COVID-19 continues to have a significant impact on many market participants. We recognise that this may lead to practical difficulties which affect their ability to meet their regulatory obligations. Where a market participant breaches, or expects to breach, a regulatory obligation as a result of the COVID-19 circumstances and seeks relief from the FMA, the primary approach we intend to take is ‘no-action’.
A key benefit of this approach is that it allows the FMA to act in a quick and decisive way in an environment where uncertainty may lead to unnecessary operational / regulatory burden and investor detriment. We will consider whether the relief requested is specific to the individual circumstances of the entity, or appropriate for a wide range of market participants on a class basis.
What is a ‘no action’ approach?
A ‘no action’ approach means that the FMA will not take action against a person for breach of a statutory or regulatory obligation. It is an expression of regulatory intention about how to exercise the FMA’s functions. An FMA ‘no action’ confirmation does not necessarily preclude third parties from taking legal action in relation to the same conduct or conduct of that kind.
Our expectations
This approach is aimed at allowing market participants to continue focusing on serving their customers’ needs. We expect market participants to be communicating more regularly with their customers during this time, and to be responsive to any specific customer needs where possible. Our expectation remains that participants should be treating their customers fairly at all times.
Accordingly, as part of this approach, there is a general expectation that where possible, breaches will be remediated at a later date, and as such the requirement to comply is being delayed rather than removed. We also expect market participants will take steps to mitigate any risks resulting from the breach.
The ‘no-action’ approach is not intended to apply to ongoing and open-ended breaches, or where there is significant risk of customer detriment. Exemptions may be required in certain, limited, circumstances, however we expect to deal with most requests for relief due to COVID-19 with this ‘no-action’ approach.
We strongly encourage financial market participants to promptly report past or inevitable and imminent breaches due to COVID-19 to us.
How to apply
If you need ‘no action’ relief in respect of any breaches resulting from Covid-19, please provide us with the following information, preferably by email to [email protected]
Who needs the relief?
Give the full name, address and corporate status of the person(s) seeking the relief.
State the jurisdiction in which you are incorporated or constituted, and any securities exchanges upon which your financial products are listed.
If you are licensed or authorised by us, please provide us with these details. Please also provide your Financial Service Provider (FSP) number.
What do you need ‘no action’ relief from?
Give the provisions of the Acts and/or Regulations that you are unable to comply with as a result of Covid-19. Tell us any conditions you consider appropriate, for example:
- when and how you intend to remediate the breach(es)
- what steps you could take to mitigate outstanding risks (for example to your customers) if you cannot comply with your obligation(s)
- any alternative requirements that would be in place to protect your customer/investors.
If possible, tell us why granting ‘no action’ relief would be consistent with the purposes of the relevant Act. For example, would it avoid unnecessary compliance costs and promote flexibility in the financial markets (see sections 3 and 4 of the Financial Markets Conduct Act 2013)?
Why do you need relief?
- Explain why you cannot comply with your obligations as a result of Covid-19.
When does the obligation you cannot comply with fall due or when did the breach occur?
- Please indicate if your request is urgent and tell us any other information you consider relevant.
Our process
We will acknowledge your application. We will then consider it and may be in touch with you to discuss or to seek further information. There is no fee. We will notify you of our decision by email. We will also publish details of no action decisions that affect a wide range of market participants in the table below. If you want to rely on one of these decisions, please let us know by emailing us at [email protected].
Please note that any decision by us to grant relief is discretionary, and will be based upon the information that you provide to us. Should additional factors come to light that call into question the bona fides of the information provided, we may revisit our stance.
If you have any questions on the above, get in touch at [email protected].
