FMA acknowledges regulatory 'burden'
The Financial Markets Authority says it is concerned with how the burden of regulation is being felt by the financial services industry.
Friday, May 19th 2017, 6:00AM 
2 Comments
In an update, director of external communications and investor capability Paul Gregory said conduct regulation was a balancing act.
He said, on one side, the regulator had to consider the impact on the industry, including the cost of regulatory requirements.
On the other, it had to balance that against the benefit to the industry and the country as a whole of a well-regulated financial services sector.
“The ‘burden’ of regulation is an ongoing concern and certainly a conversation topic for the industry. Some burden is inherent within the regulation we’re required to implement. And some comes from how we choose to do our job. As the regulator we must be aware of both, but we focus on what we can control,” he said.
“There is also a difference between imposing unnecessary burden, and doing something which is simply unpopular. Risk is what separates them. Provided we are addressing a genuine risk of harm, we shouldn’t be overly concerned if those activities are not universally applauded. Changing our plans based on lack of popularity would make even less sense.”
Gregory said the FMA was working with others in the industry to be more efficient, and providing relief with exemptions where it was appropriate.
The FMA also offered tips for AFAs to get the most out of their professional development plans, which guide the CPD hours they are required to complete.
It said, when writing the plans, AFAs should personalise them and think strategically about the performance their businesses had offered over the past year, where they were confident and what they could do that might add value for their clients.
They should review the plan regularly, keep it simple - to just a few pages - and relevant. They should also identify any gaps in their competence, knowledge and skill and take action if they were relying on an old competence pathway that was no longer available.
They could do that by noting any training they needed to come up to the Code Standard 16 minimum level, the FMA said. "To do this, simply compare the learning outcomes for each of the relevant Unit Standards of the Components of the New Zealand Certificate in Financial Services (Level 5) with your current competency, knowledge and skills."
It said AFAs should also take care not to offer any services that they did not have the capability to provide.
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Comments from our readers
The GFC was 'hatched' from the largest and arguably one of the most influential economies on the planet.
Subsequently, 'regulation' was launched (in NZ) to 'help protect' the investing public, from supposedly the ravages of another GFC?
the fact remains that one of the most ultimate forms of regulation already existed back even beyond those recent GFC years, yet it was misused as claimed several colleagues.
It took the form of documents which made up a prospectus.
There were many directors of finance companies who were sent to jail, several cases may be warranted, many more were not?
The problem is still in existence, and is in the division known as the Trustees, none of who have been sent to prison, yet all of whom signed off, and supposedly were the overseers of all transactions within each relevant prospectus!
Virtually overnight, new 'jobs' were created by a government-led group with millions of dollars in their kitty, and whose main apparent role is to prosecute their members and obtain more money to be able to expand their 'process.
Yet they continue to fail by * employing known fraudsters *ex Australia....remember?) and blatant ponzi schemes such as Hibbs and of course the largest in NZ history, The (David) Ross scheme.
It would appear obvious to be investigating such huge scams, which do not have a prospectus (which give the perception of investor-protection), however, one would equally then wonder if the ultimate regulatory tool (prospectus) actually can provide required investor protection if the Trustees can get away 'scott free?' None of us can recall a Trustee being taken to task anywhere....can you/
Or do we continue to look the other way and 'scapegoat' (the majority) advisers as an easier way to put money into the coffers to in turn prosecute more and put more money in the coffers and let the big ponzi schemes carry on their business?
I've been thinking!
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Secondly, the all-singing, all-dancing FMCA still permits material non-disclosure of substantial on-going fees. Again illegal in the UK as well or will be shortly.
Thirdly, vertically integrated organisations are in NZ permitted to sell only their high-cost products and at the same time meet the FMA’s ridiculous definition of “putting clients’ interests first”. Again there is an unreasonable, unfair transfer of wealth from mum and dad to the investment sector. Again more informed regulation in Australia and the UK recognises this is a problem and is doing something about it.
All of these lapses in regulatory oversight permit behaviour which is at variance with the FMA’s overarching objective which is “promoting fair, efficient and transparent financial markets”.
I leave readers to speculate why such regulation or rather non-regulation is permitted in this country. Hint: Government has been captured by the beneficiaries of the non-regulation. Not rocket science.