Govt moves to implement 'super-regulator' recommendations

Thursday 29th April 2010

The government will create a “super-regulator’ agency, to be called the Financial Markets Authority, with sweeping powers over the conduct and integrity of New Zealand’s public investment markets.

Commerce Minister Simon Power announced the widely expected changes at the INFINZ annual awards dinners of finance industry professionals in Auckland this evening.

The FMA will be charged with “visible, proactive, and timely enforcement” securities regulations, and will have wider powers than those envisaged by the solution recommended last December by the Capital Markets Development Taskforce.

It will amalgamate the current activities of the Securities Commission, the NZX Disciplinary Tribunal, the securities offer document vetting undertaken at present by the Companies Office, Government Actuary involvement, and will remove oversight of auditors from the New Zealand Institute of Chartered Accountants.

NZX will continue to operate day-to-day market rules, but the FMA will be able to recommend and apply new listing rules that are judged “important for market integrity”.

“The consolidation of functions and powers into the new authority will ensure a focus on surveillance and enforcement, which will be key to improving confidence for Mum and Dad investors,” Power said.

The FMA would have “sole responsibility for enforcing securities, financial reporting, and company laws as they apply to financial services and securities markets. It will regulate and oversee trustees, auditors, directors of financial serices providers, and financial advisers.”

However, Power was not convinced of a need to include public enforcement of directors’ duties.

While there would be public consultation, “my judgement is that with the changes the government is proposing, the FMA will largely have the powers needed”, he said.

He favoured full-time commissioners on the FMA.

Other major securities regulatory changes announced tonight are:

· a six month extension to July 1, 2010 for registered financial advisers to gain qualifications, although they must still register by December 1 this year, recognising industry concerns that the

· the inclusion of auditors under the FMA rather than regulated by the New Zealand Institute of Chartered Accounts – a big change of heart for Power, reversing views expressed just over six months ago;

· changes to the law covering KiwiSaver providers, making the fund managers rather than the trustees liable for loss;

· a shake-up in the leadership of securities enforcement with the creation of the FMA

· a fundamental rewrite of parts of the Financial Advisers Act 2008 to remove its impact on areas clearly unintended.

The changes accompany changes to trustee legislation already under way, and the passage in 2008 of the Financial Advisers Act, which is subject to amending legislation already and, by Power’s admissions, requires further tidy-ups.

Further securities law reform is envisaged, but Power said the announcements made tonight “could not wait” because of the need to restore confidence in New Zealand’s securities market regulatory regime.

The FMA legislation will be passed this year and the authority up and running by early 2011, Power said.

Businesswire.co.nz

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