FMA releases its Annual Corporate Plan

The Financial Markets Authority (FMA) released its Annual Corporate Plan (Plan), available here.

Who needs to read it?  Why?

The Plan is important reading for all financial markets participants.

What does it cover?

The Plan sets out the FMA’s priorities for 2018/19.  These are based on the identified strategic risks to the FMA’s objectives, and the drivers of those risks (referring also to the FMA’s Strategic Risk Outlook).

The eight strategic priorities listed are:

  • Governance and cultureensuring firms have an organisational culture that places customers’ interests at the centre of their business, including continuing the review of banks and life insurers in relation to the Australian Royal Commission and FMA’s Guide to Good Conduct, with a report exported on initial findings and next steps in late October
  • Sales and adviceensuring business practices are designed and implemented to meet the needs of customers – note the FMA flags a plan to look at non-statutory disclosure documents such as information sheets
  • Conflicted conduct – getting incentives right and dealing with conflicts of interest – this includes a bank incentive structures thematic review
  • Investor decision making – helping investors make decisions through clear, concise and effective disclosure – with promoting an effective KiwiSaver market as “a critical priority”
  • Capital market growth and integrity – ensuring accessible and dynamic capital markets with resilient infrastructure, including here focuses on market misconduct, capital raising platforms, a thematic review of the custodian sector, NZX market rules, audit quality monitoring, new financial benchmarks, and anti-money laundering and countering the financing of terrorism (AML/CFT) compliance
  • Frontline regulators – helping supervisors, NZX and audit bodies provide effective oversight
  • Perimeter conduct – dealing with significant misconduct outside the regulated sphere swiftly (e.g. abuse of the Financial Service Providers Register (FSPR)) while also providing guidance for developing areas such as initial coin offers (ICOs)
  • FMA effectiveness and efficiency – ensuring FMA is an efficient and effective intelligence-led regulator with a focus on continuous improvement.

The Plan also projects significant investigation and enforcement activity in areas including:

  • Market conduct (insider trading, market manipulation)
  • Disclosure in public markets
  • AML/CFT
  • Activity on the perimeter (including scams, FSPR abuse)
  • Any obstruction to the exercising of FMA powers.

Finally, the FMA identifies developing themes for focus on regulating for technology change (e.g. ICOs and digital advice) and cyber-resilience, helping investor decision making in changing market conditions, retail investor uptake of complex and risky products and an overall review of the regulatory framework.

Our view

There are no real surprises here, but it is a valuable snapshot of the FMA’s thinking and where it intends to focus its activities over the next 12 months.

What next

If you have any questions in relation to the Plan or want to understand more about how issues are relevant for your business, please contact one of our experts.

Who can help

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