FMA provides new information on outcomes-focused regulation

The Financial Markets Authority (FMA) has released an updated report on its Outcomes-Focused Regulation strategy following extensive feedback from various stakeholders including financial services firms, consumer groups, and law firms. This approach underscores the FMA’s commitment to prioritizing the end goals that regulations are designed to achieve for consumers and financial markets.

In November 2023, the FMA initially introduced its approach to outcome-focused regulation, soliciting feedback via more than 50 submissions. After closing the consultation process in March 2024, the FMA meticulously reviewed and refined its strategy based on the input received. Clare Bolingford, Executive Director of Regulatory Delivery, emphasized that the revised approach aims to address the most critical risks and opportunities faced by businesses, investors, and consumers in New Zealand. Additionally, it emphasizes streamlining regulatory processes, offering industry participants more flexibility in meeting compliance requirements.

The core focus of the public consultation was to define fair outcomes for consumers and markets. Bolingford highlighted the document’s pivotal shift towards reframing outcomes in response to feedback, ensuring clarity and alignment with the FMA’s statutory objectives. The document outlined seven key outcomes, including ensuring fair services, providing quality ongoing service, enhancing access to products and services, fostering resilient markets and providers, promoting market innovation and growth, empowering well-informed investors and consumers, and upholding market integrity and transparency.

To effectively implement an outcomes-focused approach, the FMA acknowledged the importance of engaging in constructive dialogues with stakeholders to identify and address risks impacting desired outcomes for New Zealanders and financial markets. A key initiative outlined in the report is the annual Financial Conduct Report, which will outline regulatory priorities for the upcoming year, identify key risks to outcomes on a market-wide and sector-specific level, and provide insights from supervisory and response efforts to guide stakeholders.

Moreover, the FMA detailed its revamped supervisory approach set to roll out in 2025. This new approach will align supervisory activities with regulatory priorities outlined in the Financial Conduct Report, leverage data from firms and intelligence from supervisory work to proactively manage risks, and cultivate a forward-looking supervisory model to enhance understanding of firms’ business models and risk management practices.

In essence, the FMA’s Outcomes-Focused Regulation strategy underscores its commitment to promoting fair, transparent, and efficient financial markets by prioritizing outcomes that benefit consumers, investors, and businesses in New Zealand. By fostering collaborative relationships with stakeholders, enhancing regulatory transparency, and implementing proactive supervisory measures, the FMA aims to strengthen market integrity and instill confidence in the financial landscape.