On 1 May 2011, the FMA took over the functions of the Securities Commission and the Government Actuary (although the Government Actuary is to continue until 20 September 2011 for the limited purpose of performing its existing role in relation to the Government Superannuation Fund), the Commissioner for Financial Advisers, and certain functions of the Ministry of Economic Development and the Registrar of Companies.
The FMA is a new Crown entity created with the main objective of restoring investor confidence and trust in the integrity and operation of New Zealand's capital markets domestically and internationally.
Simon Allen is FMA chair, and Sean Hughes is the chief executive. The eight board members are: Shelley Cave, Colin Giffney, Mary Holm, Murray Jack, James Miller, Justine Smyth, Michael Webb, and Mark Verbiest. In addition, Bruce Sheppard, Rebecca Eele, and Arthur Grimes have been appointed associate members of the board.
Simon Allen has said "FMA's intent is to establish clearer and more consistent rules for market participants, improve market intelligence and surveillance, and be more visible and proactive in regulation and enforcement as well as raise the standards of financial advisers".
Core functions of the FMA
As the new regulator of New Zealand's financial sector, the FMA:
- oversees compliance with a range of financial markets legislation;
- has a range of exemption powers under the Securities Act 1978, Securities Markets Act 1988, Financial Reporting Act 1993 and Financial Advisers Act 2008;
- oversees market infrastructure and securities markets activity, including:
- the licensing and oversight of exchanges, approving market rules and undertaking an annual review of registered exchanges;
- overseeing disclosure and practices of companies listed on NZX; and
- overseeing and enforcing the insider trading, market manipulation and other dealing misconduct provisions of the Securities Markets Act 1988;
- licenses and supervises Authorised Financial Advisers and Qualifying Financial Entities under the new financial advisers regime and investigates complaints about financial advisers;
- oversees the registration and administration of KiwiSaver and Superannuation Schemes, and is responsible for maintaining the KiwiSaver schemes register. From October 2011, the FMA will also monitor managers and trustees of KiwiSaver and superannuation schemes, and has powers to ensure they comply with their statutory obligations; and
- is one of three supervisors that will monitor and enforce compliance with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 Act which is due to come fully into force in 2013.
In addition, from October 2011 the FMA will license and supervise securities trustees and statutory supervisors and, when the Auditor Regulation Act comes into force (which is expected to be by July 2012) will supervise accredited accounting bodies (initially NZ Institute of Chartered Accountants) and the auditing profession.
The FMA has also been charged with educating New Zealanders on investing. This includes ensuring accurate and relevant information is provided to investors and, in the event of breaches by market participants, the FMA will provide public warnings, alerts or guidance for investors.
FMA's enforcement plans
In a recent speech Sean Hughes noted that the FMA board has yet to set the FMA's enforcement strategy, but went on to outline some of the principles the FMA is being guided by in its early days. In particular:
- The FMA intends to focus its energy not across every act of misbehaviour or insignificant breach but primarily on those areas of misconduct where the failings or beaches are deliberate or reckless and where the perpetrator set out to deliberately mislead or deceive innocent investors or third parties.
- In respect of the finance company cases and investigations it has inherited from the Securities Commission and the MED, the FMA intends to:
- pursue the cases already before the courts and, where possible, will add additional resources so as to enhance its prospects of success; and
- for matters not before the courts but that are under investigation, the FMA intends to undertake a detailed forensic analysis to assess whether those matters meet its new strategic priorities including those in the statutory objective.
- The FMA aims to have the framework for a market intelligence function in place by mid to late June and have it fully operational by the end of August. Its aim is to bring together a range of different information sources from across the market, and from within the FMA and other government agencies, to start to build a picture of where the most risky behaviours are occurring. It also intends to develop strong information-sharing arrangements with the Serious Fraud Office, the Police, other investigatory bodies and securities regulators overseas, especially ASIC in Australia.
For more information on the FMA, visit the FMA's website at: www.fma.govt.nz/