This year we have worked hard with our regulated sectors to ensure our expectations of them are clear. Throw into that a number of major investigations and court proceedings, the re-licensing of the supervisor cohort and a significant number of potential remit changes and it has been as busy as ever.

These reviews, and the findings of our thematic reports into bank incentives, soft commissions and QFE insurance replacement business practices have underlined our belief that change must be fundamental, and that all parties involved in the sale of financial products must take responsibility for conflicted conduct that can result from poorly designed sales incentives. 

Last month, we published our Audit Quality Report, which shows that while improvements have been made in the quality of FMC Act audits, even within firms the results can be varied and the effort needs to be sustained. We expect the audit profession to consider and learn from our findings and we acknowledge too that a strong contributor to audit quality is the engagement and collaboration of management and boards in the process.

Encouragingly, through our engagement with the financial services industry we see strong willingness to do the best for New Zealand’s financial markets and investors. I look forward to continuing this work throughout the coming year.

I wish you a happy and restful summer break.

Rob Everett
Chief Executive

Audit Quality Report

This report summarises our findings from audit quality reviews carried out between 1 July 2017 and 30 June 2018. To follow up, early in 2019 we will publish the results of survey of how market participants and investors view audit quality.

Dual Language PDS exemption

We have updated our offer information FAQ page with information to assist issuers who are considering producing a product disclosure statement (PDS) in English and te reo Māori, in reliance on the exemption to enable PDSs in both languages.

MIS manager valuation and pricing practices

Following a review, we have published an information sheet that sets our recommendations for Managed Investment Scheme (MIS) manager pricing and valuation practices, in line with the IOSCO principles for the valuation of collective investment schemes. It will be of particular interest to MIS managers and their supervisors.

Wynyard Report

Last month we published the findings of our investigation into Wynyard Group Limited’s compliance with continuous disclosure and fair dealing obligations. Following Wynyard’s failure in October 2016, the FMA and NZX undertook an investigation into the conduct of the company and its directors. Despite the FMA’s views on the potential contravention of disclosure obligations, the FMA has decided not to pursue enforcement action against the company.

Read the full report.

Our 2018/19 Corporate plan includes thematic work on cyber-resilience to better understand the level of preparedness and good practice across the population we regulate. A voluntary survey will ask participants to provide a current and a planned future self-rating, across a range of cyber-resilience topics, drawn from internationally recognised frameworks.

The information gathered will be used to provide market guidance, raise cyber-resilience awareness and preparedness, and inform the development of FMA’s risk-based monitoring approach for cyber-resilience. The survey will take place in Q1 2019 by invitation. Individual survey responses will be confidential and any thematic findings and guidance published by FMA will be at an aggregate, anonymised level.

We have granted new exemptions, or amended existing exemptions, as follows:

• a new class exemption relieving Part 3 disclosure for offers of financial products of the same class as ASX-quoted products where the issuer also has a secondary listing with NZX.  The exemption facilitates offers on an equivalent basis as the Schedule 1 ‘same class offers exclusion’ in the FMC Act

• amended the Financial Markets Conduct (NZX–NXT Market) Exemption Notice 2014 to align its revocation with the closure of the NXT market

• amended a definition in the Financial Markets Conduct (Shares in Investment Companies) Designation Notice 2017 to ensure consistency with the updated NZX Listing Rules.

See more on the Legislation website.

Setting financial goals for 2019? Don’t forget to make sure you’re in the right KiwiSaver fund for your needs. Talk to your provider and use the Sorted Fund finder to help you check you are on track.

We’ve also updated KiwiSaver Tracker data, to help you see who is managing your money and what the results and costs are.

Our tracker tool shows:

• Returns and fees for each fund.
• A percentage figure for how much of the return is paid to the fund manager in fees (excluding fixed  management fees) and how much is paid to investors.
• Data that currently covers the past year and average five-year returns.

Funds that have been invested for less than a year and restricted schemes are excluded.