Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698836552855.pdf (New Zealand)
2010/423 Financial Service Providers (Exemptions) Regulations 2010 Anand Satyanand, Governor-General Order in Council At Wellington this 22nd day of November 2010 Present: His Excellency the Governor-General in Council Pursuant to sections 44(1)(ab) and 79(1)(a) of the Financial Service Providers (Registration and Dispute Resolution) Act 2008, His Ex- cellency the Governor-General, acting on the advice and with the consent of the Executive Council, and on the recommendation of the Minister of Commerce in accordance with section 44(1A) of that Act, and on the recommendation of the Minister of Consumer Affairs in accordance with section 79(1A) of that Act, makes the following regulations.
Contents Title Commencement Interpretation Part 1 Exemptions from application of Act Exemption for directors of promoters 1 2 3 4 Page 2 2 2 3 1 Financial Service Providers (Exemptions) Regulations 2010 2010/423 r 1 Exemption for financial services provided to related entities Exemption for sole adviser practice Exemption for individual trustees Exemption for loyalty schemes Exemption for gift cards and other gift facilities Exemption for credit provided, on interim basis, by non-financial service business Exemption for Lloyd’s underwriters Exemption for individual members of angel organisations Exemption for New Zealand Police Exemption for National Provident Fund and Annuitas Management Limited Part 2 Exemption from obligation to be member of dispute resolution scheme 15 Exemption for low-value non-cash payment facilities 4 4 5 5 5 6 6 7 7 7 8 Regulations Title These regulations are the Financial Service Providers (Exemp- tions) Regulations 2010.
Commencement These regulations come into force on 1 December 2010.
Interpretation In these regulations, unless the context otherwise requires,— Act means the Financial Service Providers (Registration and Dispute Resolution) Act 2008 angel organisation means an incorporated or unincorporated body that— (a) is established for the purpose of facilitating the provi- sion of capital by investors (either alone or in combin- ation) to innovative or start-up businesses; and does not itself directly provide capital to those busi- nesses (b) 1 2 3 2 2010/423 Financial Service Providers (Exemptions) Regulations 2010 Part 1 r 4 cash means New Zealand or foreign currency in notes or coins or both Crown organisation means a Crown entity (as defined in sec- tion 7(1) of the Crown Entities Act 2004), a department (as defined in section 2(1) of the Public Finance Act 1989), or a government-related organisation (as defined in section 4 of the Crown Organisations (Criminal Liability) Act 2002 facility means a means of payment (including a means that is intangible property, a contract, an arrangement, a term of a contract or arrangement, or a combination of any or all of these, whether or not it also includes a physical device such as a debit card) Lloyd’s means the society of that name incorporated by the Imperial Act known as the Lloyd’s Act 1871 make non-cash payments means to make payments, or cause payments to be made, other than by the physical delivery of cash non-financial service business means a person whose only or principal business is the provision of goods or services that are not financial services provide includes to offer to provide relevant service means any conduct referred to in any of para- graphs (a) to (n) of section 5 of the Act user, in respect of a facility, means the person who is entitled to use the facility to make payments (for example, by using the debit card in accordance with its terms) and not the person who receives the payments.
Part 1 Exemptions from application of Act 4 Exemption for directors of promoters A director of a promoter of securities is exempt from the ap- plication of the Act in respect of the director’s participation as a promoter in the offer of those securities to the public (within the meaning of section 5(i) of the Act).
3 Part 1 r 5 Financial Service Providers (Exemptions) Regulations 2010 2010/423 5 Exemption for financial services provided to related entities (1) A body corporate is exempt from the application of the Act in respect of a relevant service provided to— a related body corporate; or (a) a limited partnership if the body corporate and the gen- (b) eral partner are related bodies corporate.
(2) In this regulation, a body corporate is related to another body corporate if it is related to it within the meaning of section 5B(2) of the Securities Markets Act 1988.

Exemption for sole adviser practice 6 (1) A sole adviser practice is exempt from the application of the Act in respect of all financial adviser services or broking ser- vices it provides (and any other relevant service provided in connection with those services).
(2) A sole adviser practice is a body corporate that is in the busi- ness of providing financial adviser services and to which all of the following apply: (a) there is only 1 financial adviser employed or engaged by the body corporate in providing those services (the individual adviser); and the individual adviser is— (i) the only director, or 1 of only 2 directors, of the body corporate; and the only senior manager (if any) of the body cor- porate.
(ii) (b) (3) However, the exemption applies only if— (a) (b) (c) (d) the individual adviser is registered; and the sole adviser practice’s name or trading name is stated on the register as the individual adviser’s trading name or principal; and the sole adviser practice provides only the types of financial services for which the individual adviser is registered; and the sole adviser practice is a member of an approved dis- pute resolution scheme or the reserve scheme (if section 48 would have applied to the sole adviser practice if it were not exempted from the Act by this regulation).
4 2010/423 Financial Service Providers (Exemptions) Regulations 2010 Part 1 r 9 Exemption for individual trustees 7 (1) An individual trustee or individual superannuation trustee who is in the business of providing a financial service in that cap- acity is exempt from the application of the Act in respect of those services.

