FMA looking at Australia's national anti-scam centre, but 'there's no silver bullet' to fight fraudsters

The Financial Markets Authority (FMA) is looking at anti-scam measures introduced in other jurisdictions such as Australia’s recently launched national centre.

Clare Bolingford, FMA Executive Director for Regulatory Delivery, told the Financial Services Council’s annual conference there was no silver bullet to help protect New Zealanders from scams, but the industry and regulators could “come together better”.

She said there was an opportunity to do that effectively in NZ, because "we are a smaller jurisdiction and we can get quite a lot of the industry and government parties in that kind of dialogue, saying 'this is what we are trying to achieve'".

Bolingford said the FMA was looking at a National Anti-Scam Centre, similar to one recently set up in Australia.

The Australian centre was opened in July and brings together government, law enforcement and the private sector to combat scams.

Singapore has a similar anti-scam centre which had recovered more than $200 million for victims since it was setup in 2019.

All of New Zealand's big four banks say they are supportive of setting up an anti-scam centre.

Bolingford said how to fight scammers “was a really challenging question”.

“These are not straightforward things to try and combat. So I think it is really important that we work together and try and find, you know, the variety of different solutions.”

In a speech, Bolingford said the Financial Markets Conduct Act established what it calls the FMA’s perimeter – the borderline of its formal powers. 

“Most obviously this perimeter boundary is where we see criminal activity that causes harm to the public and erodes confidence in the system. This is why we are so alert to scams and frauds.”

She said to be able to achieve this, the FMA’s second strategic priority was vital – to improve the regulator’s understanding of the drivers of market, provider and consumer behaviour.  

Bolingford said responding to threats and harms “on our perimeter remains our third strategic priority”.  

“We know that protecting the perimeter is also important to firms, because ensuring it is rigorously policed, supports confidence across the board and recognises the efforts firms have invested in complying with their obligations. No-one wants to see scammers undermining public confidence in a system designed to protect them.”

Bolingford said the markets watchdog understands from its international peers that many of these threats are on the rise everywhere, and the global surge in scams requires a coordinated response. 

She said Aotearoa cannot go it alone, and neither can NZ "work in silos at home if we want to respond effectively”. 

“The International Organisation of Securities Commissions has raised this to the top of its agenda, and so have we.”

“Challenging unregulated harmful activity when it originates overseas stretches the FMA to the limits of our domestic powers and jurisdiction …. Sadly, we know that our enforcement actions alone will not be sufficient to end this type of activity or to protect the public from the blizzard of scams that is confronting them now in social media, online, their phone, or even in their community through word of mouth.”

Bolingford told the audience to “expect to hear more from us on this in the months ahead, and whenever you can, please share our alerts and warnings, promote our resources, and raise awareness to help people pause, stop, think, and protect themselves before handing their money over to scammers”.

The FMA's regulatory director said NZ had been "playing catchup" with the majority of its "foundational regulations".

"With [Conduct of Financial Institutions] and the new Financial Market Infrastructure regimes now in place, this brings NZ more closely into line with international jurisdictions, closing conduct gaps and implementing a fully-formed twin peaks regulatory model. Twin peaks is simply where prudential and conduct regulators meet to support a robust, sound, and fair financial system. The important piece is to ensure we work closely and cooperatively where we share a responsibility to supervise and enforce. We want to make sure this is neither cumbersome or clumsy."

The council's blueprint

The Financial Services Council (FSC) launched an inaugural policy platform on day two of the conference.

The Blueprint For Growth is aimed at helping to lead, guide and shape the policy debates that matter in relation to growing the financial confidence and wellbeing of all New Zealanders.

It identified four money issues facing New Zealanders. It said New Zealanders aren’t financially literate enough, with 53% of Kiwis unable to access $5,000 in time of emergency.

It said New Zealanders are taking too much risk without managing the downside, with 70% of people underinsured.

New Zealanders aren’t prepared for retirement, leading to stress and anxiety in later years with 56% reporting in a 2021 survey that they don’t feel they are financially prepared for retirement.

It said 39% of New Zealanders are worried about the financial consequences of a significant health event.

“The lack of a coherent vision for the sector and for all New Zealanders is costing us dearly and leading to poorer outcomes for all Kiwis, along with missed opportunities for a key sector of the New Zealand economy,” FSC chief executive Richard Klipin said.

 “Our number one priority is to grow the financial confidence and wellbeing of New Zealanders."

Kilpin said the announcement was just the beginning, "as we know that good, evidence-based, bipartisan policy leads to better outcomes for all New Zealanders. This is part of the key to unlocking the future prosperity and productivity in New Zealand".