FMA releases its 2022/2023 Annual Report

  • Legal update

    06 December 2023

FMA releases its 2022/2023 Annual Report Desktop Image FMA releases its 2022/2023 Annual Report Mobile Image

Yesterday, the Financial Markets Authority (FMA) published its Annual Report for 2022/2023 (Report), which outlines how the FMA delivered its core activities over the year to 30 June 2023. The Report, the FMA’s media release, and the Ease of Doing Business Survey released alongside them can be found on the FMA’s website.

Who should read this? Why?

Entities regulated by the FMA should read the Report, as it not only covers how the FMA has performed its main activities over the most recent financial year but also provides an indication of how the FMA may operate over the coming years.

What does it cover?

In reporting on its operations over the past financial year, the FMA divided its activities into three categories:

  • looking out for investors and consumers;
  • helping to keep financial markets and services fair, efficient, and transparent; and
  • preparing for the future.

It reported that it had “successfully achieved all its performance measures” over the past year and gave examples of its achievements, including:

  • reviewing wholesale investments, particularly into property-related offers, and identifying various poor practices (especially concerning eligible investors);
  • making (and then successfully defending in the High Court) a permanent stop order to an overseas multi-level marketing business, to alleviate the risk of investor harm from activities that seemed dishonest and misleading;
  • obtaining large penalties against those in breach of market manipulation prohibitions and disclosure obligations;
  • filing proceedings against insurers for breaches of fair dealing provisions, and ordering others to pay penalties for the same;
  • bringing into full effect the new financial advice regulatory regime, after a transition that began in 2019;
  • carrying out risk assessments of the Managed Investment Scheme and Discretionary Investment Management Service sectors, to inform future action and monitoring; and
  • issuing guidance on the Climate-Related Disclosures regime, and engaging with climate reporting entities to help prepare them for the first year of reporting.

Further, the FMA noted that, over the last financial year, it placed particular emphasis on ensuring that customers would not be “overcharged or otherwise disadvantaged as a result of providers’ poor practices and inadequate processes and systems”. By October 2022, it had managed to return $150 million from banks and insurers to 1.5 million customers who had been affected by “a range of issues requiring customer remediation”.

The FMA also indicated that it is seeking to pivot to an outcomes-focused approach to regulation, moving from a focus on detailed compliance to one on fairness. This would serve to balance holding providers to account for “achieving fair outcomes for their customers” with recognising that they are well placed to determine how their businesses would best achieve those outcomes.

The Ease of Doing Business Survey found that most respondents generally agreed that the FMA was effective, helpful, understandable, and easy to do business with.

Our view

The Report rightly states that “Fair, efficient and transparent financial markets are a cornerstone of a well-functioning New Zealand economy”, and the success of the FMA as a principal regulator is key to this.

The stated direction towards an outcomes-focused approach has already been flagged by the FMA. We have previously discussed the FMA’s consultation on this approach, which remains open until March 2024. As we raised there, an outcomes-focused approach can be a positive, but care must be taken not to blur the letter of the law and the careful balance in its drafting.

In the Report, the FMA’s Chief Executive Samantha Barrass stated that, while “[the FMA’s] preference is to work constructively with entities to resolve issues…enforcement action will always be on the table when justified by the level of actual or potential harm”. This is consistent with previous statements by the FMA around credible deterrence and how it can, but will not always, scale up to strong enforcement action, depending on the context.

What next?

As mentioned above, there is an existing consultation ongoing for the outcomes-focused approach until March 2024.

If you have any questions in relation to the regimes supervised by the FMA, please contact one of our experts.


This article was co-authored by Sam Short, Senior Solicitor and Samuel Turner-O'Keeffe, Summer Clerk, from our Banking and Financial Services team.