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International learnings

Rob Everett, CE, FMA


I spent last week in Sydney at IOSCO meetings (the global standards-setter for securities regulators) and the annual ASIC conference.  As well as debating best practice for securities regulation, it was a great opportunity to learn more about how our regulatory counterparts in Australia are responding to the findings of the Royal Commission into misconduct in banking and financial services.

There’s been a lot of talk about ASIC’s new “why not litigate” approach to regulatory breaches by the finance industry and ASIC provided more context to the shift in its approach and the role “hard” enforcement action plays alongside other supervisory tools.

For ASIC however, its biggest challenge is one we also face in New Zealand – how do you regulate practices and behaviours that are not in breach of the law but are not putting people first?  The role of a conduct regulator goes well beyond pure enforcement and the broad array of regulatory tools (and skill-sets) needed to do the job well is an increasingly common topic for discussion at regulator meetings.

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

AML/CFT warnings issued by FMA

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.

Financial reporting statements

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.


Audit Quality

A research project published this week has identified reasonable levels of confidence in audit quality, but also a serious gap in the expectations of investors and what auditors are delivering.
Just over half of the investors, directors, managers and auditors surveyed (56%) agreed they would trust the audit profession to act with ethics and integrity, while 68% of company directors indicated they trusted the audit profession.
There is a similar gap between investors and the profession’s view of itself when asked about the independence of auditors, and their level of professional scepticism and ability to challenge management and directors in conducting their audits reviews.

View Report

Financial advice regime changes

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

MBIE’s timeline


Our research shows many KiwiSaver members aren’t taking any action when they receive their annual member statements. We think it’s the perfect time for a KiwiSaver health check, so we’re launching a social media campaign encouraging Kiwis to get their head out of the sand. If you can share the campaign through your channels, contact for details.


Following our report into Banking Conduct and culture, we have been assessing the materials supplied by banks at the end of March and that we are now assessing the next steps. We will be providing feedback to banks in June and expect to provide public commentary following this as well. Responses by Life Insurers to our report and specific findings letters are due at the end of June 2019.

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FMA news

21 May 2019 - FMA research highlights gap between what investors expect and what auditors deliver

13 May 2019 - 10 formal AML/CFT warnings issued by FMA


3 May 2019Company convicted for abuse of the FSPR


16 April 2019 - Director sentenced to community service for abuse of FSPR

15 April 2019 - FMA files civil proceedings over trading in Oceania Natural




Industry insights

Financial conduct regulation in a restless world

Speech by Christopher Woolard, Executive Director of Strategy and Competition at the FCA, delivered at the Deloitte conduct risk roadshow 2019, London.


ASIC Keynote address - International Swaps and Derivatives Association AGM

Keynote address by Cathie Armour, ASIC Commissioner, at the International Swaps and Derivatives Association (ISDA) AGM 2019, (Hong Kong) 10 April 2019.


APRA releases new Enforcement Approach

The Australian Prudential Regulation Authority (APRA) has released details on the future role and use of enforcement activities in achieving its prudential objectives.


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