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FMA publishes its first medium-term strategic risk outlook

Page last updated: 11 Dec 2014

Media Release
MR No. 2014 - 045
11 December 2014

The Financial Markets Authority (FMA) today published its seven-point strategic risk outlook, identifying the areas where it will apply the majority of its regulatory effort in the medium-term. The priorities will direct the FMA’s work in licensing, supervision, compliance and enforcement.

The FMA’s chief executive, Rob Everett, said the strategic risks partly reflect the FMA’s mandate under the Financial Markets Conduct Act 2013, which has taken effect progressively this year.

“We have to make choices about where we will focus our efforts in order to deliver the maximum results, taking into account our expanded mandate,” Mr Everett said.

“The FMA’s overarching objective is to promote and facilitate fair, efficient and transparent financial markets. Defining the risks that pose the most significant barriers to us achieving our main objectives means we can focus our resources strategically.

“Firms and professionals within our mandate should anticipate us paying attention to the seven priorities over the next two to three years. Also, representatives of the finance professions – including directors, auditors, legal counsel and financial advisers – can expect us to work with them constructively on these areas to improve outcomes and build confidence.”

In summary, the seven priorities are:

  • Governance and culture: boards and directors leading strategy, culture and values
  • Conflicted conduct: firms and professionals managing conflicts of interest effectively
  • Capital market growth and integrity: facilitating capital market growth and supporting market integrity
  • Sales and advice: sales and advisory services reflecting the best interests of investors and consumers
  • Investor decision-making: investors having access to tools that help them make informed financial decisions
  • Effective frontline regulators: ensuring frontline regulators are effective
  • The FMA maximising its own effectiveness and efficiency as a regulator.

Mr Everett said these priorities don’t exclude the FMA from looking at other areas of the market and financial services. “But these are the areas where we see the greatest risks and therefore the most potential to improve trust and confidence in our markets,” he said.

The priorities are the result of FMA’s analysis of the underlying drivers of risk. The FMA identified the market structures, behaviours and tensions that could lead to poor results for investors, firms, professionals and for the economy.

“Our main aim, as a regulator, is to work with firms and professionals to prevent things going wrong. Generally, it’s more effective to address causes rather than remedying poor results after they have happened,” Mr Everett said.

The FMA’s strategic priorities and the drivers of risks are set out in more detail in the ‘Strategic Risk Outlook 2015’ that is published on the FMA’s website.


Andrew Park
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