(2) However, the exemption applies only if the trustees of the trust, or the superannuation trustees of the superannuation scheme, are collectively registered as an unincorporated body.
Exemption for loyalty schemes 8 (1) A person is exempt from the application of the Act in respect of a relevant service provided in the course of providing a loyalty scheme.
(2) A loyalty scheme is a facility by which a person may make non-cash payments and to which all the following apply: (a) (b) (c) the facility is issued under a scheme the sole or main purpose of which is to promote the purchase of goods from, or the use of services of, 1 or more non-financial service businesses; and a member of the scheme is allocated credits under the facility (however described and whether or not a mon- etary value is expressly attributed to the credits) as a re- sult of the purchase of goods from, or the use of services of, the non-financial service business or businesses (the stored value); and the stored value— (i) can be used to make a non-cash payment for goods or services, or to obtain some other benefit, only from 1 or more non-financial service busi- nesses; but cannot be withdrawn in cash.
(ii) Exemption for gift cards and other gift facilities 9 (1) A person is exempt from the application of the Act in respect of a relevant service provided in the course of providing a gift facility.
(2) A gift facility is a facility by which a person may make non- cash payments and to which all of the following apply: 5 Part 1 r 10 Financial Service Providers (Exemptions) Regulations 2010 2010/423 (a) (b) the facility is promoted or marketed only as a gift prod- uct; and the amount that is credited as being the value of the facility (the stored value)— (i) (ii) (iii) (iv) is determined at the time of the issue of the facil- ity; and can be used to make a non-cash payment for goods or services only from 1 or more non-finan- cial service businesses; and cannot be increased, or used and re-credited, after the issue of the facility (unless it is because of the reversal of a payment made under the facility in the case of a refund or because of a correction of an error); and cannot be withdrawn in cash (unless it is the with- drawal of the remaining full amount of the stored value after the making of 1 or more non-cash pay- ments under the facility and the provider has rea- sonably determined that that amount is unlikely to be able to be used conveniently under the fa- cility).
10 Exemption for credit provided, on interim basis, by non-financial service business A non-financial service business is exempt from the applica- tion of the Act in respect of the provision of credit under credit contracts to its customers if— (a) the credit is provided in order to facilitate the provision of goods or services to those customers; and in the ordinary the non-financial service business, course of its business, assigns the credit contracts to another person within 1 working day of providing the credit.
(b) Exemption for Lloyd’s underwriters 11 (1) An underwriting member of Lloyd’s is exempt from the appli- cation of the Act in respect of any insurance business carried on by the member in that capacity.
6 2010/423 Financial Service Providers (Exemptions) Regulations 2010 Part 1 r 14 (2) However, the exemption applies only if the underwriting member is a member of— (a) (b) an approved dispute resolution scheme or the reserve scheme; or a group of underwriting members of Lloyd’s that col- lectively are members of an approved dispute resolution scheme or the reserve scheme.
12 Exemption for individual members of angel organisations (1) An individual who is a member of an angel organisation is exempt from the application of the Act in respect of financial adviser services provided to any other member of that or any other angel organisation.
(2) However, the exemption applies only if— (a) (b) the angel organisation of which the individual is a mem- ber is registered; and the individual is named on a list of individual mem- bers kept by the angel organisation and (if reasonably requested) provided to the Registrar.