No action relief granted 2020
| Overview |
Who is affected |
Summary of requirement |
FMA response in light of Covid-19 |
| KiwiSaver – annual return – one month delay |
All managers of KiwiSaver schemes |
Regulation 8 (1) of the KiwiSaver Regulations 2006 requires that the manager of a KiwiSaver scheme must provide the annual return for the scheme to the FMA on or before 31 May 2020 |
No action will be taken by the FMA in respect of any late lodgement of the annual return, on the condition that the annual return is provided to FMA by close of business 30 June 2020 |
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Licensed DIMs providers – quarterly limit break reports – one month delay
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All licensed DIMs providers that have a reporting period that ends on or after 31 March 2020 but before 1 August 2020. |
Regulations 231 and 232 of the Financial Markets Conduct Regulations 2014 (Regulations) require Limit Break reporting to be supplied to FMA 10 working days after the expiry of each quarter of each year. |
No action will be taken by the FMA in respect of any late lodgement of quarterly limit break reports, on the conditions that:
a) the report is provided to the FMA within one month after the standard due date (defined to mean the period within which the relevant provision must be complied with under the Regulations); and
b) when lodging the report with the FMA, the DIMs provider notifies the FMA that it is doing so in reliance on the no action relief communicated on 28 April
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Licensed DIMs providers – quarterly Related Party Transaction Reports – one month delay
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All licensed DIMs providers that have a reporting period that ends on or after 31 March 2020 but before 1 August 2020 |
Regulation 236 of the Regulations requires Related Party Transaction reporting to be supplied to FMA 10 working days after the expiry of each quarter of each year. |
No action will be taken by the FMA in respect of any late lodgement of quarterly related party transaction report, on the conditions that:
a) the report is provided to the FMA within one month after the standard due date; and
b) when lodging the report with the FMA, the DIMs provider notifies the FMA that it is doing so in reliance on the no action relief communicated on 28 April
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Licensed DIMs Providers – quarterly DIMs retail client reports – 2 week delay
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All licensed DIMs providers that have a reporting period that ends on or after 31 March 2020 but before 1 August 2020 |
Regulations 210 and 212(1)(b) of the Regulations require quarterly DIMs retail client reports to be delivered or sent to each retail investor’s address who uses the service (if not otherwise made available by agreement with the investor through an electronic facility) within 20 working days after the last day of each reporting period in each year. |
No action will be taken by the FMA in respect of any late delivery of quarterly retail client reports on the condition that the report is delivered or sent to each retail investor’s address within two weeks after the standard due date
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Licensed DIMs Providers – DIMs Retail Client Annual Reports
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All licensed DIMs providers that have a reporting period that ends on or after 31 March 2020 but before 1 August 2020 |
Regulations 211 and 212(1)(b) of the Regulations require annual DIMs client reports in respect of the most recently completed disclosure year to be delivered or sent to each retail investor (if not otherwise made available by agreement with the investor through an electronic facility) within 20 working days after the last day of each disclosure year. |
No action will be taken by the FMA in respect of any late delivery of annual retail client reports on the condition that the report is delivered or sent to each retail investor’s address within two weeks after the standard due date
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Licensed crowdfunding service providers – agreed upon procedures report on net tangible assets calculation – time frame for providing report
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All licensed crowdfunding service providers that are eligible and rely on section 5 of the Financial Markets Conduct (Financial Reporting and Other relief – COVID-19) Exemption Notice 2020 (the COVID-19 Financial Reporting Exemption).
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Standard condition 7 of the crowdfunding service licence requires the licensee to engage a qualified auditor to perform agreed upon procedures, and provide the FMA with a copy of the report (the AUP Report) in respect of the calculation of the licensee’s net tangible assets (NTA) during its accounting period. Under clause 7(3)(b) of the standard conditions, the AUP Report must be sent to the FMA, by the earlier of: (i) five working days after the audit report on the licensee’s annual financial statements is signed, or (ii) four months and five working days after the end of its accounting period (the Prescribed Timeframe).
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No action will be taken by the FMA in respect of non-compliance with the time frame in clause 7(3)(b)(ii) of the standard conditions for crowdfunding service licence, if the licensee is eligible and relies on section 5 of the COVID-19 Financial Reporting Exemption, and provides a copy of the AUP Report to the FMA (including a copy of the licensee’s NTA calculation as at its balance date, and accompanied by a written notice stating that it is relying on the no action), by the earlier of:
i) five working days after the audit report on the licensee’s annual financial statements is signed; or
ii) six months and five working days after the end of the licensee’s accounting period.
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Licensed peer-to-peer lending service providers – agreed upon procedures report on net tangible assets calculation – time frame for providing report
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All licensed peer-to-peer lending service providers that are eligible and rely on section 5 of the COVID-19 Financial Reporting Exemption. |
Standard conditions of the peer-to-peer lending service licence requires the licensee to engage a qualified auditor to perform agreed upon procedures, and provide the FMA with a copy of the AUP Report. Under clause 7(3)(b) of the standard conditions, the AUP Report must be sent to the FMA in accordance with the Prescribed Timeframe. |
No action will be taken by the FMA in respect of non-compliance with the time frame in clause 7(3)(b)(ii) of the standard conditions for peer-to-peer lending service licence, if the licensee is eligible and relies on section 5 of the COVID-19 Financial Reporting Exemption, and provides a copy of the AUP Report to the FMA (including a copy of the licensee’s NTA calculation as at its balance date, and accompanied by a written notice stating that it is relying on the no action), by the earlier of:
i) five working days after the audit report on the licensee’s annual financial statements is signed; or
ii) six months and five working days after the end of the licensee’s accounting period.
