New financial conduct report addresses law reform advocacy plans

Barrass added that the FMA intends “to promote and facilitate the development of fair, efficient and transparent financial markets, and to promote the confident and informed participation of businesses, investors and consumers in financial markets.” 

According to Barrass, the FMA’s new report seeks to: 

• ensure transparency, certainty, and better engagement with the financial industry and stakeholders 
• identify regulatory priorities, risks, and opportunities over the year ahead across the sectors regulated by the FMA 
• address the regulator’s plans for tackling these key focus areas 
• offer context and reasoning for the FMA’s priorities 
• state the motivations behind the regulator’s efforts 
• prepare for emerging risks and opportunities like virtual assets and tokenisation 

“We are publishing this FCR in the context of an uncertain economic outlook, geopolitical changes, financial pressure on households and businesses, and an expanding regulatory remit for the FMA,” Barrass said. 

Focus areas

According to Barrass, the FMA’s focus areas include: 

• helping consumers comprehend how to make complaints 
• ensuring industry players respond quickly to prevent more harm and offer timely remediation 
• protecting clients’ money and property to promote confidence in financial markets 
• addressing scam activities originating from New Zealand to keep consumers safe 
• issuing public warnings emphasising the high incidence of misconduct 

In the media release, Barrass stressed that investment scams have increasingly been impacting New Zealand consumers and growing in terms of complexity and volume. 

Regarding misleading disclosures by wholesale insurers, another regulatory priority, the report said: “To clarify the current law, we have filed a case stated procedure with the High Court to seek determination on the interpretation and application of the law about the use, confirmation and acceptance of eligible investor certificates in the wholesale investment sector.” 

According to Barrass, examples of the FMA’s efforts to promote innovation and growth in financial markets include the implementation of a single conduct licence and a regulatory sandbox pilot for a small group of fintech companies. 

In the media release, Barrass added that supporting companies as they test new products and services within a controlled environment will: 

• assist the FMA in understanding how the country’s laws may hamper innovation 
• help companies find ways to operate beyond the regulatory perimeter 
• improve consumers’ experience of financial services 
• speed up consumers’ access to new offerings 

According to the report, maintaining an open dialogue with the financial industry will help the FMA respond swiftly, as needed, to adjust rules and licence conditions and pursue legal reforms seeking to tackle unnecessary regulatory burden or better safeguard consumers. 

In the media release, Barrass urged boards, executives, and leaders involved in the financial sector to review the report to gain insights on possible ways to attain better outcomes for markets and consumers. 

“We anticipate the FCR will become an annual go-to reference point for the FMA, stakeholders and media to understand where it is focused, and what it aims to achieve for the year ahead,” Barrass said in the FMA’s media release. 

As a regulator, the FMA provides licensing, monitoring, and guidance to the financial sector; enforces the relevant laws; and seeks to promote consumers’ confidence in the industry.