FMA boss calls for end to financial blame game

Sean Hughes. Photo / Mark Mitchell

Kiwi investors need to take responsibility for their financial decisions and stop blaming the market regulator every time something goes wrong, says the head of the Financial Markets Authority.

A day after Wellington financial adviser David Ross was arrested and charged, FMA chief executive Sean Hughes told the Financial Literacy Summit in Auckland it was not the authority's role as a government agency "to hold the hand of every investor".

"I would say we need to wean New Zealanders off a culture of blame and dependency every time there is financial misadventure."

Hughes said investors needed to do their homework, get proper financial advice, ask questions and not adopt a set-and-forget policy for investments.

"Here in New Zealand the securities regulator's role is about ensuring that investors do have confidence in the markets. But with my FMA hat on, I would say that financial well-being must start at home and in schools."

Hughes said the topic of fraud was "painful in all our hearts" in the wake of multiple financial misadventures in the past decade.

"With the outcomes in relation to the situation such as David Ross yesterday, it is indeed a national tragedy that we need to continue to focus on."

Another of the summit's keynote speakers, Gerri Walsh, shared her experience heading up the investor education programme at America's largest independent securities regulator.

Walsh, who works for the Financial Industry Regulatory Authority (Finra), said one of the biggest challenges to raising levels of investor education was audience engagement.

"Some people describe financial education as serving up broccoli.

"It's the veg you should eat that is good for you. But frankly what do you prefer? I prefer chocolate."

To improve financial literacy, she said, educators needed to think harder about who their audiences were and understand their needs.

"You believe people need this information but how do you make them want it? That involves stepping into the shoes of your audience and understanding what their daily life looks like."

Hughes said there was still a lot of work to do in raising levels of financial literacy in New Zealand.

"My favourite story is the young fellow who was asked a few years ago what the NZX was and he interpreted it to be a pornographic magazine."