FMA gets 'good' report card

Industry participants are giving the Financial Markets Authority a solid pass mark for its first two years of operation.

Friday, May 3rd 2013, 6:00AM

by Susan Edmunds

The FMA turned two on Wednesday.

Commerce Minister Craig Foss said the FMA had worked to rebuild investor confidence and used its powers to pursue misconduct in the financial markets.

“The rules are being made clearer and those who break the rules will be held to account as the government continues to progress financial markets reform. The Financial Markets Conduct Bill is the next essential piece of legislation to help restore confidence in the sector and grow our capital markets,” he said.

Barry Read, of IDS, which helps financial advisers meet compliance requirements, said the FMA had provided the industry with a good insight into how they would apply the principles of the laws and regulations they were tasked with looking after.

He said monitoring had been pragmatic and helpful and the FMA had shown diligence in dealing with issues and complaints.

Read said what was missing was promotion of the good things financial advisers did.

David Whyte, of financial advice consulting firm DCW Management, said the FMA had found a good balance between conflict and collaboration with the industry.

But he said the FMA should take more action on the regulation governing the industry and take the lead, suggesting what could make it more effective.

“The FMA has been there two years now, they need to stand up and say the legislation is effective or ineffective. These guys are charged with implementing it, they should be heading the debate.”

But he said the FMA was probably still going through the bedding down phase and would find its feet.

“Overall, their report card would come out as good. They could do better but it’s a wee bit early to pass negative judgement on them. There’s been a lifting of focus, which is positive.”

He said: "More transparency, discussion and awareness has to be a positive thing. There's no reason why the regulation shouldn't be driving that."

Whyte said the FMA should now focus on more frameworks to help the market to operate effectively.

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