The Financial Markets Authority – Te Mana Tātai Hokohoko (FMA) of New Zealand has recently initiated a consultation phase to discuss its strategy towards outcomes-focused regulation in the financial services sector.
According to a news release, this move aims to ensure fair results for both consumers and markets. The FMA is actively seeking input from various stakeholders to refine this approach.
The core of this approach, the FMA said, lies in prioritising the tangible results that benefit consumers and markets, rather than merely adhering to procedural compliance. The regulator’s focus will also extend beyond conventional rule-following to encompass the actual outcomes of financial activities.
This strategic shift does not entail the introduction of new rules or regulations. Since the release of its “Guide to the FMA’s view of conduct” in 2017, the FMA said that it has consistently expected firms to deliver fair outcomes for clients. The current consultation represents a further step in guiding the industry towards achieving these objectives.
Key outcomes under consideration include ensuring consumers have access to suitable products and services, providing consumers with beneficial information for informed decision-making, assuring fair value for money, fostering trust in providers to act in the best interests of consumers, and ensuring quality ongoing care. Additionally, the FMA aims to promote integrity and transparency in markets, supporting their trustworthiness, and to encourage sustainable innovation and growth within these markets.
The FMA also outlined its expectations for providers of financial products and services to take responsibility for these outcomes, integrating considerations of governance, leadership, management, and operations to effectively deliver these results. This approach seeks to establish consistency and clarity in the FMA's objectives, making its vision more accessible and practical for the financial sector.
This consultation phase marks a significant step in aligning the operational practices of financial service providers with the broader goals of consumer protection and market integrity.
“We will always be a risk-based regulator, able to use a range of tools to respond proportionately to the harms and misconduct we identify,” said Liam Mason, FMA general counsel and executive director for evaluation and oversight. “We believe that beginning our conversations with firms based on the outcomes we want to see, will help prevent harm in the first place. As we become a more outcomes focused regulator, this will require a shift in culture and mindset from us and firms to think about the results we want and have a shared interest in delivering for New Zealanders. The first step in this shift is the consultation, and we will be engaging and listening to all of our stakeholders over the next few months.”
As part of its campaign for Fraud Awareness Week 2023, the regulator also sounded off on investment scams, urging Kiwis to exercise more caution as over 1,300 complaints have been lodged with the FMA, resulting in 373 warnings issued against these fraudulent activities.
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