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Financial Service Providers (Registration and Dispute Resolution) Bill Government Bill As reported from the Finance and Expenditure Committee Commentary Recommendation The Finance and Expenditure Committee has examined the Financial Service Providers (Registration and Dispute Resolution) Bill and rec­ ommends that it be passed with the amendments shown.
Introduction This bill seeks to regulate ﬁnancial service providers by establishing a registration system for them, and requiring them to join an approved industry­led dispute resolution scheme or the reserve scheme.

The bill is one of a suite of measures to implement the recommen­ dations of the Government’s Review of Financial Products and Providers.
We have already considered and made recommendations on the Reserve Bank of New Zealand Amendment Bill (No 3), which imposes a regulatory framework on non­bank deposit takers.

We are also considering the Financial Advisers Bill, which would set and monitor standards for ﬁnancial advisers.

190—2 2 Financial Service Providers (Registration and Dispute Resolution) Bill Commentary The Financial Service Providers (Registration and Dispute Reso­ lution) Bill is the umbrella legislation for these measures.
It would provide a basic regulatory framework for registration for all ﬁnancial service providers.

Who must register Clauses 5 and 6 of the bill determine the application of the legisla­ tion by deﬁning the activities considered to be ﬁnancial services, and setting out who would be excluded from the regime.

We recommend amendments to clauses 5 and 6 to ensure that the regulatory regime is appropriately targeted.
We recommend the in­ sertion of clause 5(A) and amendments to clause 6(2) to ensure that organisations who carry out ﬁnancial services as a necessary but in­ cidental element of their professional practice would not be included in the regime.
This amendment would ensure that those who offer ﬁnancial services only as a necessary consequence to their primary role, such as lawyers, chartered accountants, tax agents, and real es­ tate agents would not be subject to further registration and dispute resolution requirements under this regime.

We recommend similar amendments to clauses 10 and 11 to conﬁrm that only those in the business of providing ﬁnancial services are intended to be captured under the regime.
We also recommend amendments to allow a speciﬁc exemption for non­proﬁt organisations that provide free ﬁnancial services such as budgetary advice, as we consider the advice provided by such organ­ isations an important community service.

Although the exemption under this bill would apply only to organisations, we note that staff providing free budgetary advice for a non­proﬁt organisation would be excluded from registration under the Financial Advisers Bill.
We recommend further amendments to ensure that the Crown agen­ cies who are exempt (Government departments, the Reserve Bank, and statutory entities listed in Schedule 1 of the Crown Entities Act 2004) are set out in the bill rather than prescribed by regulation.

We do not consider it appropriate that a regulation­making power might be used to determine the application of the legislation.
We therefore recommend that clause 42(1)(b) be deleted and that all exceptions for Crown agencies be set out in the bill.

Commentary Financial Service Providers (Registration and Dispute Resolution) Bill 3 We recommend the deletion of clause 5(a) to ensure that arrange­ ments where payment is made in arrears (such as hire purchase ar­ rangements) are not captured by the bill.

We consider that the regu­ lation of such arrangements does not accord with the intention of the bill.
We recommend amendments to clause 5 to clarify that those who act as deposit­takers or who are involved in offering debt se­ curities, registered banks, investment brokers, and dealers in futures contracts would be subject to the regime.

We also recommend the consolidation of subclauses (c) and (d) to simplify the provisions re­ lating to credit contracts.
Financial adviser service For simplicity we recommend removing separate references to “ﬁ­ nancial advisers” and “ﬁnancial adviser services” from throughout the bill, and inserting “ﬁnancial adviser service” as a new category within the meaning of “ﬁnancial service” in clause 5.

We acknowledge that there is separate legislation before the House (which we are currently considering) that deals speciﬁcally with ﬁ­ nancial advisers.

However we see no need to separate these terms out in this bill.
We consider ﬁnancial adviser services to be a type of ﬁ­ nancial service, and the amendment we recommend accords with the intention that the Financial Service Provider regime be the umbrella scheme for any regulation of ﬁnancial advisers that may be imple­ mented through separate legislation.

