FMA publishes its enforcement policy

The Financial Markets Authority (FMA) has published its enforcement policy.

Rather than be an exhaustive or legally-binding document, the policy is intended to guide and inform financial market participants. It will be revised from time to time as the FMA's regulatory objectives and priorities change.

The FMA is committed to enforcement action targeting conduct that harms, or presents the greatest likelihood of harm to, the function of open, transparent and efficient capital markets. The FMA has indicated that it does not intend to pursue every breach that comes to its attention.

Some early enforcement priorities that have been highlighted include:

• compliance with new legislation (such as the licensing of financial advisors and trustees and statutory supervisors);
• misconduct in KiwiSaver sales and distribution practices;
• conduct in traded securities markets; and
• policies and procedures that credit and financial institutions will use to assess and manage the risks of money laundering and terrorist financing from 30 June 2013.

The enforcement policy also sets out the FMA's approach to:

• the use of its formal functions and powers;
• third party accountability;
• the publication of enforcement action;
• early intervention to prevent market failure;
• pursuing civil and criminal sanctions; and
• its use of section 34 of the FMA Act 2011, which allows the FMA to 'stand in the shoes' of another person's right to take action against a third party.

In addition to this enforcement policy, the FMA intends to issue a model litigant policy that outlines its intended approach to litigation, and a policy on its intended approach to conducting investigations.

For a copy of the FMA's Enforcement Policy, click here.

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