Financial Markets Authority

Yes, indeed, all eyes on the election on Saturday.

OK, so we've got the Financial Markets Authority, the FMA, they've put their annual report out.

Yes, and it's been, let's face it, quite a tumultuous year for the Financial Markets Authority.

We won't dwell too much on that.

Various departures? Just a few, just a few.

But it says that it has delivered on a number of priorities over the past year, but not all of them.

So the FMA has given itself a pass for increasing greater participation in capital markets, supporting innovation and flexibility, and establishing itself as New Zealand's single conduct regulator for financial markets.

But that might not be the whole story.

Is that a job for the

FMA, the Financial Markets Authority? It seems it is.

They have been auditing the auditors.

They've done a review of auditors responsible for checking the financial reports of listed public companies.

Others bound to regulatory standards.

It indicates 20% fail to meet standards, which is interesting.

The Financial Markets Authority, its quality review of 20 audits found reoccurring weakness in some auditors' performed audits with non-compliance issues in 4 or 20% of the reviews.

Now, FEMA head of audit, Jako Moisen, says a pair of second eyes, there'll be a few journalists who could do with that sometimes too, don't they, by an audit partner would have probably resolved the problems identified in the three of the four non-compliant reviews.

All of a sudden, KiwiSaver is having this moment in the sun where all of the political parties have just about have to have something to say about it.

You look at the average KiwiSaver balance per the FMA report, just

over $40,000.

That's not enough.

60,000 babies born a year in New Zealand, so who pays for that? Is it the employer? So the government contribution going? But look, overall, the theme's sort of the same with those parties.

It's lifting contribution rates, which we sorely need to.

So you look at the average KiwiSaver balance per the FMA report, just over $40,000.

That's not enough.

Welcome to another edition of Taxpayer Talk.

With me now is number eight on the New Zealand First Party list, former chair of the Financial Markets Authority, a man with a distinguished career in finance, going back over many years, Craig Stobo.

Good to have you with us, Craig.

How's life as a political candidate?

Just like Australia, their primary mandate is to adopt international standards for local use.

And their equivalent of the corporate regulator, their version of ASIC, is the FMA, the Financial Markets Authority.

Okay, I am putting myself in the shoes of a candidate listening right now.

My head is totally spinning with acronyms.

So there you go.

And the Reserve Bank and Financial Markets Authority are telling banks and other financial services to put in place a plan to deal with AI risks.

What is the big concern here?

You know, we've been hearing about this almost every single day this past week, that there is an increasing risk, and I don't think there's any ... it's not been lost on the Reserve Bank and the Financial Markets Authority that saying, you know, that they are, there are specific risks associated with artificial intelligence.

And it, it does need to be addressed specifically at the highest level around the board table, and you need to make sure that you've set out the priorities p- and you have to be sure w- what you're doing there.

And it's, it's, it's a bit of an unknown at the moment because AI's still relatively new.

But one thing that is interesting in the whole, um, piece was what is going on with third-party suppliers because so much of AI is dependent on data centers that are owned by somebody else and, uh, you know, AI agents.

Who knows where they came from and what they're doing? You've gotta be on top of, of a lot these days for governance, but that's the Reserve Bank and Financial Markets Authority's expectations.

in an interview a week or so back, didn't he, as the biggest threat from AI.

Um, yeah, the Reserve Bank, the Financial Markets Authority, I'm sure they've been working on this [chuckles] for a while, they are telling, um, some of the banks and the industries like, uh, insurance and other non-deposit takers to step up their cybersecurity oversight to specifically respond to AI-enabled incidents and attacks.

Now, the regulators have issued a joint statement, and they spell out their expectations to ensure the risks are managed appropriately.

Now, the RBNZ Director of Specialist Supervision, Scott McKinnon, says AI comes with benefits but also risks and responsibilities for banks and other financial institutions to manage.

You know what? If you watch the finance min- or the finance spokesperson debate, that would be what I'd really like to talk about, because there's new faces there.

I think s- did, what happened to Stobo? Did Stobo go from the Financial Markets Authority? What happened there? Was there a conduct review? Oh, yeah.

Anyway, I don't think it's quite how you said it.

Um, doo, doo, doo.