This amendment means that ﬁnancial advisers would be required to be members of a dispute resolution scheme under this legislation.
Although the bill as introduced did not require ﬁnancial advisers to be members of a dispute resolution scheme, we note that this amend­ ment would not change the obligations imposed on ﬁnancial advisers in practical terms, as the Financial Advisers Bill (as introduced) con­ tains provisions which require ﬁnancial advisers to become members of a dispute resolution regime.
Registration Disqualiﬁed persons We recommend that clause 13, which sets out matters that disqualify a person from registering as a ﬁnancial service provider, be amended to specify the types of offences that would count as fraudulent or dis­ 4 Financial Service Providers (Registration and Dispute Resolution) Bill Commentary honest in relation to the provision of a ﬁnancial service.

This amend­ ment is intended to avoid doubt and to give clarity and certainty to those involved in administering the regime.
We recommend the inclusion of new subclause 13(ca) to provide that those who offend against the regime by being in the business of providing a ﬁnancial service without registering, or by holding out that they are entitled to provide ﬁnancial services when they are not, would also be ineligible to register.

Licensed service offence We recommend the deletion of clause 10(2), which provides that it is an offence to provide a licensed service unless licensed.
Whilst this legislation contains the requirement to be licensed, it does not contain particular licensed service requirements for each type of ﬁ­ nancial service provider.

It is intended that each type of ﬁnancial service provider will have its own legislation setting out particular licensed service requirements.

This amendment is intended to allow offences for particular licensed services to be dealt with in the spe­ ciﬁc legislation for that licensing regime.
Deregistration of ﬁnancial service provider We recommend amending clause 17 to oblige the Registrar to dereg­ ister an applicant who has made a false or misleading application or whose registration fee has been dishonoured, declined, or reversed.

We consider this amendment necessary to ensure that the register re­ mains a reliable source of honest and credible providers.

We recommend amending clause 20 to provide that deregistration should be publicly notiﬁed.
This would help to ensure that relevant information is available to all consumers who might deal with ﬁnan­ cial service providers, and we consider that this amendment would make the regime more transparent and effective.

Re­registration of ﬁnancial service provider We recommend inserting a new provision in the bill (clause 20A) to provide for re­registration of a ﬁnancial service provider who was deregistered as a result of certain of the breaches outlined in clause 17.
The Registrar would have the power to consider applications for re­registration where he or she determined that the reasons for dereg­ Commentary Financial Service Providers (Registration and Dispute Resolution) Bill 5 istration no longer applied (for example, if the registration fee had subsequently been paid).
However, providers who had been deregis­ tered because they had provided false or misleading information on registration, or who no longer qualiﬁed, could not be re­registered, but might be able to reapply for registration under clause 14.

Responsible ﬁnancial service provider We recommend inserting new clause 20B to allow institutional regis­ tration as a “responsible ﬁnancial service provider”, and an amend­ ment to clause 6 to allow their afﬁliated entities to be exempt from registration.
The bill as introduced focuses on the registration of in­ dividuals or businesses.

We are concerned that this might pose com­ pliance difﬁculties for some businesses, such as KiwiBank, whose franchise structure would mean that each franchisee would have to be individually registered and a member of a dispute resolution scheme.

We consider that compliance in such cases would be unduly burden­ some with no corresponding beneﬁt to consumers.
Under new clause 20B, the Governor­General would be able to de­ clare an entity a responsible ﬁnancial service provider, on the recom­ mendation of the Minister.

This status would exempt any afﬁliated entities from the need to register separately under clause 6, and the responsible ﬁnancial service provider would be held responsible for the ﬁnancial services provided by its afﬁliated entities.
We consider that this amendment would help to achieve the objectives of the bill in a way that accommodated the various structures of businesses.

Establishment of and access to the register We recommend that clause 26 be amended to require the type of ser­ vices a licensed provider is registered or licensed to provide to be recorded on the register.

We consider that this information is vital in ensuring consumers are well informed when they deal with providers.
However, we accept that there are practical difﬁculties in requiring information on the type of services to be provided from registered providers.

As such, we recommend that at this stage only licensed providers be required to provide this information.

