The following are the current FMA consultations with the FMA and MBIE.
Financial Advice NZ will submit on these consultations, and we welcome any feedback and contributions from our member so you can have your say on what matters.
Please click on the links below to see the details around these consultations and contact Leigh Hodgetts – leigh.hodgetts@financialadvice.nz, who will be coordinating the feedback and lodging the submissions.
Conduct of Financial Institutions:
1. Licensing fees for financial institutions
MBIE is seeking feedback on a discussion paper on proposed regulations around licensing fees for financial institutions.
The feedback from this consultation will inform the levels at which licensing fees are set. In September 2019, Cabinet agreed that banks, insurers and non-bank deposit takers will be required to be licensed under Part 6 of the Financial Markets Conduct Act 2013 in respect of their conduct in relation to retail customers.
The licensing regime will be monitored and enforced by the Financial Markets Authority.
The link below provides the details and submission questions to consider. Closes 26 October, 2022.
A draft discussion document on proposed licensing fees for financial institutions
2. Sales incentives
MBIE is also consulting on proposed regulations regarding sales incentives to support the new regime. The feedback from this consultation will be used to inform the drafting of regulations that will put in place a prohibition on certain sales incentives.
In September 2019, Cabinet agreed to regulate sales incentives based on volume or value targets. It was agreed that this regulation would apply to banks, insurers, non-bank deposit takers (together, financial institutions) and the intermediaries of these financial institutions.
Click on the link below for more details. Closes 9 November 2022.
An exposure draft of proposed regulations relating to sales incentives
Other consultations:
3. Consultation: Proposed regulatory returns for licensed Class 3 Financial Advice Providers (FAPs)
NOTE! This consultation is primarily intended for Class 3 licensed financial advice providers. Consultation on Class 1 and 2 regulatory returns will be conducted separately.
This consultation may be relevant to financial advisers, nominated representatives and authorised bodies. The FMA welcomes feedback from other interested parties, such as industry associations, financial service law firms, training providers and compliance consultants.
Financial advice companies who hold a full financial advice providers (FAP) licence are required to comply with certain conditions. Conditions are imposed by the Financial Markets Authority (FMA) under section 403 of the Financial Markets Conduct Act 2013 (FMC Act), which includes the standard conditions for full FAP licences.
Regulatory returns requirements fall under Standard Condition 3 and apply in respect of any regulated financial advice provided to retail clients. Regulatory returns must be provided on a periodic basis to the FMA, so the information provided can be used to monitor licensees’ ongoing capability to effectively perform licensed financial advice services.
This consultation outlines the questions we propose to ask in the regulatory returns for Class 3 FAP licensees; and invites feedback on the appropriateness and format of the information we intend to collect. Closes 28 October, 2022.
Proposed question set for FAP Regulatory Returns
4. Consultation: Proposed guidance and expectations for keeping proper accounting records.
The objective of financial statements is to provide financial information that is useful to investors and other users in making decisions about providing resources to an entity. Financial statements must be supported by proper accounting records to provide evidence that they comply with financial reporting requirements, including applicable accounting standards.
This consultation seeks input from FMC reporting entities and other interested parties on proposed guidance to help reporting entities to meet their statutory requirement to keep proper accounting records at all times.
Submissions will be used to help refine our proposed guidance, which will set out key principles for keeping proper accounting records, along with specific considerations and evidence required for making judgements and estimates when preparing financial statements. Closes 31 October, 2022.
Proposed guidance and expectations for keeping proper accounting records
5. Consultation: Proposed guidance for client money or property service providers
The Financial Advisers Act 2008, which originally set out the obligations for brokers, has been repealed. The equivalent obligations are now contained in the Financial Markets Conduct Act 2013, and brokers are now referred to within that legislation as ‘client money or property service providers’.
We are proposing to update the 2014 guidance, to align with the new regulatory regime, and incorporate additional information to address issues we have observed through recent monitoring and misconduct cases. We are also proposing to incorporate additional guidance for custodians, who have specific obligations in addition to those that apply to all client money and property service providers. Closes 1 November 2022.
Proposed guidance for client money or property service providers
6. Consultation: Proposed standards for Financial Market Infrastructure Act
The Financial Market Infrastructures Act 2021 (the Act) establishes a comprehensive framework for the oversight and regulation of financial markets infrastructures (FMIs). The purposes of the Act include promoting the maintenance of a sound and efficient financial system and promoting and facilitating the development of fair, efficient and transparent financial markets.
The development of the FMI Standards is a key milestone in the implementation of the FMI Act. The FMI Standards provide a comprehensive framework for the regulation of FMIs operating in New Zealand. Following consultation on the approach to developing the FMI Standards in the second half of 2021, the Reserve Bank of New Zealand and Financial Markets Authority (together the Regulator) have prepared exposure drafts of the FMI Standards, along with related guidance, and a draft equivalence framework for overseas FMIs.
The RBNZ and the FMA are inviting written feedback on these exposure drafts and related documents until 18 November 2022.
Financial Market Infrastructures Act 2021 exposure drafts
7. Consultation: Proposed regulatory returns for licensed Class 1 financial advice providers
This consultation is primarily intended for Class 1 licensed financial advice providers. The consultations on Class 2 and 3 regulatory returns are currently open and can be found in the list of Consultations. This consultation may be relevant to financial advisers, and authorised bodies. The FMA welcomes feedback from other interested parties, such as industry associations, financial service law firms, training providers and compliance consultants. Closes 18 November 2022.
Proposed regulatory returns for licensed Class 1 financial advice providers
8. Consultation: Proposed regulatory returns for licensed Class 2 financial advice providers (FAPs)
This consultation is primarily intended for Class 2 licensed financial advice providers. The consultations on Class 1 and 3 regulatory returns are currently open and can be found in the list of Consultations. This consultation may be relevant to financial advisers, and authorised bodies. The FMA welcomes feedback from other interested parties, such as industry associations, financial service law firms, training providers and compliance consultants. Closes 18 November 2022.
Proposed regulatory returns for licensed Class 2 financial advice providers (FAPs)
