The Financial Markets Authority (FMA) believes that new laws must be created to protect customers from banks, insurers, and market players.
FMA said that it cannot rely solely on banks, insurers, and market players to do what’s best for customers, so a new law is needed to regulate them.
Rob Everett, chief executive at FMA, commented that “bad things happen” when banks are not regulated.
“If the focus on that behaviour and the treatment of customers is allowed to come off, bad things happen. So that focus does need to be relentless, it needs to be consistent. That can’t be left to the industry to do for themselves,” Everett told RNZ.
The FMA regulated financial services and capital markets but soon widened its scope to banks and insurers following the conduct review it carried out with the Reserve Bank last year. It found little evidence of widespread misconduct but still saw insufficient action, especially in the life insurance sector.
The financial regulator has asked the government for more funding and the power to take immediate action against misconduct in the banking and insurance industries.
Everett believes the government will follow through and introduce a new law before the next general election.
“In the meantime, we will push as hard as we can on those sectors to try and make sure we put as much pressure on them as we can under the existing remit,” he concluded.