FMA pours big effort into culture and conduct review, prompting resource reshuffle
By Paul McBeth
Aug. 9 (BusinessDesk) - The Financial Markets Authority's joint review of culture and conduct in the banking and insurance sectors with the Reserve Bank is taking up a lot of the regulator's time as it works towards filing an October report.
Chief executive Rob Everett told a media briefing on the FMA's annual corporate plan that the review had taken precedence over some other work programmes. The FMA and RBNZ will report to ministers in October, and Everett said the diversion of resources underscores the FMA's ability to meet intense workloads when needed.
"Our resource allocation shifts and evolves as circumstances dictate," Everett said. "It's fair to say the conduct and culture review did take resource from other work."
The market watchdog and central bank launched a joint review of the culture and conduct of banks and life insurers after a Royal Commission inquiry into Australia's financial sector discovered some disconcerting practices. The regulators have told banks and life insurers that they effectively need to prove why they don't believe that kind of misconduct is taking place on this side of the Tasman.
Everett said conduct improvements had been "patchy".
"We can see a shift happening in some spaces, and also in some spaces where that’s not happening," he said.
The FMA's annual corporate plan shows the regulator may identify regulatory gaps in the framework that need tightening up as a result of the review.
Liam Mason, director of regulation, said the FMA has had to put off some monitoring work until later in the year for the review.
"Right now this is absolutely the right place for our resources," he said.
The corporate plan shows the regulator wants to address poor culture in some firms meaning they don't manage conduct risk, and ineffective governance or systems that lead to customers being harmed.
Everett said he expects firms to be able to offer "concrete evidence of progress" made in putting good conduct at the heart of their business.
"We have become increasingly impatient with the lack of attention to better customer outcomes and strong conduct frameworks from parts of the industry," he said.