Financial Advisers (Custodian Assurance Engagement Relief – COVID-19) Exemption Notice 2020

Summary: On 23 April 2020 the FMA granted the Financial Advisers (Custodian Assurance Engagement Relief – COVID-19) Exemption Notice 2020.

The Notice comes into force on 29 April 2020 and grants exemptions with the effect that some custodians will have an extension of 2 months to obtain an assurance engagement under the Financial Advisers (Custodians of FMCA Financial Products) Regulations 2014. The exemptions only apply if the market participant believes, on reasonable grounds, that it is not reasonably practicable for it to comply within the required time frame because of the outbreak of COVID-19.

The notice also amends a two class exemptions issued by the FMA under the Financial Advisers Act to similar effect.

What balance dates are covered?
Generally, the exemptions will apply for custodians with relevant dates on and after 31 December 2019 and before 1 August 2020.

What conditions apply?
Custodians must comply with the conditions in the notice to:

• obtain an assurance engagement within an extended period of 2 months
• notify the FMA in writing if they are relying on the exemption on or before the original timeframe for compliance.

Some practical matters in relation to notifications
Notices to FMA can be emailed to [email protected].

Generally notice must be given on or before the original due date for obtaining an assurance engagement. However, if a custodian has a 31 December 2019 relevant date then notice must be given to the FMA on or before 15 May 2020.

The notice to the FMA should clearly state the following:

• the date notice is given
• the full name of the custodian giving notice
• the custodian’s FSP number
• the applicable relevant date
• the clause relied on (e.g. “the exemption in clause 5 of the Financial Advisers (Custodian Assurance Engagement Relief – COVID-19) Exemption Notice 2020” or ”clause 8 of the Financial Advisers (Overseas Custodians—Assurance Engagement) Exemption Notice 2018”).

We recommend that a clear and complete record is kept of the reasons for the belief that it is not reasonably practicable to comply within the required time frame because of the outbreak of COVID-19. We may request this information. However, the notice does not need to set out those reasons.