6.95
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - ▼6.85 ▼6.49 ▼6.35
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - ▼6.85 ▼6.49 ▼6.39
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 ▼7.45 ▼7.09 ▼6.99
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - ▼6.59 - -
Co-operative Bank - Owner Occ 8.40 ▼6.79 ▼6.49 ▼6.35
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 ▼7.29 ▼6.99 ▼6.85
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 ▼6.69 ▼6.35 ▼6.15
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 ▼7.75 ▼7.39 ▼7.19
Kiwibank - Offset 8.50 - - -
Kiwibank Special - ▼6.85 ▼6.49 ▼6.39
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 8.74 7.74 7.09 6.95
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 7.14 6.49 6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Lender Flt 1yr 2yr 3yr
Westpac 8.64 7.49 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 6.89 6.75 6.39
Median 8.64 7.14 6.82 6.44

Last updated: 19 July 2024 9:21am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com