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What to do, what to do …

Although compliance with the Financial Advice Code should be a given there are some missing pieces from the puzzle of compliance under the new regime.

Tuesday, October 8th 2019, 9:40AM

by Russell Hutchinson

Russell Hutchinson

Those are disclosure regulations and final licence conditions. Although they would both be useful, we are not without plenty of things to do. The FMA is sometimes exasperated at the industry for not focusing on what it does have to do now, while waiting for the parts not yet done – such as in this post from August.

So, if you want to get your teeth stuck into some of your licensing preparation work, look no further than the FMA’s take on corporate governance to help you prepare. These are three places to get stuck in: conduct, governance and compliance assurance.

The foundation for all discussions about conduct should probably be the FMA’s guide. You can find it here.

The FMA describes why it is so important:

“Conduct is at the core of the Financial Markets Conduct Act (FMC Act). The FMC Act sets new standards for conduct and adds weight to the FMA’s existing statutory mandate to monitor conduct, and compliance with financial markets legislation, in New Zealand’s financial markets.”

Now that financial advice law is part of the FMC structure, this applies to advisers too.

Although if you are confused about conduct, you must bear in mind that the guide itself offers two definitions: on page 7 – “At its core, good conduct means focusing on customers.” And on page 14 “Definitions: Good conduct: Good conduct is about doing the right thing by stakeholders: customers, investors, shareholders, employees and the public.”

But really the whole guide is about customers – search for stakeholders / investors and employees and you won’t find much – stakeholder is mentioned four times and two of them are in the definitions.

If that leaves you concerned for your other stakeholders, then do not worry, there are more resources for you. You should also read the FMA’s corporate governance handbook, which you can find here.

That offers advice on governance – this is the business of how an organisation is directed or controlled. When a business is just one person, this can seem like an awful lot of mucking around, but it is always worth remembering that no business is just one person. When you start to think about it, business can only happen when there are at least two people involved. We owe it to our customers to organise ourselves to be accountable for the decisions we make. The FMA is very keen on this, as without effective direction and control what does any compliance process mean? This is the operating system through which individual policies, procedures and actions must flow. The guide is intensely practical, and although geared up for larger businesses, every process can be right-sized, I believe, for your business.

The next leg of the information the FMA provides on how to meet its expectations is a guide to operating compliance assurance programmes. Start with the fact sheet at this link.

This is a guide to running, monitoring and reporting on compliance assurance programmes: the checks on the business that it is doing what it is supposed to do to meet code, conduct and conditions requirements.

The results of these checks are to be reported into the appropriate governance structure.

Tags: Code compliance FMA licensing regulation Russell Hutchinson

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