It issued a notice under the FMA Act when a firm wasn't forthcoming with information
The Financial Markets Authority (FMA) has released a report on its supervision activity over the past 18 months, and says that most adviser firms were “open, engaged and cooperative” during its monitoring reviews.
However, it says that some firms were not disclosing important information, and were not taking the action required of them. In one instance, it had to issue a notice under the FMA Act 2001 to access information which a firm had failed to provide.
“We expect licensed and authorised entities to provide all notices and reports that are required by their obligations to the FMA in a timely manner,” the FMA stated.
“We also expect entities to engage with us in an open and transparent manner, particularly in relation to changes in their business and any breaches or issues they have identified.”
The FMA’s report revealed weaknesses in some AFA’s and QFE’s advice disclosure practices.
FMA chief executive Rob Everett said some of the issues identified in the report are “concerning,” and says the regulator would need to take stronger action where shortfalls were not properly addressed.
“We are at a point now where the volume of FMA guidance, level of engagement and maturity of the regulatory regime mean there are no excuses for conduct that presents the risk of harm to investors, customers and the integrity of the markets,” Everett said.
“While we have seen positive evidence of genuine customer focus during COVID-19, there is more work to be done to build a sustainable customer-centric culture.”
Everett says the FMA also found weaknesses across its regulated sectors in the areas of governance and oversight, conduct and culture, assurance programmes and compliance and controls.
He noted that trust in the financial services sector have been tested significantly over the past few years, and expressed concern that some firms did not seem to be taking the conduct and culture side of their duties seriously.
“We saw much good progress over the last year but were unimpressed by attitudes from one or two firms that suggested to us that they saw good conduct as something that only needs to be demonstrated when we visit,” Everett said.
“This is not a box-ticking exercise, it needs to be woven into the culture of providers.”
“Good conduct comes from the top,” he added.
“We expect boards and senior leadership to champion customers’ interests, and to demand the systems and processes required to deliver strong governance of these issues.”