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Licensed managed investment scheme managers (MIS) – agreed upon procedures report on net tangible assets calculation – time frame for providing report
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All licensed MIS that are eligible and rely on section 5 of the COVID-19 Financial Reporting Exemption. |
Standard conditions of the MIS licence requires the licensee to engage a qualified auditor to perform agreed upon procedures, and provide a copy of the AUP Report to either the FMA (if the licensee does not have a supervisor) or its supervisor if it has one. Under clauses 8(3)(b) and (4)(b) of the standard conditions, this must be complied with in accordance with the Prescribed Timeframe. |
No action will be taken by the FMA in respect of non-compliance with the time frame in the applicable clause 8(3)(b) or (4)(b) of the standard conditions for MIS licence, if the licensee is eligible and relies on section 5 of the COVID-19 Financial Reporting Exemption, and provides a copy of the AUP Report, to either the FMA (if the licensee does not have a supervisor) or its supervisor if it has one (including a copy of the licensee’s NTA calculation as at its balance date, and accompanied by a written notice stating that it is relying on the no action), by the earlier of:
i) five working days after the audit report on the licensee’s annual financial statements is signed; or
ii) six months and five working days after the end of the licensee’s accounting period
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Licensed derivatives issuers – agreed upon procedures report on net tangible assets calculation – time frame for providing report
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All licensed derivatives issuers that are eligible and rely on section 5 of the COVID-19 Financial Reporting Exemption. |
Standard condition of the derivatives issuer licence requires the licensee to engage a qualified auditor to provide an assurance report (the Assurance Report) and an AUP Report. Under clause 11(2) of the standard conditions, the Assurance Report and AUP Report must be sent to the FMA in accordance with the Prescribed Timeframe.
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No action will be taken by the FMA in respect of non-compliance with the time frame in clause 11(2) of the standard conditions for derivatives issuer licence, if the licensee is eligible and relies on section 5 of the COVID-19 Financial Reporting Exemption, and provides a copy of the Assurance Report and AUP Report to the FMA (including a copy of the licensee’s NTA calculation as at its balance date, and accompanied by a written notice stating that it is relying on the no action), by the earlier of:
i) five working days after the audit report on the licensee’s annual financial statements is signed; or
ii) six months and five working days after the end of the licensee’s accounting period.
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Licensed discretionary investment management service (DIMS) providers – agreed upon procedures report on net tangible assets calculation – time frame for providing report
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All licensed DIMS that are eligible and rely on section 5 of the COVID-19 Financial Reporting Exemption |
Standard condition 8(3) of the DIMS licence applies if the licensee is not eligible to rely on the Financial Markets Conduct (Financial Reporting – DIMS Licensees) Exemption Notice 2015 or Financial Markets Conduct (Financial Reporting - DIMS Licensees) Exemption Notice 2020 (the DIMS Exemption)(the DIMS Exemption). If the licensee is not eligible to rely on the DIMS Exemption, clause 8(3)(a) of the standard conditions requires the licensee to engage a qualified auditor to perform agreed upon procedures, and provide the FMA with a copy of the AUP Report. Under clause 8(3)(b) of the standard conditions, the AUP Report must be sent to the FMA in accordance with the Prescribed Timeframe. |
No action will be taken by the FMA in respect of non-compliance with the time frame in clause 8(3)(b)(ii) of the standard conditions for DIMS licence, if the licensee is eligible and relies on section 5 of the COVID-19 Financial Reporting Exemption, and provides a copy of the AUP Report to the FMA (including a copy of the licensee’s NTA calculation as at its balance date, and accompanied by a written notice stating that it is relying on the no action), by the earlier of:
i) five working days after the audit report on the licensee’s annual financial statements is signed; or
ii) six months and five working days after the end of the licensee’s accounting period.
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MIS Managers - Full portfolio holdings report – 10 day extension
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All MIS Managers (excluding restricted schemes) |
Clause 54(1)(d) of Schedule 4 of the Financial Markets Conduct Regulations requires that the information required by clause 53(1)(j), i.e. the complete list of individual assets of the fund, no earlier than 40 working days after 31 March or 30 September (whichever is more recent) |
No action will be taken by the FMA in respect of any late lodgement of
the report due 40 working days after 31 March 2020, on the condition
that the report is lodged no later than 50 working days after 31 March 2020
(I.e. an extension of 10 working days). The relief does not apply to the
September obligation. In addition, please note this does not apply to
restricted schemes.
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