'Close to zero' chance of another bum hire: FMA's Everett 2 Oct 2015
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'Close to zero' chance of another bum hire, says FMA's Everett
Oct. 2 (BusinessDesk) - Financial Markets Authority chief executive Rob Everett says he’s confident a review of the market watchdog’s recruitment policies means there is "close to zero" risk of repeating Benjamin Kiro hiring debacle.
In an embarrassing revelation last month, one of the FMA’s analysts was charged with forging his academic record and running a Ponzi-style scam. Kiro, who worked at the FMA from September last year until January, is accused of stealing $210,000.
Kiro was recommended to the FMA by outside provider, Frog Recruitment. Everett said “the quality of our people is absolutely paramount to us” and that made the case “extremely disappointing”. An internal review of its recruitment procedures to see what it can do differently and what it will expect in future from recruitment providers, is still under way. Everett wouldn’t comment on whether heads will roll but agreed it was damaging to the watchdog's reputation.
The FMA’s annual report out today shows staff turnover remains high at 21.5 percent for the second consecutive year, which Everett said was largely a result of changing the type of staff it needed while changing from an enforcement organisation dealing with breaches once they occurred to one that has legal powers to monitor and intervene with licensed providers as problems emerge.
He also took it as "something of a badge of honour” that private sector employers were poaching FMA staff to help them deal with the new regime under the Financial Markets Conduct Act.
The report shows the FMA had a spending spike this year while implementing the new Act, reporting a $2.5 million loss with expenditure of $32.7 million and income of $30.2 million. FMA chairman Murray Jack said the range of the watchdog’s mandate, a surge of activity in public markets, along with new capital-raising mechanisms under the Act, was stretching its people and financial resource.
“Over the year we will continue to fine-tune our strategic priorities to ensure we operate within our means,” he said.
Everett said it will become even more important for the FMA to prioritise the strategic areas outlined in a December report, and be clear to the market about what it doesn’t have resource to cover.
Last week the FMA lost a court case taken by financial services firm Vivier & Co, which had been stripped of its registration and removed from the Financial Services Providers Register. That has sparked a number of legal appeals by other deregistered firms. Some 50 firms were removed by the FMA and it recommended to the Registrar that another 50 didn’t get approval.
Everett said the FMA was still considering the decision, which found the FMA had breached Vivier’s rights to natural justice by failing to supply the firm with detailed evidence regarding its removal.
The case pointed to a specific issue in the process of deregistration, as this was the first time it had been tested under the new laws, he said. “As much as anyone else we need to know what’s required from us and we’ve been told in this case to pull back and have another crack.”
He said there was a bigger policy picture for the FSPR, which is under review by the Ministry for Business Innovation and Employment. The FMA’s view is that there needs to be more clarity that companies registering, who may not be actually operating in New Zealand, fall under no regulatory framework here.
“The question is around whether or not these companies should be on the register. At the moment, everyone is confused, which is a polite way of putting it,” he said.
The FMA will be releasing a number of reports this year on KiwiSaver, which is one of its seven strategic areas of focus this year. Those reports include annual industry facts and figures and a review of sales and advice practices, based on information sought from 10 providers, covering 80 percent of KiwiSaver members. It’s also reviewing how fees and returns are calculated in a bid to get more consistency among providers and managed funds. .
Investors will be handed back $51.1 million as compensation for losses negotiated by the FMA during the year, while $1.7 million was paid in fines and penalties. Some 77 percent of completed investigations resulted in sanctions that didn’t involve going to court.
Complaints were also up 25 per cent on last year, mainly because of its investigation into Arena Capital, trading as BlackfortFX. The FMA said it remains concerned about the activities of online foreign exchange trading platforms.
Everett said the rise in complaints was adding to its workload but complaints were vital because the watchdog couldn’t monitor everything.
“Without complaints it would be very hard for us to verify who is being let down by providers. It’s real gold dust for us and we’d be hamstrung without complainants,” he said.
(BusinessDesk)
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