Inbox: Turning around investor confidence

Simon Allen, chairman of the newly created Financial Markets Authority (FMA), is fully aware of the challenges the authority faces in rebuilding investor confidence and creating and enforcing regulation to advance New Zealand’s economic outlook.
“Broadening and deepening our financial markets to ensure local businesses have access to the capital they need to grow is our overriding objective,” he said. “To achieve that investors have to regard New Zealand as good place to invest.
“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,” said Allen.
The FMA takes over the mandate of the Securities Commission and the Government Actuary and centralises other regulatory functions from the Ministry of Economic Development.
Allen said that he, the FMA board and chief executive Sean Hughes, were fully aware of the difficulty in turning around investor confidence in the current environment in which investors have suffered large losses in recent years as well as the repercussions of the global financial crisis.
“We can and will set clearer rules for how markets and businesses should operate to higher standard, and we will more consistently and strongly enforce those rules,” he said. “However, New Zealand cannot regulate its way to improved standards of market behaviour, company performance and corporate governance.
“Ultimately, if New Zealand is to seriously lift its game, it requires all market participants including professional company directors running New Zealand businesses to take these new rules and responsibilities of conduct, governance and integrity very seriously.
“In that sense, we are all in this together, and I can’t over-emphasise that enough,” he added.
Hughes said that FMA had greater resources and larger mandate than its predecessors.
“Over time investors can expect access to more timely and better quality information and higher standards of financial advice on which to make their investment decisions. And the market generally can expect FMA to act more quickly and efficiently in market surveillance, intervention and, where necessary, enforcement if the new rules are deliberately flouted.”
Lifting the standards of corporate governance is also priority of the newly established body, Hughes says.