Call for more scrutiny of regulators
Financial services providers are becoming ever more familiar with the Financial Markets Authority in its industry oversight role – but who is keeping an eye on the regulators?
Monday, August 15th 2016, 5:59AM 
2 Comments
That’s the question being asked by one international financial services consultant, now based in New Zealand, who says this country’s financial services regulation needs to be more stringently scrutinised.
Geof Mortlock is a New Zealand financial sector regulation specialist, who has worked with the IMF, the World Bank, Financial Stability Institute and KPMG.
He said New Zealand’s approach to financial services regulation was still light-handed compared to many countries’ – but that its oversight of its regulators was also more relaxed.
“I would put emphasis on the need for the FMA to be subject to more scrutiny from Treasury and MBIE and be subject to more KPIs in terms of its own performance,” he said.
Mortlock said there should also be a cost-benefit analysis applied to its proposals.
“That’s one thing that I think we fail in quite badly. There has been some cost-benefit assessment but it’s been pretty light-handed stuff, unlike Australia, where it’s much stronger. We really do lack quality cost-benefit analysis and we need to strengthen that area very much.”
He said an example of that was the Financial Advisers Act. He said it should lead to a real focus on trimming back excessive regulatory intrusion on the sector, and some of the unnecessary burdens that increased advisers’ bureaucratic requirements but did not lead to any improvement in the quality of their advice.
“We also need to strengthen the external scrutiny of regulators,” he said. “I don’t think they are accountable enough at the moment,” he said.
“The performance monitoring of the regulators is very light-handed and it doesn’t get into a true performance assessment form of assessment, that’s what it needs. Not someone to regulate the regulators per se, but someone to exercise much greater scrutiny of what the regulators do and assess them against benchmarks. At the moment, not much of that happens.”
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While the empire of the FMA grows, and their cash burn increases, the market and Govt are being told more money is needed to serve the growing needs of the FMA.
It sounds like we need some more accountability from the regulator. The advisory industry is being regulated by Guidance Notes, and the country as a whole needs to be seeing if we are in fact getting efficiency transparency and good value from this. I'm surprised at the lack of comments on this article.
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Anecdotal evidence that regulation needs fixing was provided by someone from the Bankers Association the other day who said, on Radio NZ, words to the effect that the banks are very happy with current regulation. Well they would be wouldn’t they.