FMA Finds Inadequacies Among Financial Service Providers

New Zealand’s Financial Markets Authority (FMA) has issued its first report looking into the sales and advice practices of financial services providers in the country. Among the findings of the report are inadequacies with regard to governance systems, and the provision of appropriate information to clients.

The FMA said in a press release that the report, covering registered and authorized financial service providers as well as qualifying financial entities (QFEs), found a number of inconsistencies in the quality and maturity of the service provision systems used by the companies across the industry.

Inconsistent governance practices, sub-par internal reporting

The watchdog found a lack of comprehensive governance systems detected in sector players, with symptoms including insufficient attention to conflicts of interest and inconsistent reporting to senior management regarding the outcomes of any sales or advice activities carried out. In addition, the FMA said that the companies within the scope of the report were found to be wanting in the regulatory Compliance Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term respect.

Industry Willing to Cooperate

On the plus side, though, the FMA found that financial service providers were willing to cooperate with the relevant authorities to remedy matters and become compliant with new regulations aimed at protecting customers and markets.

Going forward, the authority said that it will focus its attention on supervision of sales and advice activities in the financial services sector, including closer cooperation with the senior management of these companies, in order to improve the quality of the services they provide and their level of regulatory compliance.

This is the first report of this kind following the passing of the Financial Markets Conduct Act, and comes a month after the release of the 12-month financial market report of the FMA summing up the changes that took place after the implementation of the new legislation. The purpose of the new law is to boost confidence in New Zealand’s financial markets and support the country’s economic growth. The focus of that report was once again on regulatory compliance.