Guide to good conduct

In a wide-ranging submission, a Joint Advocacy Group of INFINZ and the CFA Society says that while the Guidance is a "valuable tool" for market participants in framing their compliance and delivery programmes, and in engaging with the FMA, it becomes problematic where it calls for a 'demonstration' of a range of matters such as those embodied in the Good conduct in practice section.

According to the JAG submission, 'There is a risk that these are interpreted as amounting to prescription of specific outputs or processes, which would not be consistent with the stated aims of the Guidance or in many cases with the provisions and overall scheme of the FMCA.'  

The FMA has repeatedly emphasised that the guide was never intended to be a checklist or something that laid out required processes to be followed by firms. However the JAG says this is difficult to reconcile with the fact that the FMA's expectations are expressed as requiring demonstration - in the sense of evidence of compliance.

"We submit that they should be appropriately anchored in a legislative standard or rule, in order to avoid potential inconsistency and confusion and to respect choices made by lawmakers"

The JAG submission says that the concept of 'demonstrating' relevant matters "is pervasive" in the Guidance, and it is concerned "that this takes the Guidance away from its stipulated basis in principles toward being, in potential effect if not in intent, a prescription of processes or outputs."

To avoid any "confusion or over-reach" in terms of its stated aims, the JAG says that some relatively straightforward improvements could clarify its intent, as follows;