However, we ex­ pect that regulations could be made in future under clause 42 that required the register to show which ﬁnancial services a registered provider could provide.
6 Financial Service Providers (Registration and Dispute Resolution) Bill Commentary We recommend an amendment to clause 30 to make it clear that it should be possible to search the register by the criteria speciﬁed in clause 26.

In the bill as introduced, the search criteria were to be set by regulation.

However, we consider it preferable that basic search criteria be included in the bill, and see no reason that the entire con­ tent as set out in clause 26 should not be accessible by searching.
Other search criteria could still be added by regulation as necessary.

We recommend an amendment to clause 33 and the addition of new Schedule 2 to specify further bodies with which the Registrar may share information.

Clause 33 as introduced includes four bodies or agencies.

The additional agencies would include the New Zealand Police, the person responsible for an approved dispute resolution scheme or the reserve scheme, and any other body listed in Schedule 2 of the bill.
Other agencies could still be added by regulation under clause 42(1)(e).

Registrar’s inspection powers We recommend expanding the investigative powers of the Registrar in clause 36 to include investigation of false or misleading represen­ tations.

This is an offence under the bill, and it is important that the Registrar be able to investigate such matters if the prohibition on such behaviour is to be effective.
Review of registration system and dispute resolution regime We recommend the insertion of new clause 42A requiring that the registration system be reviewed within ﬁve years.

The ﬁndings of the review would be reported to the responsible Minister, who would in turn be required to present a copy of the report to the House.
We rec­ ommended a similar review provision for the Reserve Bank Amend­ ment (No 3) Bill, given the novelty of some of the features of the regime and the allowance for matters to be determined by regula­ tion; we consider that a similar case can be made regarding this bill, and that a co­ordinated approach should be taken to reviewing the new regulatory framework for the ﬁnancial sector.
We recommend a similar provision be inserted as new clause 74A in regard to Part 3 of the bill (the dispute resolution regime).

Commentary Financial Service Providers (Registration and Dispute Resolution) Bill 7 Territorial application We also recommend inserting new clause 42B for the avoidance of doubt to limit the territorial application of the bill to the provision of a ﬁnancial service in New Zealand by a person who is in New Zealand.
This new provision would clarify that it is not the intent of the legislation to apply to off­shore ﬁnancial services.

Decisions continue until appeal We recommend the insertion of a new clause (clause 41A) to clar­ ify that any decision of a Registrar that is subject to an appeal would remain in force unless the High Court should determine otherwise.

This should provide certainty for scheme members and ensure con­ tinuity in terms of recourse for consumers.
Dispute resolution schemes Membership Clause 44 in the bill as introduced requires a ﬁnancial service provider to join an approved dispute resolution scheme only if it pro­ vides a ﬁnancial service to individuals or to small and medium­sized businesses, and if a default scheme (the reserve scheme to be established under clause 65) is available.
We recommend replacing this with new clause 44, which would re­ quire every provider of a ﬁnancial service to the public to be a mem­ ber of an approved scheme or the reserve scheme.

We regard it as important that all those who provide ﬁnancial services to the public, bar the exemptions set out in clause 6, be subject to a dispute reso­ lution regime.
We recommend an associated amendment to clause 58 to conﬁrm that only consumers and small to medium­sized busi­ nesses and organisations could make complaints for resolution by a dispute resolution scheme.

We recommend removing (as a condition of scheme membership) the requirement that a reserve scheme be available.

We consider that this qualiﬁcation could reduce consumers’ access to redress if no reserve scheme were appointed.
We considered an amendment to exempt credit unions from the re­ quirement to join an approved dispute resolution scheme.

However, whilst we acknowledge that credit unions have a dispute resolution 8 Financial Service Providers (Registration and Dispute Resolution) Bill Commentary regime available under the Friendly Societies and Credit Unions Act 1982, we are not convinced that the two schemes are sufﬁciently sim­ ilar to justify an exemption from this bill.
In addition, we expect that any overlaps between them could be addressed in the context of the current review of that legislation.

