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FMA Update - 9 December 2015

Seasons greetings

It is with some surprise that I find myself writing for the FMA’s December Update. Either time is passing more quickly or I am getting old . . . or maybe we are all just busy?

As we canter towards the summer break, we have several new people holding the reins at the FMA. The new structure and executive team kicked in on December 1st – with Nick Kynoch arriving as the new General Counsel in late January. I am very much looking forward to working with the team in their new roles.

We have put out a couple of important reports in recent weeks – the Sales & Advice Report and the Audit Quality Report. Although they cover quite different sectors, both reports demonstrate that while good progress is being made towards our expectations, it has been patchy and effort needs to be sustained.

These reports are both good reminders that the regimes being overseen by the FMA are still mostly brand new and that it will take a lot of effort on all sides to get to where we are trying to land.

A major focus in recent and coming weeks is on good conduct within financial services firms. We are determined that firms understand the need to ‘hardwire’ good governance, systems and processes into their organisations. This lays the groundwork for good conduct, rather than just relying on good intentions and fine rhetoric. These issues are top of the list for prudential and conduct regulators worldwide – as demonstrated by the focus on them at the Financial Stability Board and IOSCO. See Liam Mason’s presentation to the INFINZ conference on this topic.

Talking of regulators, we recently met domestically in CoFR (Council of Financial Regulators), and on a trans-Tasman basis with ASIC and the other Australian regulators. One topic on all these agendas was regulatory collaboration and alignment. Everyone wants to see the regulation of financial services work on a holistic basis and these meetings help build good lines of communication to make that happen.

I wish you and your families a safe and happy Christmas.

AFA renewals

If you’re an AFA we encourage you to make a note of your authorisation expiry date.

We have published a renewal guide on our website and if you need to talk to someone about your application renewal, please email us at renewals@fma.govt.nz or call us on 0800 434 567 (+64 3 943 4222 for overseas callers).

QFE renewals guide published

We have published our renewal guide and application forms for QFEs on the QFE licensing forms and resources page of our website.

We encourage QFEs to make a note of their expiry date and plan ahead for their renewal application.

Reminders 

14 December

Consultation closes – Proposed variations to standard conditions of market services licences

17 December

Some amendments to the FMC Act Regulations take effect. See our website for details on the key changes.

21 December

Consultation closes - Consultation on annual declaration of compliance for FMC Act licensees

Applying for a MIS licence?

We are pleased to see an increase in applications from Managed Investment Scheme (MIS) managers. For those still working on your applications, we encourage you to talk to us early, and apply as soon as possible.

For managers of non-traditional MIS schemes such as forestry, property and other single-asset schemes, our assessments are adapted to the unique aspects of your business, such as the size, nature and complexity.

Meeting the minimum standards

Our licensing guide explains that we expect all licensees to demonstrate how they can meet the minimum standards. Our assessment against the minimum standards takes into account the unique aspects of your scheme(s) and their underlying assets. Where a particular standard does not seem relevant to your application, you will need to explain how you came to that view. You will also need to explain how you will meet the intent of that standard, and the summary statement for that particular category. See page 3 of the guide for details.

In limited cases, we will consider requests for an exemption from certain requirements of the Financial Markets Conduct Act. Next week, we will be publishing consultation papers of interest to MIS managers of non-financial assets, specifically forestry and property schemes.

For any questions on MIS licensing please visit our website or call us on 0800 434 567.

What's new

Have your say on the future of financial advice

The Ministry of Business, Innovation and Employment (MBIE) has released an options paper as part of a review of New Zealand’s financial advice laws. Deadlines for submissions are 29 January 2016 for sections relating to the Financial Service Providers Register, and 26 February 2016 for remaining sections. A consumer brochure is also available. MBIE would appreciate the assistance of providers in circulating the consumer brochure. More

Consultation closing soon........

Proposed variations to standard conditions of market services licences

Closes Monday 14 December

Consultation on annual declaration of compliance for FMC Act licensees

Closes Monday 21 December

Upcoming consultation

We have been working on a number of legislative notices (particularly exemptions) to support the implementation of the FMC Act. 

A general update on exemptions and designations will be available shortly on our website. In the coming week we will be publishing consultation papers seeking feedback on exemption proposals relating to the matters below. 

Designation of shares in some investment companies to managed investment products

We are seeking views on proposed designations which would result in certain types of shares in ‘investment companies’ being treated as managed investment products in a managed investment scheme, where this more closely reflects the economic substance of the financial products.

Recognition of overseas financial reporting and offers

We are consulting on possible exemptions for overseas issuers and overseas FMC reporting entities.   We are largely proposing to continue existing disclosure and governance exemptions for overseas issuers.  We are proposing to offer more substantial exemptions for overseas financial reporting and audit regimes, providing they are broadly equivalent to New Zealand.

Closing dates for submissions on these proposals will be mid February 2016.

Forestry schemes

Our consultation paper will seek input on possible exemptions from some FMC Act obligations for schemes with certain characteristics. The paper also discusses how forestry schemes would comply with some FMC Act obligations.

Limited exemptions for existing property schemes

We are also considering issues that arise for existing property schemes or syndicates other than forestry schemes in complying with the FMC Act, and possible exemptions to address some of these issues.

Out next week

In our last major report for 2015, we'll be publishing our findings on anti- money laundering and countering financing of terrorism.

FMA offices closed over Christmas holidays

Our offices will be closed on Thursday 24 December and will reopen again on Tuesday 5 January 2016. Enquiries or complaints will be dealt with from 5 January 2016.

We wish everyone a safe and happy Christmas.

FMA presentations

12 November – Fund Managers Forum – Emerging themes from licensing

14 October – Presentation by Liam Mason to the INFINZ annual conference

Feedback?

Email us at communications@fma.govt.nz