UK regulator likes NZ model

The United Kingdoms Financial Services Authority is casting an eye over New Zealand’s moves to improve financial literacy.

Thursday, March 3rd 2005, 6:37AM

by Rob Hosking

The FSA’s Shaun Mundy, who is in Wellington this week, says the FSA is in the process of setting up a financial strategy for life.

He likes the Retirement Commission’s “Sorted” website and its emphasis on managing finances throughout life, rather than just focussing on retirement planning.

The FSA, an industry-funded body set up under UK statute, is charged with both regulating the financial services industry as well as improving public knowledge of the financial system.

Encouraging people to save is linked to ensuring savers have confidence in the financial system, he says, so the regulatory and education roles are closely linked.

The FSA was the eventual outcome of a move to tighter regulation in the UK that began in the mid-1980s.

Financial planners had to be registered – but as firms, not as individuals. The market was regulated by a mix of different organisations – government agencies and industry bodies - under laws that came into effect in 1987.

Those included a compliance process, an ombudsman, and a compensation fund, paid for by industry levies.

However the industry found having a number of different bodies didn’t work and the number had narrowed to three by the time Tony Blair’s Labour government was elected in 1987.

”You can get differences when you have different bodies,” he says. “You still get those tensions when you have a single organisation, but you have systems to resolve them.”

Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.

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