We also do not consider it necessary to exempt lawyers, accountants, and real estate agents who are acting as ﬁnancial service providers, from membership of a dispute resolution scheme.
We consider that the occupational regulation bodies of these industries are focused on professional conduct, and provide limited opportunities for redress where ﬁnancial services are involved (as distinct from legal, account­ ing, or real estate services).

We similarly do not think that funeral directors who offer pre­paid funerals should have a speciﬁc exemp­ tion.

However, we note that scheme membership would only be required if these businesses were offering services to the public.
Number of schemes We recommend the inclusion of new paragraphs (k), (l), (la), (lb) and (m) in clause 47(1) to reduce the risk of a proliferation of small schemes, and to avoid schemes “cherry­picking” members to their advantage, or vice versa.

We are concerned that this could hamper the development of a pool of dispute resolution expertise, and result in some schemes ceasing to be viable.
The amendments we recommend would require the Minister to have regard to the number and type of approved schemes in existence, any other current applications for approval, and the proposed size and membership coverage, before approving a scheme.

These amendments are intended to allow multiple schemes whilst discouraging undue proliferation of new schemes.

Approval of schemes We recommend deleting the ten­year expiry provision for approval of schemes (clause 45(2)).
The bill already contains adequate accountability provisions, including provision for the withdrawal of schemes, independent review of schemes, and annual reporting (clauses 51, 58(m) and 62).

We therefore consider the expiry provision under clause 45(2) unnecessary.
Commentary Financial Service Providers (Registration and Dispute Resolution) Bill 9 We also recommend an amendment to clause 48 to require the re­ sponsible Minister to consult the Ministers of Finance and Com­ merce before approving dispute resolution schemes.

This change is necessary because we consider that the bill should provide separate ministerial responsibility for Part 3.
As introduced, the Minister of Commerce would be the responsible Minister and would be required under clause 48 to consult with the Ministers of Finance and Con­ sumer Affairs.

We expect that the responsible Minister for Part 3 would be the Minister of Consumer Affairs rather than the Minis­ ter of Commerce because that Minister is advised by the Ministry of Consumer Affairs on matters of consumer dispute resolution.
Con­ sequential amendments are also recommended for clauses 66(3) and 67(3) to take account of the provision for separate ministerial respon­ sibility.

Scheme rules Public access to information We recommend amending clause 57 to require that a list of the mem­ bers of an approved dispute resolution scheme be displayed on the website of the scheme.

This is intended to improve consumers’ ac­ cess to information about the redress available through the scheme.
We recommend amendments to clauses 49 and 55, and the insertion of new clause 74AA, to require details of the approved schemes and withdrawal of approvals to also be publicly notiﬁed, with details to be made available for inspection at the head ofﬁce of the Ministry free of charge, on the Internet, and in any other way the chief executive thinks ﬁt.

Rules of the scheme Clause 58 sets out a number of rules for the operation of an approved dispute resolution scheme.
We recommend amending clause 58 by deleting the provision for costs to be allocated to consumers (clause 58(i)).

We believe that ac­ cess to the schemes should be free for consumers, to ensure equitable accessibility.
10 Financial Service Providers (Registration and Dispute Resolution) Bill Commentary We further recommend amendments to clause 58 for the following purposes: • to replace the requirement for an internal review of the scheme every three years with a requirement for an independent re­ view of the scheme at least once every ﬁve years from the date of the scheme’s approval (clause 58(m)), and for the results of this review to be provided to the Minister (and we recommend a consequential amendment to clause 46(2)(d)) to require that a time limit be set for the investigation of com­ plaints to tighten the requirements regarding remedial action, requir­ ing schemes to set out how they intend to enforce remedial action, including action after a member has left the scheme to allow the termination of the investigation of any complaints if the complainant takes alternative court action against the member.
• • • We consider that these changes would make the schemes more effect­ ive, leading to better outcomes for complainants and scheme mem­ bers alike.

Duty to cooperate and communicate in certain circumstances We recommend inserting new clause 61A, which would impose a duty on the person responsible for a dispute resolution scheme to co­ operate with other schemes if a complaint involved their members, and other relevant ﬁnancial service provider licensing authorities.
The clause would also impose obligations of conﬁdentiality to ensure that individual privacy is protected.

