Brokers & Custodians

Brokers & Custodians

Breaches & offences

Under the Financial Advisers Act 2008 (FA Act) and Financial Advisers (Custodians of FMCA Financial Products) Regulations 2014, breaches of broker or custodian obligations may lead to claims for compensation, action by the FMA or prosecution.

Compensation

Claims may arise from clients for compensation for losses incurred as a result of a breach or breaches, including the duty to exercise required care, diligence and skill.

Action by the FMA

If you breach of an obligation, we may:

  • give direction orders 
  • go to the High Court to seek injunctions, banning orders, and prohibitions on payment/transfer of money, financial products or other property; or
  • issue temporary banning orders in some circumstances.

Prosecution

Breaches, including the trust accounting obligations, may give rise to an offence resulting in a substantial fine.

We may use our powers under the FMA Act 2011 for breaches by brokers and custodians, or under the Financial Markets Conduct Act 2013 for breaches by DIMS custodians.

If you provide a broking service or custodial service without being appropriately registered on the Financial Service Providers Register, you may be liable for up to 12 months imprisonment or a fine of up to $100,000 (for an individual) or up to $300,000 (for an business).

Find out more about our powers and our approach to enforcement.

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