13 14 (1) Exemption for New Zealand Police The New Zealand Police is exempt from the application of the Act.
Exemption for National Provident Fund and Annuitas Management Limited The board of trustees of the National Provident Fund is exempt from the application of the Act.
(2) Annuitas Management Limited is exempt from the application of the Act in respect of any financial services it provides— (a) to the board of trustees of the National Provident Fund, to the Government Superannuation Fund Authority, or to any other Crown organisation; or on behalf of any person in paragraph (a) (unless that person is not itself exempt from the application of the Act in respect of those services).
(b) 7 Part 2 r 15 Financial Service Providers (Exemptions) Regulations 2010 2010/423 Part 2 Exemption from obligation to be member of dispute resolution scheme Exemption for low-value non-cash payment facilities 15 (1) A financial service provider is exempt from the obligation to be a member of an approved dispute resolution scheme or the reserve scheme under section 48 of the Act in respect of a rele- vant service (other than the provision of credit under a credit contract) provided in the course of providing a low-value non- cash payment facility.
(2) However, the exemption applies only if the financial service provider gives written notice to the Registrar that it is relying on an exemption from section 48 of the Act.
(3) A low-value non-cash payment facility is a facility for mak- ing non-cash payments to which both of the following apply: the total amount that is available for making non-cash (a) payments, under all facilities of the same class issued by the financial service provider, by any one user of the facility at any one time, does not exceed— (i) $1,000, in the case of an individual user (unless it is reasonable for the financial service provider to believe that the individual does not hold the fa- cility for personal, domestic, or household use); or $15,000, in any other case; and (ii) the total amount that is available for making non-cash payments by all users of that class of facility issued by the financial service provider does not exceed $15 mil- lion at any one time.
Rebecca Kitteridge, Clerk of the Executive Council.

(b) 8 2010/423 Financial Service Providers (Exemptions) Regulations 2010 Explanatory note Explanatory note This note is not part of the regulations, but is intended to indicate their general effect.

These regulations, which come into force on 1 December 2010, provide various exemptions from the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (the Act).
The Act applies to persons who are in the business of providing a fi- nancial service.

Those persons are required to register under the Act and, as a qualification for registration, be a member of an approved dispute resolution scheme or the reserve scheme if required by sec- tion 48 of the Act.

Part 1 of these regulations exempts specified classes of persons from the application of the Act (and so from the requirement to register as a financial service provider).
In brief, the exemptions are for— • directors of promoters participating in offers of securities to the public: financial services provided between related bodies corporate (including financial services provided to a limited partnership if the general partner and the service provider are related bod- ies corporate): sole adviser practices (which are bodies corporate for which there is only 1 individual financial adviser who is also the only director, or 1 of only 2 directors, of that body corporate) if the relevant individual adviser is registered as a financial service provider.
The sole adviser practice still needs to be a mem- ber of an approved dispute resolution scheme or the reserve scheme as a condition of the exemption: individual trustees of a trust and superannuation trustees of a superannuation scheme if the trustees are collectively regis- tered as an unincorporated body.

In some cases, the Act may otherwise require trustees of a trust to individually register (rather than register collectively as an unincorporated body): loyalty schemes.
In some cases, the Act may otherwise apply to a person who carries on a business of providing a loyalty scheme that constitutes a means of payment.

Loyalty schemes are schemes operated to encourage the purchase of goods or services from a business.
For a payment facility issued under a loyalty scheme to be exempt, the customer must not be able • • • • 9 Explanatory note Financial Service Providers (Exemptions) Regulations 2010 2010/423 to withdraw cash from the facility and the scheme must be for goods or services from a non-financial service business: gift facilities, such as gift vouchers and cards.

In some cases, the Act may otherwise apply to a person who carries on a busi- ness of providing a gift facility that constitutes a means of pay- ment.
To be exempt, the facility must be marketed solely as a gift product, the facility must be for goods or services from a non-financial service business, the facility must not be re-load- able, and the customer must not be able to withdraw cash from the facility: credit provided by retailers or other non-financial service busi- nesses on an interim basis (that is, until the credit contract is assigned to another provider within 1 working day): Lloyd’s underwriters (but in this case, the underwriting mem- bers of Lloyd’s are required to be, either individually or col- lectively, members of an approved dispute resolution scheme or the reserve scheme): individual members of angel organisations (which are organ- isations directed at facilitating the provision of capital from investor members to innovative or start-up businesses) advis- ing other members.
There is likely to be other angel or venture capital investing to which the Act does not apply and so this exemption is directed at a limited range of cases only: the New Zealand Police, the National Provident Fund, and An- nuitas Management Limited.
• • • • • Part 2 of the regulations exempts non-cash payment facilities (such as Snapper cards and taxi chit services), if they are conducted on a relatively small scale, from the obligation to be a member of an approved dispute resolution scheme or the reserve scheme.

For a facility to be exempt, the maximum amount available for payments under the facility must be $1,000 for individuals (unless they are not using it for personal, domestic, or household uses) and $15,000 in other cases.
The total maximum amount that may be available for payments by all users of the facility at any one time is $15 million.

10 2010/423 Financial Service Providers (Exemptions) Regulations 2010 Issued under the authority of the Acts and Regulations Publication Act 1989.

Date of notification in Gazette: 25 November 2010.

These regulations are administered by the Ministry of Economic Development.

12 Wellington, New Zealand: Published under the authority of the New Zealand Government—2010 11