Time the only true test for outcomes-focused regulation

The latest guidance from the FMA appears to allay some industry concerns about how it will regulate based on consumer and market outcomes but some areas will likely remain grey until it is really put to the test.

Friday, March 28th 2025, 3:09PM

by Kim Savage

“It’s a definite improvement,” says DLA Piper Partner Tom Barnes, who specialises in financial services and funds management.

“One of the issues with the earlier consultation draft was it wasn't clear who was responsible for achieving the outcomes.”

The fresh guidance carries tweaks the regulator has made to its approach following its consultation on fair outcomes for markets and consumers last year. The consultation drew more than 50 submissions, many wanting more clarity on what fair outcomes looked like in the FMA’s eyes, particularly where outcomes are not within financial service providers’ control.

“There were some statements, for example, that boards needed to take responsibility for the achievement of these outcomes, which then puts boards in the position of figuring out, well, what is it that we can actually do to try and achieve these outcomes?” says Barnes.

“One was that consumers have access to the products and services that they need. But if you're a product provider in a particular segment, say a fund manager, it's not your role to ensure that consumers have access to the insurance products that they need.”

The final version of the guidance, says Barnes, is an advance on what was originally just a list of expectations of the sector.

“It's quite clear that this is now a framework through which the FMA is going to be exercising its supervisory and regulatory discretion. And I think that's positive in some respects.

“I think that there's still going to be some issues about certainty and what the outcomes mean in practice and we'll have to wait and see how it's actually adopted.”

Tom Barnes says it is positive to see the FMA committing to providing a transparent briefing on its regulatory priorities and risks to outcomes in an annual Financial Conduct Report. Advisors will need to take note of the early signals the regulator sends out.

“The outcomes which come most to mind are fair services, quality ongoing service and well-informed consumers. And at the end of the day that's about communication, disclosure, transparency and quality service and these are things that good advisers will be doing already.” says Barnes.

“It's probably just a question of making sure that that's documented and reviewed, in light of this new note.”

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