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FMA guide sets out conduct profile

02 February 2017

The Financial Markets Authority (FMA) has published the final version of a guide to its view of conduct.

Produced for directors and executives of licensed financial services providers, the guide sets out a "conduct profile" to summarise the FMA's expectations about what providers should be able to demonstrate to their customers.

The guide says the Financial Market Conduct Act's focus on conduct is a significant shift in financial services regulation. It means the FMA will assess providers based on their conduct, which is what their customers experience from products and services.

"The FMA will take a risk-based approach to this job. We will assess which financial service providers (providers), and what conduct, are mostly likely to pose risks to fair, efficient and transparent markets – and harm to investors and consumers – and direct our regulatory attention and effort accordingly," it says.

"As we try to assess risk, our focus will be on whether providers we regulate have the interests of their customers at heart. In particular, how that customer-centric perspective is embedded within how they go about approaching their compliance obligations and their business activities more generally.

"The weight we place on conduct when calibrating our regulatory approach is a shift of emphasis for us. It is also a shift for those we regulate. They may need to think differently about what they do with their people and organisational culture, and their processes and controls, to show their customers – and, where necessary, us as regulator – that they understand what good conduct is, and can habitually demonstrate it.

The FMA says conduct is particular to each business or person and to their circumstances. A regulator cannot, and should not, prescribe how that happens.

"We appreciate that some people have already thought deeply about this. Others are still coming to grips with it. We expect this document to prompt those we regulate to examine how they think about good conduct to ensure they consistently deliver good outcomes to their customers."

Last updated on the 16th September 2019