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Financial Markets Confidence Slumps to 2017 Levels

A recent survey has revealed a significant decline in the proportion of New Zealanders who believe their country’s financial markets are effectively regulated. The findings show that only 39% of investors and 46% of non-investors express confidence in the effective regulation of the financial markets, levels not seen since 2017.

Causes of the Decline

The decline is largely attributed to changes made to the survey question wording, which removed a reference to regulatory responsibility. As a result, fewer investors indicated they are “fairly confident”, and more became uncertain about their level of confidence. Non-investors, on the other hand, saw a decrease in those who were “not very confident” and an increase in those who are unsure.

Investor Confidence by Type

Investors with managed funds tend to be more confident and knowledgeable about financial markets, which may explain why they have been less affected by the question wording change. However, all investment types except for managed funds saw a decline in confidence levels, with KiwiSaver investors showing the lowest confidence.

Awareness of the Financial Markets Authority

The survey also found that those aware of the Financial Markets Authority (FMA) are significantly more likely to be confident in the effective regulation of financial markets. In fact, 70% of those who are aware of the FMA are confident, compared to just 12% of those who are not aware.

Demographic Factors

Males and those with higher incomes tend to be more likely to express very high confidence levels, while those citing corruption and legal failures as reasons for their lack of confidence were more prevalent among those aware of the FMA.

Implications

The findings suggest that despite efforts to improve financial market regulation, there is still a significant disconnect between the public’s perception of regulatory effectiveness and reality. The financial services industry must continue to work towards building trust and transparency to restore investor confidence.