Annual Corporate Plan 2019/20

Annual Corporate Plan

2019/20

Financial Markets Authority | Annual Corporate Plan 2019/20

Contents

Message from the Chief Executive

3

Summary Corporate Plan 2019/20

5

Introduction

6

Strategic priorities

8

Cross sector activities

9

Capital Markets

10

Investment Management

12

Sales, Advice and Distribution

14

Banking and Insurance

16

FMA's regulatory approach

18

This copyright work is licensed under the Creative Commons Attribution 3.0 New Zealand licence. You are free to copy, distribute and adapt the work, as long as you attribute the work to the Financial Markets Authority and abide by the licence terms. To view a copy of this licence, visit licenses/by/3.0/nz/. Cover image: georgeclerk. Please note that the Financial Markets Authority logo may not be used in any way that infringes any provision of the Flags, Emblems, and Names Protection Act 1981. Attribution to the Financial Markets Authority should be in written form and not by reproduction of the Financial Markets Authority logo.

2

Annual Corporate Plan 2019/20 | Financial Markets Authority

Message from the Chief Executive

When talking to market participants I am consistently asked: "what do we need to do to meet the FMA's expectations of good conduct?"

At its core, conduct is about how market participants behave and how they serve the needs of customers, including the culture and governance that drives that behaviour.

For me, it's boards and senior managers asking themselves some fundamental questions. Is our culture focused on serving the needs of customers? Are our customers treated fairly at all times? Are our products designed with customers in mind? Are our incentive structures aligned with the interests of customers? Do we have a good understanding of the conduct risks inherent in our business and are we managing these effectively?

These questions affirm the importance of customer treatment and integrity. While they are often difficult to answer, the discipline

of asking them is the first step in lifting standards of behaviour.

This Annual Corporate Plan (ACP) outlines our work for the coming year that aims to lift standards of behaviour. This year we have released our ACP alongside our refreshed Strategic Risk Outlook (SRO). Both publications reflect a new sector-based approach to assessing risks and harm, and identifying the outcomes we want to see.

"Our five new priorities underpin

our regulatory approach by ensuring we focus our activity where we have the greatest opportunity of achieving desired

" outcomes and reducing harm.

To reflect the maturity of our regime and the broadening of our focus on investor and customer treatment, we have refreshed our strategic priorities in the SRO. Our five new priorities (see page 8) underpin our regulatory approach

by ensuring we focus our activity where we have the greatest opportunity of achieving desired outcomes and reducing harm.

Our ongoing work with the Reserve Bank on the Conduct and Culture reviews of the banking and life insurance sectors reflects these priorities. Our reviews highlighted that retail banks and life insurers have not done enough to address the risks that their conduct poses to investors and consumers. The work also noted the gaps in the regulatory framework.

I acknowledge the Government's commitment to fast-track measures to protect customers in their dealings with banks and insurers, and I expect preparation for any potential changes to our regulatory remit will be a key focus of our activity this year.

3

Financial Markets Authority | Annual Corporate Plan 2019/20

Beyond the Conduct and Culture follow-up, the wide scope of this ACP highlights the importance of other activity within our core mandate. Our work to maintain capital market integrity, ongoing monitoring of advisers and implementation of the new advice regime, AML/CFT monitoring, work with frontline supervisors, and engagement with investors and customers are all critical to delivering fair, efficient and transparent financial markets.

It remains a period of significant change in our financial markets. Our ACP outlines how we intend to navigate this change over the coming year as we deliver our

statutory objectives and promote high levels of trust and confidence.

"...it is primarily the responsibility

of the industry to drive the behaviour changes necessary to promoting good conduct and

" culture.

However, I want to be clear that it is primarily the responsibility of the industry to drive the behaviour changes necessary to promoting good conduct and culture. The expectations set out in our Conduct Guide and the lessons from the Conduct and Culture reviews apply to the governance,

processes and controls of all financial market participants. I also expect all market participants to review the risks we have identified for their respective sectors, and assess the relevance of these risks and how they are being mitigated. The industry should not be waiting for legislative change or the regulator to come knocking to do the right thing.

Rob Everett Chief Executive Financial Markets Authority

4

Annual Corporate Plan 2019/20 | Financial Markets Authority

Summary Corporate Plan 2019/20

Statutory objective

Fair, efficient and transparent financial markets

Strategic priorities

Governance, culture, Credible deterrence

systems

of misconduct

and controls

Successful implementation of potential remit

changes

Investor and

Promoting trust and

customer decision- confidence in capital

making

markets

Capital Markets

Accessible, dynamic and resilient capital markets, where participants have

a high degree of trust and confidence

Sector outcomes

Investment Management

Efficient, stable and well-managed funds

and services

Sales, Advice and Distribution

Sales, advice and distribution protects

and promotes the interests of customers

$

Banking and Insurance

Banks and insurers demonstrate how they serve customer needs

? NZX Obligations Review ? Insider trading and

market manipulation investigation and enforcement

? Crowdfunding

and peer-to-peer monitoring

? AML/CFT monitoring ? Disclosure and

financial reporting reviews

? Climate-related

disclosure

? Audit monitoring and

strategy

Sector activities

? Monitor disclosure,

including fees and performance

? Work with providers

on investor engagement

? Input into Government

policy reviews

? Managed Investment

Scheme (MIS) Sector Risk Assessment and follow-up (delivered by supervisors)

? Financial advice

monitoring and implementation of new regime

? Derivative Issuer

sector risk assessment

? Investor capability

strategy

? Respond to

misconduct reports

? AML/CFT monitoring ? Monitor the perimeter ? Respond to frauds and

scams

? Bank Conduct and

Culture and incentives follow-up

? Life Insurance Conduct

and Culture follow-up

? Preparation for, and

implementation of, any remit change

FMA regulatory approach

5

Financial Markets Authority | Annual Corporate Plan 2019/20

Introduction

Our purpose and approach

The FMA is an independent Crown entity and New Zealand's principal conduct regulator of financial markets. Our overarching statutory purpose is to promote and facilitate the development of fair, efficient and transparent financial markets.

Financial markets means not only traded markets in securities but the broader market for financial services and products.

Fair means providers and participants acting fairly and professionally, and focusing on serving the needs of customers*.

Efficient means dynamic and accessible markets that facilitate growth and innovation.

Transparent means investors and customers get the clear, concise and effective information they need to make informed decisions.

We also want to see capable and engaged investors and customers.

There are many factors that contribute to achieving our statutory objectives. Working within our statutory framework, our role is twofold.

First, we seek to promote and facilitate developments that enhance fairness, efficiency and transparency in financial markets by working and engaging with industry, investors and customers.

Second, we seek to identify and mitigate risks to achieving these conditions. We do this by:

? setting expectations and

influencing industry behaviour

? monitoring adherence to

regulatory and legislative requirements

? identifying breaches and taking

action

? working to enhance investor

and customer engagement and capability.

What's in this plan?

This Annual Corporate Plan sets out our activities for 2019/20 that will promote our strategic priorities, address regulatory risks and harms, and deliver sector outcomes.

This plan should be read alongside our Strategic Risk Outlook (SRO), which provides our mediumterm view (three to five years) of the most significant risks to and opportunities for promoting fair, efficient and transparent financial markets.

We expect that fair, efficient and transparent financial markets will promote high levels of trust and confidence.

6

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download