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FMA's conduct guide due out soon

16 December 2016

The final document on the Financial Markets Authority’s conduct guide is due to be published in the new year after consultation was completed.

Earlier this year the FMA consulted on the guide, signalling to New Zealand financial services providers what to expect from interaction and engagement with the conduct regulator.

With a broad range of industry submitting, the process has given the FMA valuable insight into how financial services providers view conduct regulation in general; and the intent and content of the guide specifically.

The FMA’s chief executive Rob Everett says the FMA recognises that the Financial Markets Conduct Act does not contain broad conduct obligations for providers, beyond prohibiting mis-selling and misrepresentation under its Fair Dealing provisions.

A number of submitters had focused on the legal status of the FMA’s expectations as to conduct set out in the draft guide and the FMA had discussed that issue with interested parties.

“The guide does not create or replace any legal obligations on financial services providers. Its intention is to prompt their leaders first to consider why good conduct matters; and then to think about how to make that happen within their own organisations,” says Mr Everett.

For other submitters, the guide was not sufficiently detailed and needed more concrete detail about what good and bad conduct looks like, and what it takes to comply.  However, as an expression of the FMA’s expectations and some indicators as to practices and processes that would reflect a good approach to conduct risk, it was never intended to be a checklist or something that laid out required processes to be followed by firms.

“The true test of any provider’s approach to conduct will not be how much it sounds like what is in the guide,” Mr Everett said. “It will be whether they can show customers – and the FMA if necessary – that what they do is consistently effective at producing good customer outcomes.”

The final version of the guidance and a report on the submissions received will be published in the new year.

Last updated on the 16th September 2019