The Financial Markets Authority (FMA) has released its inaugural Financial Conduct Report (FCR). The FCR is intended to be an annual report providing an overview of the FMA's regulatory priorities and key areas of conduct focus over the next 12 months, with a view to providing clarity to the financial industry on what to expect from the FMA.
This FCR outlines the FMA's areas of focus and priorities for the following key sectors and cross sector themes and sets out the FMA's rationale behind its priorities and the risks and opportunities in each sector. At a high level the FCR sets out the following key areas of focus for each sector:
- Cross sector: removing unnecessary regulatory burden, understanding emerging risks and opportunities, ensuring customers are treated fairly, disrupting scams and advocating for reform of assets held in custody
- Financial advice: conduct impacting consumers in vulnerable circumstances, ensuring consumers and investors understand fees, incentives and commissions, effective protection of client assets and challenges regarding accessibility of advice
- Banks and non-bank deposit takers: proactive product reviews
- Insurance: proactive product reviews and communication with consumers on products and services
- Capital markets sector: tackling misleading disclosure by wholesale issuers, clear expectations for ethical investment disclosures, insider conduct and continuous disclosure and supporting policy changes for capital markets
- Investment management sector: clear expectations for ethical investment disclosures, ensuring consumers and investors understand fees, incentives and commissions, effective protection of client assets, advocating for reform for assets held in custody and ensuring consumers’ and investors’ interests are at the forefront of decision-making.
The FMA intends to provide its regulatory priorities for consumer credit closer to the time of the transfer of responsibility for consumer credit regulation from the Commerce Commission to the FMA and will include this as a sector in the next FCR.
Our views
The FCR provides a welcome forward view of the regulatory priorities of the FMA and will be useful for informing participants' business and compliance planning, particularly for those participants within priority sectors such as banks and non-bank deposit takers, insurers, investment managers, capital markets and financial advisers.
As the FCR is relatively high level we would hope to see additional details of priorities and initiatives coming from the FMA, as its industry engagement continues.
If you would like to discuss any aspect of the FCR or its impact on your sector, please get in touch with our financial services regulation team.
This article was prepared by Andrew Suggate (Senior Associate) and Nicole McAnulty (Solicitor).
