FMA boss sorry for finance failures
Outgoing Financial Markets Authority head Sean Hughes has today used a savings conference to apologise to victims of financial market failures, saying they were entitled to expect better.
In a strongly worded speech at the Workplace Savings NZ conference in Wellington, Hughes lambasted those who questioned the need for stronger regulation, saying they should stop complaining or leave the market.
He also apologised to New Zealanders left out of pocket by the "actions and failings of a sad procession of both market participants and officials".
"You were entitled to expect more of your market and your gatekeepers and you were let down."
"You have every right to feel aggrieved."
Hughes, who will step down at the end of his three-year term this year, introduced his remarks by saying the fledgling FMA had set out to be different from its predecessors, the Securities Commission and parts of the former Ministry of Economic Development.
He said while he wasn't personally part of the market apparatus at the time of the failures, his apology was "heartfelt".
New Zealanders had been let down by patchy regulation, patently obviously gaps and flaws and a culture of finger pointing when it came to accountability and no one had said to them they could and should expect better, he said.
Hughes said it was little wonder investor confidence had tanked when faced with finance company collapses, the Ross Asset Management alleged ponzi scheme, cases where directors had shown showing little remorse or sympathy and - on a more mundane note - jargon-filled or inaccurate investment documents.
"Is it any wonder nervous investors prefer bricks and mortar and choose the perceived safety of property investment?"
Previously Hughes has stressed investors must take some responsibility for losses when they failed to do due diligence and should not always be looking for someone to blame.
A group representing Ross Asset Management investors recently suggested Hughes was stepping down due to the FMA's failure to prevent the collapse, although he denied that was the case and his performance overall has praised by other market participants.
Today Hughes reiterated his view that people who were intent on relying solely on family and friends for advice, not seeking independent help and not educating themselves bore some blame for their losses. The problem was not just a lack of financial literacy, he said.
However his strongest words were reserved for critics of stronger market regulation.
Hughes said he was surprised how strong the anti-regulation voice was when he started his term.
He said there was "absurd paranoia" about over-regulation and nay-saying participants should get on with it or get out of way because "we are tired of your incessant complaining."
There wasn't much New Zealand could do now about "smug" market participants who had failed to see their job was to protect investors' interests but looking ahead, the FMA wanted to use a carrot rather than a stick to make sure investors were put first, he said.
Looking back on his term Hughes said the FMA's achievements of the past two years might not seem much to "regulatory experts in blogland" but represented a huge amount of change for the likes of financial advisers.
However he questioned whether regulation had gone far enough and challenged his successor to look for untravelled areas that might need intervention.