Like the FMA, ASIC are working to ensure that investors and consumers can have confidence that financial services and products will be provided to them fairly and with their interests at heart. Their mandate in the consumer space is much broader than the FMA’s at present but the blend of enforcement, supervision and educative capability they discussed has much in common with where we need to be.

The recent MBIE options paper on potential legislative change in the regulation of retail banking and insurance touches on many of these topics and at the FMA we are thinking hard about what that would demand of us if some of the proposed changes land.  The opportunity to question ASIC and other international regulators about how to approach some of those challenges was very timely.

Rob Everett

This month, we issued formal warnings to 10 reporting entities under Section 80 of the Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT Act). This follows a risk-based assessment of independent audit reports, targeting 69 reporting entities.

Five formal warnings were issued to entities who did not have their risk assessment and AML/CFT programme audited every two years and five formal warnings were issued to reporting entities whose audit was late, occurring months after its due date. 14 further desk-based reviews and four monitoring visits will be carried out in response to this work.

AML/CFT laws have been in force for more than five years.  Entities we supervise should understand that if we didn’t examine your report this year, there is a strong possibility we will be looking at your report next year.

We have published a statement outlining our approach to financial reporting reviews, and highlighting selected areas of interest for our 2019/20 reviews. It will be useful for anyone involved in preparing or approving financial reporting for FMC reporting entities.

New regime for financial advice

On 9 May, the Minister of Commerce and Consumer Affairs approved the new Code of Conduct for Financial Advice Services, which comes into force at the start of the new regime. The Code is made up of nine standards in two parts. There are five standards in part one - Ethical behaviour, conduct and client care and three standards in part two - Competence knowledge and skill. It will apply to everyone who gives regulated financial advice.

MBIE is currently focusing on finalising the supporting regulations for the new regime – including the registration and disclosure regulations, and licensing fees and levies. In the meantime, we will continue providing information on the specifics of licensing, including an online tool to help advisers with their decision making and a guide explaining how to apply for a transitional licence.

Based on current estimated timings, we expect transitional licensing to open in quarter four 2019, with the new regime starting in quarter two, 2020 – giving at least six months to apply for a licence. Transitional licences, the new code and new disclosure requirements will all apply from the start of the new regime.

See MBIE's timeline for more information