FMA says it will do better with FMCA than AML
Wednesday, September 18th 2013, 6:05AM
by Susan Edmunds
Advisers will get a lot more notice of what is expected of them under the Financial Markets Conduct Bill than they got when Anti-Money Laundering legislation was implemented.
The regulator was criticised for only finalising regulations just before the AML legislation was due to be implemented.
The FMA said it was not planning a repeat performance for the latest Act.
At a stakeholder briefing in Auckland yesterday, Sue Brown, the FMA’s head of strategy, innovation and engagement, said there would be more warning about what was expected under the FMCA. The FMA is working with the Ministry of Business, Innovation and Employment to draft rules.
Chairman Simon Allen said the legislation defined a new era in the development of New Zealand’s financial markets.
Brown said it would mean an extended period of change and growth for the marketplace.
FMA head of primary regulatory operations Simone Robbers said the FMA knew that investor confidence and participation in capital markets was low because of finance company collapse and the global financial crisis.
She said there were issues with confidence in financial advisers because of high-profile cases such as the Ross Asset Management collapse. The FMA was working hard to restore trust and the FMCA was a key part of that.
She said the criminal liability regime had been delivering suboptimal outcomes for investors because it made directors too risk averse.
The FMCA changes the system from predominantly a criminal-based regime to one of civil liability.
It will now be clear that issues under the FMCA will be dealt with by the FMA. Brown said the move to focus mostly on issues where there was clear recklessness would allow directors more freedom to focus on their business. “That’s a key change… it will allow them to focus on true due diligence, not legal due diligence.”
The FMCA will be implemented in two tranches, in April and December next year. In April, the FMA will open its doors for several of its new roles, including licensing and its DIMS oversight responsibilities, as well as policing fair dealing provisions. By December, the whole Act will be in force, when new governance standards apply and there are new ways to raise capital.
The draft FMC regulations will go out for feedback in October and there will be a series of FMC labs involving face-to-face feedback from the market.
Changes to disclosure requirements come into effect next December and there will be a staggered period over which institutions such as managed funds investors can move towards the new, shorter PDS.
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