Scant FMA oversight drags out investigations ‘in deepest secrecy’

Limited oversight of the Financial Markets Authority (FMA) has let the watchdog drag its heels on investigations into listed company failures such as CBL Corp and Wynyard Group, New Zealand Shareholders’ Association (NZSA) chairman John Hawkins says.

The retail investor group held its annual meeting in Auckland on Saturday, at which Hawkins was reelected to the role. He planned to vacate the position, but put that off until a replacement was locked in.

Hawkins lauded efforts by NZX management under new chief executive Mark Peterson to improve the core function of the stock market operator, noting the “irony” that while NZX faced “significant oversight”, the FMA itself effectively self-reported.

“It publishes many different documents about what it does and how that compares with former years. The problem, as far as I can see, is nowhere are there any detailed performance standards that investors can look at regarding the investigation role that FMA has,” he said.

“There are lots of generalities of course, but they allow plenty of scope for investigations to drag on in deepest secrecy. It seems to me that where serious concerns are raised, these disappear into a black hole only to surface years down the track or not at all.”

Hawkins highlighted the lack of retail investor representation on the FMA’s board and questioned whether the weighting of directors from the “big end of the market” had caused the watchdog to lose sight of what ordinary investors expected of it.

“If we consider the Wynyards and CBLs of the world, it is obvious change is needed when it comes to policing poor behaviour,” he said.

Hawkins said he was optimistic that the lack of new listings on the stock market was a short-term lull and would improve over time, echoing sentiments from Direct Capital managing director Ross George earlier in the day.

Direct Capital has taken several companies public, including New Zealand King Salmon Investments and Scales Corp.

George said the stock market operator itself was looking more broadly at the private economy — which dwarfed the listed market — and was more open to smaller companies than it had been in the past.

“I think it’s a very live issue and, yes, we do have businesses we’re invested in that we think will be great listing candidates,” George said.