Financial Markets Authority (FMA) Chief Executive Samantha Barrass used her speaking slot at the Financial Services Council conference last week to promote the FMA’s adoption of an outcomes-based approach to regulation and to invite industry input.
Ms Barrass encouraged industry members to take part in the FMA’s consultation on draft guidelines outlining its outcomes-based approach to regulation. The Consultation closes on 1 March 2024.
Ms Barrass described the FMA’s adoption of an outcomes-focused, risk-based approach and emphasised the risks of “tick-box” regulation. She encouraged industry members to take part in the Consultation, which outlines seven “fair outcomes”:
- Consumers have access to appropriate products and services that meet their needs.
- Consumers receive useful information that aids good decisions.
- Consumers receive fair value for money.
- Consumers can trust providers to act in their interests.
- Consumers receive quality ongoing care.
- Markets are trusted based on their integrity and transparency.
- Markets enable sustainable innovation and growth.
The Consultation provides a more detailed description of each fair outcome and sets out what an “outcomes-focused” approach will mean for providers, consumers, the FMA and New Zealand’s economy.
Ms Barrass noted that the best way to instil industry confidence in the FMA’s approach is through actions. Industry participants can expect to see a palpable shift in the way they engage with the FMA’s monitoring teams. The FMA’s focus will be on understanding outcomes, as opposed to rules and compliance with rules. The FMA is also looking for a small number of firms to volunteer to pilot new approaches.
Change is afoot for the financial services industry
Ms Barrass’ message to the industry came after the Minister of Commerce and Consumer Affairs, Andrew Bayly, announced significant changes for the financial services industry at last week’s Financial Services Council conference, including:
- a more defined ‘twin peaks’ regulatory model, with the RBNZ as the single prudential regulator and the FMA as the single conduct regulator;
- retaining, but reviewing, the existing Conduct of Financial Institutions licensing requirements which are due to commence on 31 March 2025;
- simplifying and rationalising licensing requirements generally, with a single prudential licence from the RBNZ and a single conduct licence from the FMA; and
- reviewing and reforming the CCCFA and Companies Act.
The combination of the Minister’s and Ms Barrass’ comments suggests that the financial services industry is poised for a period of significant change. Both leaders demonstrated an eagerness to engage with the industry on these important matters.
We encourage industry participants to respond to the FMA’s consultation and have their voices heard on how the FMA should approach guidelines on its outcomes-based approach to regulation.
Our financial services experts have experience in engaging with regulators on all aspects of the financial services landscape. We are available to assist any industry participants with their responses to the Consultation and to provide advice to any firms who may be considering taking part in the FMA’s pilot programme.