Rob Everett, departing chief executive of the Financial Markets Authority. Photo / Supplied
When Rob Everett took the top job at New Zealand's investment watchdog, he expected to spend his time licensing the industry and bedding in a new law that would quickly settle down into the norm.
But nearly eight years later he is leaving a Financial Markets Authority that has doubled in size to 260 people, and changed so much that his job looks nothing like it did when he started.
"When I arrived it felt like a start-up," he says now. "We were doing everything for the first time. My predecessor had spent most of his time dealing either with the finance company litigation or the financial adviser legislation which was the first mover."
Everett - an expat Brit who moved to Wellington for the job after spending much of his career at investment bank Merrill Lynch - had never worked for a regulator before, let alone as chief executive of one.
That didn't stop him from getting stuck into licensing everyone from crowdfunding platforms, to peer-to-peer lenders and KiwiSaver managers.
"The FMA had 135 people then and brand-new legislation - most which had not even come into effect at that point. I thought my job was going to be getting it up and running, establishing core processes, explaining to the industry what you were trying to achieve and how you were going to do it, and then hopefully at some point you move into business as usual. That bit never happened."
Instead, in 2018 Australia's Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry revealed a raft of horrifying rip-offs that rippled into New Zealand, given that most of our largest financial companies are Australian-owned.
"Suddenly the Royal Commission came on and everything caught fire," Everett recalls.
Calls were made for New Zealand to have its own inquiry. Instead, the FMA and the Reserve Bank joined together to begin probing the conduct and culture of the New Zealand banks and life insurers.
Everett says it was a "gotcha" moment that stretched to cover the bulk of the industry. It has seen the banks change their frontline staff sales incentive practices, though the message has taken a little while longer to hit home for the insurance industry.
"It has been hard work," he admits.
"There's a few that are ending up in court with us, a few that are having pointed conversations behind the scenes and we are just trying to prepare that sector for what it is going to be like when it is regulated."
The Conduct of Financial Institutions Bill is still waiting to be passed into law but is expected to get there either late this year or early in 2022, giving the FMA the power to regulate bank and insurer conduct for the first time.
"The Royal Commission moment and the reviews with the Reserve Bank gave us a platform and a reason to have a conversation with the broader industry to say, 'look, some of this isn't the law yet but it is going to be in some shape or form. And you really have to do a better job for your customers'. That was the transformation moment I think."
Asked if that moment would have happened without the Australian Royal Commission, Everett says what the commission did was make public a lot of issues that had either been dealt with behind closed doors - or hadn't been dealt with at all.
"My fear at the time was if we didn't get onto this ... at some point there would be a real blow-up somewhere in the industry about how customers were being treated and it is always hard to put out those fires once they are lit."
He points to the 1987 sharemarket crash as evidence of what can go wrong when you have a very lightly regulated sharemarket, and then there was the collapse of the finance companies in 2008.
"Once you have destroyed confidence in your financial institutions and the regulators, that is a long journey to come back. I was desperate that we took advantage of the opportunity to get onto this before it blew up.
"We are still seeing pockets where things aren't as good as they should be and some of those, particularly when we take them to court, won't look great for the industry. But compared to what you saw in the Royal Commission they are relatively low-impact issues."
On top of preparing to regulate the banks and insurers, the FMA has also been navigating the rise of retail investment platforms such as Sharesies and Hatch in recent years, as well as new types of investment like cryptocurrencies.
Everett says it is hard to keep on top of the constant change.
"Things evolve around you. We spend a lot of time trying to work out what is changing in our increasingly large remit - that we may need to adjust to and of course typically the law hasn't kept up."
Trading platforms aren't directly regulated by the FMA, although it does have some involvement when it comes to ensuring they do not enable money laundering.
"But what we have to be prepared to do is insist on a dialogue, even though we don't have a licensing framework to use as the leverage, and not feel constrained by the fact the law didn't know this stuff was going to happen and therefore doesn't deal with it.
"So you end up in the grey area."
Everett says retail investment trading platforms and cryptocurrencies are things that all regulators are struggling with.
"The direct engagement of retail investors with investment and investment services on the one hand is great - it democratises financial services - disintermediates some of the brokers and banks and I think that is great.
"But it potentially exposes people to risks they don't understand and influences that don't have their best interests at heart."
Everett says at the moment the agency has a good relationship with the platforms and he doesn't feel licensing is necessary right now.
"We probably at this point wouldn't push for a change for the law for licensing, but if we felt they were operating in a way some of the overseas platforms have operated, and taken advantage of people's behavioural biases to get more and more business and encourage more and more trading - not only would we want to sharpen the conversation we are having with them, at that point you might push for a clearer set of operating rules and usually licensing is the easiest way to do that."
Everett says he doesn't have any specific regrets in leaving the job but there is plenty of unfinished business.
"I am still up to my eyeballs. I finish on Friday; there is so much to do and so much interesting stuff. Our own resources and the fact that everyone is in lockdown at the moment ... that is constraining what we can do at the moment.
"There is always regret there that we haven't got to some stuff and I won't name names but there's a few that have got away that I would like to have nailed during my time."
But he says he has been lucky because the investment markets have been in a bull run for virtually the whole time he has been in the job.
"When things unravel - whether that is house prices, whether that's investment markets - only then do you really learn both about investor behaviour but also about provider behaviour and also whether the regulations are good enough."
Even after 10 years, Everett says the FMA is still using some of its powers for the first time.
"We are grown up but not yet fully mature so there is still some learning for us to do. It's a very exciting period ahead - that retail trading stuff, the consumer finance - people at the FMA are itching to get into it. I'm sorry to be leaving that behind but I can't stay forever."
He will take a break for the next few months and then start a new job at the end of January heading the New Zealand Growth Capital Fund - a government-funded initiative designed to help allocate capital to early-stage growth companies.
"It will be a real shift. This was my first and probably only gig as a regulator. I spent most of my career on the other side of the table doing capital raisings and helping clients get done what they wanted to get done.
"I'm really looking forward to, rather than telling people off all the time, a growth and contribution and help us re-tool the New Zealand economy role."
• Role: Departing chief executive, Financial Markets Authority. New CEO of the NZ Capital Growth Fund
• History: Originally from the UK, emigrated to New Zealand in 2013
• Age: 53
• Education: Master of Arts and Law degree St Catharine's College, Cambridge
• Career: Began working as a trainee solicitor at Allen & Avery in London in 1991, moved to Merrill Lynch's legal team in 1995 and worked in London, New York and Hong Kong before becoming general counsel for the Europe division in 2005. Appointed chief operating officer Europe, for Bank of America Merrill Lynch between 2009 and 2012, director Promontory Financial Group. Appointed chief executive Financial Markets Authority February 2014.
• Family: Married with three children plus another teenager who lives with us, plus his brother and the dog.
• Last movie watched? Alpha – a movie about a boy and a wolf, with my daughter. The new Bond film with the whole family
• Last book read? Hamnet by Maggie O'Farrell (half way through). Just finished The Dark Towers (about Deutsche Bank and Donald Trump) by David Enrich.
• Last holiday? October school holiday - a week down south checking up on the parents-in-law.
Reserve Bank says leaving banks to their own devices hasn't worked.