1. Compliance
  2. Fair dealing

Fair dealing

 

The Financial Markets Conduct Act 2013 (FMC Act) sets out minimum compliance standards of behaviour for people operating in the financial markets.

The FMC Act provides for fair dealing in relation to financial products and services by prohibiting:

  • misleading or deceptive conduct
  • false or misleading representations
  • unsubstantiated representations
  • offers of financial products in the course of unsolicited meetings.

The fair dealing provisions of the FMC Act are not focused only on retail customers. They apply to all members of the public (regardless of whether they're a retail or wholesale customer) and are based on equivalent provisions in the Fair Trading Act 1986 (FTA).

What financial products and services are covered?

The range of financial products and services covered is defined in the FMC Act and is very broad.

Financial products consist of the 4 categories of investment introduced by the FMC Act:

  • debt security
  • equity security
  • managed investment product
  • derivative.

Financial services are defined by reference to Section 5 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (FSP Act).

Providing credit under a credit contract is not defined as a financial service for these purposes.

Who do I contact if I have a fair dealing complaint?

We are the primary regulator of:

  • misleading or deceptive conduct and false or misleading representations in relation to financial products and services (other than credit contracts)
  • of unsubstantiated representations in relation to financial products and services (other than credit contracts)
  • offers of financial products in the course of unsolicited meetings

Therefore please contact us if you would like to make a complaint about one of the above.

IMPORTANT - if you would like to make a complaint about misleading or deceptive conduct in relation to financial products and services that occurred prior to 1 April 2014, then please contact the Commerce Commission. This is because the Commerce Commission was the regulator of those types of misconduct prior to that date.

How do the FMA and the Commerce Commission work together?

The FMA and the Commerce Commission have a Memorandum of Understanding that describes how we will work together to regulate fair dealing across financial products and services.

  • Only the FMA can bring proceedings arising from unsubstantiated representations relating to financial products or financial services (other than credit contracts) and offers in the course of unsolicited meetings.
  • Credit contracts will continue to be regulated by the Commerce Commission. The Commission will also investigate breaches of the FTA in respect of financial products and services (other than credit contracts) and, with our consent, take enforcement action.

What do the changes mean for financial advisers?

If you're a financial adviser, the fair dealing provisions of the FMC Act will apply to you. These are in addition to your obligations under the Financial Advisers Act 2008.

Does this apply to advertisements of offers under the Securities Act 1978?

The fair dealing provisions apply to prospectuses, investment statements and other advertisements relating to offers made under the Securities Act 1978 (other than in relation to civil liability for untrue statements, or criminal liability for misstatements). For more information see the transitional provisions in Schedule 4 of the FMC Act.

The unsubstantiated representations prohibitions will not apply to prospectuses and investment statements, but will apply to representations you make in other advertisements.

Also see our information sheet: Fair dealing provisions - transitional arrangements for advertising.

Reporting misconduct, making a complaint, or giving us a ‘tip-off’

Read more about how to report misconduct, make a complaint, or give us a ‘tip-off’ about a person or organisation offering financial services or products.