1. About us
  2. What we do
  3. How we regulate
  4. Making compliance easier

Making compliance easier

Page last updated: 23 Apr 2019

How we reduce regulatory burden

We recognise that the burden of complying with financial regulation imposes cost, which is borne by those who participate in our market. However, a lack of strong regulation can harm investor confidence and informed participation. It is all about finding a balance so that businesses are able to comply with the law, and also focus on their day-to-day business activities.  

We have a suite of tools we can use to reduce unnecessary regulatory burden including legislative and administrative notices and guidance.

 

 

Getting the rules right

Ensuring the regulatory burden is appropriate is a key focus for the FMA. To achieve this we work closely with the Ministry of Business Innovation and Employment on policy and law reform and efficiently with other regulators.

Using legislative notices and waivers

We have legislative, administrative notices or waivers we can use to modify legal requirements when appropriate. These include exemptions; designations; frameworks or methodologies; FMC public accountability designations and levy waivers.

Typically, individual notices help one business. Class notices have a wider impact - they can affect a larger number of businesses and their clients and can be relied on by many businesses in the same class.

 

Providing timely guidance

Our Strategic Risk OutlookAnnual Corporate Plan and the Good Conduct Guide tell the market about where we see the most potential for risk or harm, where we intend to focus our resources, and why. We also provide information on our intended approach

Publishing monitoring and thematic reports

Monitoring and thematic reports give feedback on what we think is good and bad conduct, and our response to that. These reports can also encourage businesses to tell us about emerging issues, understand our approach and tell us about any further need for guidance.

Simplifying the regulatory returns process

When we develop regulatory returns we keep some very clear principles in mind to try to reduce regulatory burden. These are to:

  • not collect data twice
  • try to obtain information from other sources first
  • only ask for information we intend to use
  • only ask for information that’s readily available to a business (e.g. as part of its normal financial reporting/board information)
  • consult and seek market feedback before we create regulatory returns
  • seek feedback on our regulatory return process so we can improve it.

Improving our monitoring approach

We focus our resources on the areas of greatest risk and where we can provide the most benefit. This helps ensure that regulation is proportionate to the risks mitigated, and the benefits to be achieved.

As we evolve and improve our monitoring approach, we try to ensure that monitoring activities are not more burdensome than they need to be. Here are some improvements we have put in place:

  • reduced monitoring visits for businesses (one combined visit for different regulatory obligations)
  • development of closer relationships with the key businesses we regulate
  • combined monitoring visits with other regulators (e.g. NZX, the Reserve Bank), where possible.

Having clear standards and processes for licensing

Our licensing approach is risk-based. Applicants who may present the greatest harm will receive greater scrutiny. Applying a risk-based approach to licensing allows us to assess applications efficiently, lessening the need for further engagement with lower risk applicants.

We recognise that clear licensing guides are needed to step applicants through the licensing process. We are continually working to improve our licensing guides, so they are clear and easy to understand. 

Using a proportionate approach to enforcement

We have a wide range of functions and powers to achieve our statutory objectives and this capability has been enhanced by the Financial Markets Conduct Act 2013 (FMC Act).

Our action will be proportionate to the misconduct to achieve an appropriate market outcome. In the event of market misconduct, we may intervene on an informal basis or at a low level.  However, we are also committed to taking strong action and holding individuals and entities accountable when they break the law and fail to meet the standards that are expected of them.

How we evaluate our progress

Feedback from consultation on specific proposals tells us whether our idea will, actually, produce the intended benefit and where appropriate, reduce relevant compliance costs.

The Ease of doing a business survey is one of the ways we measure whether the burden of regulation is proportionate to its benefits. The survey helps us better understand the impact that our work has on market participants and stakeholders. It informs the way we work and our focus on continuous improvement in our effectiveness and efficiency.