DLA Piper submission on MBIE's fit for purpose financial services conduct regulation consultation

The Ministry of Business, Innovation and Employment (MBIE) recently closed its consultation on proposed reforms to financial services conduct regulation (Consultation).

We submitted on the Consultation, outlining some of our concerns with the following proposed additional powers for the Financial Markets Authority (FMA):

• To introduce a requirement for the FMA to approve changes in control of licensed firms; and
• To introduce without-notice warrantless on-site inspection powers for the FMA.

We have reservations about whether these proposals are demonstrably justified. While we agree with the Consultation's discussion document that "[t]here are benefits to ensuring that the FMA has effective tools to monitor the compliance of regulated firms", we are not aware of any evidence to suggest that the FMA's existing tools are ineffective. Even if they are, it is not clear from the discussion document how the proposals would remedy such deficiencies. In the absence of that evidence and analysis, we submit there is an insufficient basis to proceed with the proposals.

The proposals have the potential to be a drag on the efficiency of financial markets without any demonstrable justification and run contrary to a stated purpose of the ongoing financial services reforms, being to reduce the compliance burden.

You can find MBIE's Consultation discussion document here, and our submission here.

For more information on the Consultation, please see our previous update here.

Please get in touch if you would like to discuss the Consultation.