New Zealand’s Financial Markets Authority (FMA) concedes “full adjustment” to its revised expectations on sales and advice will “likely take a few more years”.

The regulator’s first monitoring report on sales and advisory practices covers the main financial services providers, including three types of professional adviser: authorised, registered and qualifying financial entity advisers.

It includes practices for the more complex Category 1 products, such as managed funds and futures contracts, and Category 2 products such as insurance, term deposits and mortgages.

The report also contains findings from an industry review of KiwiSaver sales systems, based on data provided by 10 companies.

The FMA has found inconsistencies in the quality and maturity of systems and practices in use across the industry.

The main issues highlighted are lack of comprehensive governance systems, insufficient reporting to senior management on sales and advice outcomes, and inconsistent attention to managing conflicts of interest; inadequate attention to ensuring consumers have access to appropriate information and advice; and lack of comprehensive compliance systems.

The FMA was given a wider mandate last year with the introduction of the Financial Markets Conduct Act 2013.

Director of Regulation Liam Mason says sales and advice monitoring work indicates a “high degree of willingness” among firms to meet their obligations and adjust to the Act.

But this is not necessarily translating to substantive change. “We’ll be stepping up our efforts to accelerate the change and to ensure providers are systematically putting the interests and outcomes for consumers at the centre of their processes,” Mr Mason said.

The FMA has flagged “further engagement with boards and senior management” to improve the quality of sales, information and advice systems, so investors’ interests are “systematically prioritised in the culture of an organisation”.

“Firms need to hardwire into their core processes and structures the focus on the customer that we have been talking about,” Mr Mason said.

Meanwhile, the FMA has proposed a new standard condition requiring FMC licensees to report annually on their compliance with each licence condition.

Submissions on the proposal close on December 21.