Good practices are not always about following letter of the law: financial advice provider report
The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – has announced the publication of its updated approach to outcomes-focused regulation, which has been adjusted in response to feedback from law firms, financial services firms, and consumer groups.
“In this document we have reframed the outcomes in response to the feedback we received, to clarify them and to better show how they link to the FMA’s main statutory objective and the purposes of our legislation,” said Clare Bolingford, the FMA’s executive director, regulatory delivery, in a media release.
Under an outcomes-focused approach, the FMA focuses its resources on the end results that regulations are striving to achieve for consumers and financial markets, according to the FMA’s media release.
“The approach focuses on the most significant risks and opportunities for New Zealand businesses, investors, and consumers, helps reduce unnecessary regulatory burden on the industry, and provides market participants with greater flexibility in meeting regulatory obligations,” Bolingford said.
The FMA first published its approach to outcome-focused regulation in November 2023, the media release said. The FMA then held a public consultation aiming to test what fair outcomes would be for consumers and markets. This consultation received over 50 submissions from various interested parties and closed in March 2024.
Under an outcomes-focused approach requires, the FMA should more deeply understand the sectors and business models of the firms that it regulates and should improve and maintain its capacity to do this, said Craig Stobo, FMA chairperson, and Samantha Barrass, FMA chief executive, in the introduction to its updated approach document.
According to the introduction, an outcomes-focused approach seeks to:
The introduction added that the FMA has experienced the benefits of this approach over the past year in some areas.
In its Financial Advice Provider Monitoring Insights Report, the FMA “shared examples of how good practices are not always about following the letter of the law, but about shifting the dial on how regulation positively impacts the value of advice and the level of consumer trust and confidence to seek financial advice,” Stobo and Barrass said.
Stobo and Barrass added that the FMA looked forward to engaging further on this matter and welcomed feedback as it continued evolving this approach.
