Hughes has some regrets

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FMA chief executive Sean Hughes says he wishes he had had more time to spend meeting investors.

Thursday, July 11th 2013, 5:37PM 6 Comments

by Susan Edmunds

It was announced yesterday that he will not seek another term in the role. A replacement appointment is expected before the end of the year.

Hughes said he was looking forward to reconnecting with his wife and sons, who are in Melbourne. With the Financial Markets Conduct Act looming, Hughes said the time came that he had to decide whether he wanted to stay on and tackle a new set of challenges, or pass the FMA on to someone with a fresh set of eyes.  “I decided that this is the end of the line for me. There’s no bad blood.”

He said leading the FMA had been a great opportunity.  It had been a very welcoming environment, and he had worked with a very enthusiastic team. “I’ve very humbled to have had this chance and I hope I’ve done a good enough job to be remembered well.”

The financial marketplace had an appetite for something bold, courageous and different, he said. “I hope we delivered that.”

But he said while his time was taken up with a lot of the “foundation-building” work of the organisation, it would have been valuable to have been able to get out and meet “mum and dad” investors. “We were set up to build confidence. We have to have investors who are willing to come in and part with their cash.”

He said he didn’t have enough time to discuss their anxieties with them and encourage them to return to investment markets.

The Ross Asset Management investors group said Hughes was a casualty of the RAM debacle. “The failure of the authorities to act on written warnings about RAM three years ago, and the licencing of Ross by  the FMA as an Authorised Financial Adviser without adequate due diligence, speak for themselves.”

Hughes said he had a lot of sympathy for the Ross investors. “But they’re very quick to point the finger of blame at everyone else. They should think long and hard about their decision making and how they came to be in the position they are in.”

Hughes said whoever was his successor should have had experience in the financial markets. “The FMA needs people who understand how markets work, to retain its relevance and immediacy.”

There are no job offers on the table. “I just want to draw breath and think about what I can add value to.”

FSC reaction: Sorry to see Sean Hughes go

“We will be sorry to see him go and have valued his support and energy in leading the market watchdog so successfully”, said Financial Services Council CEO, Peter Neilson.

The Financial Services Council expressed its appreciation of the Financial Markets Authority chief executive, Sean Hughes, who has announced that he won’t seek a second term in charge of the market watchdog.

“It is unfortunate for New Zealand and our financial markets that Sean Hughes has decided not to renew his contract to take the FMA through the implementation of the Financial Markets Conduct Act.”

“Sean brought to New Zealand his experience from more regulated environment.  His work to improve investor confidence and financial literacy has been very much appreciated by those in the sector that see honesty and transparency as fundamental to the success of New Zealand and the financial services industry.  We wish him well for his future career and will be very sorry to see him leave at the end of this year.  In his time here Sean Hughes has made a very big difference.”

RAM Investors Group: Is FMA CEO quitting because of RAM?

We must wonder if Mr Hughes is in fact a casualty of the Ross Asset Management (RAM) debacle.

The FMA under Mr Hughes has failed to build confidence in the NZ financial markets, or the FMA itself. The failure of the authorities to act on written warnings about RAM three years ago, and the licencing of Mr Ross by the FMA as an Authorised Financial Adviser without adequate due diligence, speak for themselves. The FMA has failed to have proper law in place to unwind Ponzi schemes and protect the property rights of investors, despite Ponzi schemes being embarrassingly common in New Zealand.

Mr Hughes repeated attacks on RAM investors implying it was their fault have not been appreciated. The FMA had the regulatory power to do proper due diligence on RAM, the investors did not.

Mr Hughes may have fallen on his sword. It remains incumbent on the FMA and the government to provide investors with a fair and just resolution of the RAM disaster.

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