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14pc of inquiries about advisers, FMA says

The number of financial adviser inquiries made to the Financial Markets Authority is steady year-on-year, the regulator's latest annual report shows.

Thursday, September 28th 2017, 6:00AM 4 Comments

The report for the financial year ended June 30 showed that 14% of its inquiries in the 2016/2017 and in the 2015/2016 year related to the Financial Advisers Act.

There were 436 in the most recent year.

That ranked below inquiries relating to the Financial Markets Conduct Act and general FMA processes.

Chairman Murray Jack said, during the year, the FMA had reviewed its strategic planning to make sure its new increased funding was directed to its key areas of focus.

“In addition to feedback from those we regulate, this review was also informed by the IMF assessment and Deloitte’s evaluation of our effectiveness and efficiency.”

The FMA said it would release the findings of its report into replacement insurance business by the end of this year.

FMA chief executive Rob Everett said a key development in the year had been the move to set conduct expectations for the industry.

“We have outlined our expectations for industry conduct. We are committed to contributing to high standards of behaviour. Therefore we expect a healthy debate – and sometimes resistance – about the influence we want to exert on how providers engage with their customers. We encourage, guide, and occasionally compel, providers and intermediaries to think about how they are serving their customers. We also want to encourage and help investors to make well-informed decisions. We must work on both sides of the fence to create a safe and more transparent environment."

The report also noted the FMA had completed its court action against Mark Warminger and the licensing of regulated services in the past year.

Meanwhile, it is advertising for a new board member, with significant background in economics and regulatory systems "as they relate to financial markets".

It said the candidate would need to have extensive governance experience, a clear sense of public accountability and capability to provide intellectual and strategic leadership.

Board members are paid $31,620 a year and $1580 a day for divisional preparation and meetings.

 

 

Tags: conduct financial advisers Financial Advisers Act Financial Markets Conduct Act FMA regulation Rob Everett

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Comments from our readers

On 28 September 2017 at 9:25 am Brent Sheather said:
I think any reasonable person would take exception to Rob Everett’s comment that “we are committed to contributing to higher standards of behaviour”. That might be true overall as regards the retail advisory space but Mr Everett made it very clear with his infamous “polo shirt” comment that the FMA’s expectations of behaviour are less “higher” for vertically integrated providers. He made it clear with that comment, that financial providers who choose to only sell their own high cost products are doing the right thing, which a reasonable person would not buy, that that low standard of behaviour is okay with the FMA and meets the test of putting clients’ interests first. That sort of double standard not only looks wrong to any person with average intelligence it also looks wrong to the regulator in the UK who in their recent Threat Analysis highlighted vertically integrated organisations and the related potential for conflicted advice as an issue they need to do something about.

The fake news in the FMA annual report continues….. “we also want to encourage and help investors to make well informed decisions.” Mr Everett might have added...”however we are not prepared to require fund managers to disclose total expenses incurred…. rather we will muddy the waters further by requiring them to also produce the dollar amounts of fees paid” …..(which is confusing and of no use to anybody). “Furthermore whilst we publicly say that fees must be fair there is no way in the world we are going to upset anybody by defining what fair means” (either because we don’t know or don’t want to upset anybody). “In addition although we publicly say we want to encourage investors to make well informed decisions we are not prepared to publicly challenge our fund manager friends who consistently do their very best to misinform investors”.

The Donald Trump fake news award for this week therefore goes to the Financial Markets Authority.

A footnote to this story is that yesterday I got an email from a client who copied an email to her from a Senior Executive at the CFFC who told her “from March 2018 the annual KiwiSaver statement of fees has to include all fees including transaction costs”. I challenged him on this and he replied “my apologies for my misunderstanding. Sorry for the confusion”.

If a Senior Executive of the Commission for Financial Capability doesn’t know what’s going on as regards fees what’s the position as regards the knowledge of the average retail investor and how on earth can the FMA think they are doing a good job in respect of “helping investors to make well informed decisions”.
On 28 September 2017 at 10:52 am R1 said:
“In addition to feedback from those we regulate, this review was also informed by the IMF assessment and Deloitte’s evaluation of our effectiveness and efficiency.”

Where the hell is the investor in all this?? Why is the FMA not informed by investors? Who are they there for? Perhaps if you don't ask those you are there to protect from dodgy FSPs' behaviour then you won't get the information that would upset your current paymasters or future employers.

In a proper regulatory environment the FMA board would have a significant representation of investors' interests rather than overrepresentation of the people they need to be protected from. Then we might have an FMA management that focuses its energy on putting investors' interests first.
On 28 September 2017 at 3:50 pm NormanStacey said:
A little strident, but not unfair Brent. Sadly many, and perhaps all regulators suffer from provider capture over time. The CFFC has had more time.
Investors and Advisors have bee & remain under-represented in the FMA's governance. Unsurprisingly, it shows in the FMA's behaviour & focus.
On 2 October 2017 at 7:20 pm Steven Popodopolus said:
Ominous soundbite in there for Insurance advisors. Here comes maximum upfront commissions legislated under the guise of reduced premiums.

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