Confidence in New Zealand’s financial markets regulator falls

Thursday, 24 October 2024

The Financial Markets Authority chief executive Samantha Barrass.

The country’s financial markets regulator appears to have lost the confidence of many financial services ‘stakeholders’, its new annual report shows.

The proportion of stakeholders, which include fund managers, KiwiSaver providers and ordinary investors, who agreed the Financial Markets Authority (FMA) Te Mana Tātai Hokohoko maintained a strong enforcement function and deterred misconduct dropped from 82% last year to just 65%.

The proportion who felt the FMA “supported” market integrity fell from 92% to 85%.

And the proportion who felt the FMA was easy to do business with was just 53%.

There was also a fall in the proportion who felt the FMA was good at implementing remit changes, and fewer felt it was not a “clear, concise and effective” communicator than did last year.

The FMA’s new chair Craig Stobo said: “You will… note we have seen a decline from last year’s positive responses for some performance measures from the Ease of Doing Business and Investor Confidence surveys. While this is a concern it is also an opportunity for improvement.”

Andrew Bayly and Samantha Barrass at the Financial Services Council in Auckland earlier this year, shortly after Bayly signalled the FMA would take over the enforcement of the country’s lending laws.

Chief executive Samantha Barrass said: “We also acknowledge the decline in stakeholder and investor perceptions for some areas of our work.”

“In collaboration with the FMA Board, we have committed to exploring these results further to understand where there are opportunities for improvement,” she said.

The FMA could not explain why it slipped on some of its performance measures, indicating a loss of confidence in its by stakeholders.

“The survey provides limited insight into the reasons behind people’s responses and we do not want to speculate or draw conclusions from limited data as to the reasons for not meeting the target and the drop from last year’s result,” its annual report said.

Barrass said the survey was also only answered by 19% of the people asked to complete it. Many of those who did were financial advisers, Barrass said.

Among investors, however, confidence that the country’s financial markets were being effectively-regulated fell to 66% from 71%.

Barrass said achieving a more representative survey with much higher response levels was critical.

“We want to get under the hood and find out what’s going on behind the sentiment, and what we can do to lift it,” she said.

The FMA is about to become more important to New Zealand households as it is earmarked to take over the enforcement of consumer lending laws from the Commerce Commission.

The FMA achieved six out of nine of its statement of performance expectations.

The regulator was keen to point out it had continued to progress litigation, and said the total money returned to the public by the likes of banks and insurers that had overcharged, or misled customers, rise to more than $215 million since the 2018 and 2019 reviews of Conduct and Culture review of banks and life insurers by it and the Reserve Bank Te Pūtea Matua.