FMA to host forums on COFI implementation
The Financial Markets Authority (FMA) will next month begin consulting with insurers and financial advisers in a series of forums to find what the regulator calls “an industry-led solution” to the way the Financial Markets (Conduct of Institutions) Bill is implemented.
Wednesday, April 6th 2022, 7:52AM 
7 Comments
by Jenni McManus
Clare Bolingford, the FMA’s Director of Banking and Insurance, says guidance will be published to clarify the FMA’s expectations of providers and intermediaries but it first wants to collaborate with the sector to ensure COFI’s objectives were met and that there are “no unintended consequences”.
Bolingford was taking part in a panel discussion organised by the Financial Services Council.
“We have a real opportunity here to deliver regulation that’s proportionate to the industry and supports you in delivering the overarching principle of treating customers fairly,” she said.
But for the legislation to work effectively, a change of mindset will be needed. The COFI regime is intended to cover the whole relationship with the customer rather than just focusing on the point of sale, Bolingford says.
“It means paying due regard to the customer’s interests – putting the customer at the forefront. Firms will need to have a whole-of -company strategy about how they think about the customer.
“It means moving away from a legalistic approach to compliance with rules to a focus on good conduct risk management to deliver fair treatment. It means checking how products are performing for customers rather than assuming they work because it fits with the commercial strategy. It means communicating clearly and regularly with customers and acting quickly of something goes wrong.”
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Bolingford said intermediaries were “vitally important” for giving customers access to financial products and services.
“Intermediated distribution channels exist to service diverse market needs and customers can get improved outcomes through great quality advice.” But she said the market dynamic between providers and intermediaries did not always facilitate fair treatment of customers and to achieve the right outcomes, responsibility had to be shared between the provider and an intermediary – as has been set out in the latest Cabinet guidance on the COFI bill.
“’Shared’ means both having the customer at the heart of their respective businesses,” Bolingford said. It did not mean compromising the commercially and legally independent relationship between providers and their intermediatires.
The FMA also wants to avoid unintended and unnecessary consequences in implementing the new legislation. Bolingford said she had heard in the banking sector that financial advisers were being asked to undertake audits at the adviser’s cost. There was no standardisation around these audits and some advisers had been required to do several.
The FMA, she said, did not want to add cost and burden to the industry without any obvious benefit to the customer.
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The part of the article that says it all for me is "The FMA, she said, did not want to add cost and burden to the industry without any obvious benefit to the customer." Read that as "if FMA thinks there is benefit to the customer then FMA will gladly add cost and burden to the Advisor"
Made my exit 3 years ago. Luckily at the end of my 50 year career
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The FMA, she said, did not want to add cost and burden to the industry without any obvious benefit to the customer.
Interesting timing to say such things, now that we have the new regulatory regime, new levies, compliance, audits, reporting, licensing, CPD and Code of Conduct requirements.
My pick is the manufacturers lawyers will advise them to treat the law as written as a bare minimum, and out of caution, go much harder - much like AML/CFT has turned out.
Or has a lot of the market morphed into tied agents and as a result all those supervisors except FMA are the same?
If individual advisers have their hands tied from commenting here on GR, where are their Principals and/or their professional bodies?
Thats a big buzz off. It was an oversight and unintended oversight that i believe is being looked into "seriously" now.
I also know the FMA have spoken to MBIE regarding this as it was not intended to have suppliers feel they can monitor us.
As for this, better client outcome jargon, what the hell do they think we doing before?
You appear to be well informed on what FMA and MBIE intended at all times and what they are doing to fix any issues that have turned out differently then was intended.
I'm envious because in about 20 years of attempted engaement, i never managed to break the Berlin Wall between the regulators and we the people.
Perhaps you could tell us how MBIE/FMA think they are are going to fix the CoFI issue wrt intermediaries. The Cabinet paper wasn't very specific.
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The Cabinet paper on CoFI was very short on the detail of the SOP changes to be implemented in the future.
Also I hope consultation is more meaningful than what has taken place.
In 1984 as a wingman for a delegate at the Economic Summit Conference, I observed that officialdom's view of consultation was "to get you together so we can tell you what we have decided" and nothing that I have seen in the next 38 years has encouraged me to want to change that interpretation.
very sad isn't it.