NZ investment industry veteran, Craig Stobo, has begun a five-year term chairing the Financial Markets Authority (FMA) under changed riding orders from the new government.
Stobo was named last week to replace Mark Todd, who completed a nine-year run on the FMA board – the last five as chair – at the end of April.
He assumes the role just after new Commerce Minister, Andrew Bayly, issued updated instructions in a ‘letter of expectations’ that require the regulator to support the government’s priorities of:
- simplifying complex financial policy and regulatory settings to remove unnecessary barriers and transactional costs, promote growth objectives and encourage competition; and,
- streamlining capital market settings to allow businesses greater access to capital to support productivity and growth.
Among other policy shifts, Bayly calls for the FMA to adopt a more “risk-based approach to regulation” including anti money-laundering rules.
- The letter says the regulator should also offer updated guidance to the market this financial year on issues such the to-be-amended Conduct of Financial Institutions (COFI) legislation and other areas such as:
- boosting confidence for financial advice providers to make recommendations about financial products purchased for investment purposes, including particularly around initial public offerings; and,
- removing barriers for fund managers, including KiwiSaver providers, from investing in alternative asset classes.
In a pointed reminder, Bayly notes, too, that the FMA should ensure “that market participants have a clear understanding of their legal obligations, and the distinction between legal obligations and guidance, and that regulatory expectations set by the FMA are properly founded in the law”.
The regulator took some heat from the industry over its proposed ‘outcomes-focused’ approach in a three-month consultation that closed in April.
In a statement, Bayly said Stobo “brings a significant depth of experience to the role, having worked as a director, diplomat, economist, and chief executive”.
“The FMA will benefit from Mr Stobo’s understanding of market issues and regulation, as well as the importance of informed participation from businesses and investors,” he said.
Stobo has a long history in the NZ financial services industry dating back to the seminal funds management firm, BT, where he worked for 12 years including the final four as CEO.
He currently holds several board chair gigs including Saturn Advice, the Local Government Funding Agency and Elevation Capital.
Elevation founder, Chris Swasbrook, is due to wrap-up his term on the FMA board next month.
The regulator has another board spot to fill following the resignation of Mark Weenink, who left at the beginning of May after just two years in the governance role.
Elsewhere in the formal letter, Bayly says the FMA will need to demonstrate “accountability for public money” as the government tightens the purse strings.
“… I expect that you will include sufficient performance measures in your statutory accountability documents to demonstrate, and enable measurement of, the outcomes that will be achieved with the funding the FMA receives.”
The FMA budget has soared over the last five years or so from under $30 million to $73 million in the most recent period (with further increases expected) as the regulator took on a raft of new duties including COFI, adviser licensing, climate-reporting and – soon – oversight of the Credit Contracts and Consumer Finance law.
However, about 80 per cent of the FMA budget is sourced from industry levies.