The Financial Markets Authority brushed off claims the market was the best arbiter of fixing any problems in the sector in settling on a new guide for a code of conduct designed at making sure firms have the customer at the forefront of their minds.
The market watchdog today released its final guide on how it views conduct and what it sees underpinning good practices, which had its genesis from talks with firms wanting a better understanding of how the FMA expected to approach certain issues.
Among submissions was a claim the market was "a better determinant of whether products and services meet customer need", something the FMA said was "worryingly complacent about the amount of harm that can be caused to customers before the market eventually 'solves' the issue" and that regulation and signalling a view on conduct was "appropriate".
"There is such an imbalance of power and information between those who provide the products and services and those who consume, that we feel in the context of this guide, that it is worthwhile pointing out the need to have a focus on customer outcomes, which is possibly more self-evident than in areas of industry where there's less of an imbalance between buy and sell," Liam Mason, FMA director of regulation, told BusinessDesk.
The new code will start informing the way FMA monitors conduct and be incorporated into its risk-assessment, and Mason said the regulator hopes to be having conversations with firms this year.
Some financial services firms have already started thinking about how to meet the code, particularly those companies with international connections, he said.
The FMA finished the introduction of the licensing regime in November with fund managers the last group of firms going through this part of the overhaul of securities legislation, and will now have a greater role monitoring the sector with the government signing off on extra funding via an increased industry levy late last year.