This amendment is intended to help facilitate the fair and just resolution of cross­service complaints.

We recommend an associated amendment to clause 51(1)(g) to allow the Minister to withdraw approval of a scheme on the grounds of fail­ ure to comply with this duty (clause 51(1)(ga)).
Reserve scheme We recommend an amendment to clause 66 to require the appoint­ ment of a reserve scheme from an established recognised dispute resolution service.

As introduced, the bill would only allow an ap­ proved scheme to be appointed as the reserve scheme.
This amend­ ment is intended to ensure that the body appointed is chosen on the Commentary Financial Service Providers (Registration and Dispute Resolution) Bill 11 basis of requisite experience and knowledge, and is well­respected in dispute resolution.

We note that this amendment would not require a dispute resolution body to be chosen from within the ﬁnancial sector.

Its focus instead would be on the dispute resolution experience and ability of the body.
We recommend an amendment to clause 66(1) and the insertion of new clause 66(1A) to clarify that rules about the functions of the reserve scheme may be prescribed by Order in Council.

The bill as introduced allowed these matters to be dealt with under clause 66(5).

However we consider it preferable to have it clearly set out that rules must be made which provide for matters equivalent to the rules for approved schemes under clause 58.
This amendment is intended to ensure that adequate rules for the reserve scheme are implemented.

We recommend the addition of clause 66(6) to require the Minister to recommend a reserve scheme within two years of the commence­ ment of the Act.

Clause 2(1) of the bill allows the commencement dates of the requirements for registration (Part 2) and membership of a dispute resolution scheme (clause 44) to be set by Order in Coun­ cil.
We asked about the likely commencement dates, as we were concerned that the regime might take some time to establish and ﬁ­ nancial service providers would need time to comply with the new arrangements.

We were told that a two­year transition period is in­ tended to allow dispute resolution schemes to be established and ap­ proved, and to give providers time to comply with the scheme.

We expect that such a period would be reasonable, and trust that such an approach will be followed.
The amendment we recommend to clause 66 would ensure that the reserve scheme would be established when registration commenced.

We recommend amendments to clause 67 to provide that appoint­ ment as a reserve scheme should be revoked should the appointee fail to comply with rules relating to the scheme, or otherwise breach an appointment condition.

This amendment is intended to maintain the integrity of the regime.
The amendments we recommend would require the Minister to recommend a replacement reserve scheme at the same time as the revocation of the ﬁrst scheme.

This amendment would ensure that adequate dispute resolution coverage was avail­ able to consumers at all times.

12 Financial Service Providers (Registration and Dispute Resolution) Bill Commentary Appeals We recommend amending the appeals provisions set out in the bill as introduced (deleting clauses 71 to 73).
This appeals process was modelled on that of the Disputes Tribunal.

We do not consider the Disputes Tribunal analogous to the disputes resolution schemes that would be available under this bill.

For example, decisions of the Disputes Tribunal are binding on both parties, whereas decisions of the approved dispute resolution schemes would be binding on the ﬁnancial service provider or adviser only.

We therefore consider that the Tribunal’s appeals process is not an appropriate model.
Parties would continue to have the usual right of appeal through judicial review.

Commentary Financial Service Providers (Registration and Dispute Resolution) Bill 13 Appendix Committee process The Financial Service Providers (Registration and Dispute Reso­ lution) Bill was referred to the committee on 11 December 2007.

The closing date for submissions was 28 February 2008.

We re­ ceived and considered 47 submissions from interested groups and individuals.

We heard 26 submissions.


We received advice from the Ministry for Economic Development on Parts 1 and 2 of the bill and the Ministry of Consumer Affairs for part 3 of the bill.

The Regulations Review Committee reported to the committee on the powers contained in clause 42(1)(b).
Committee membership Charles Chauvel (Chairperson) Hon Bill English Jeanette Fitzsimons Craig Foss Hon Mark Gosche Hone Harawira Rodney Hide Moana Mackey Dr the Hon Lockwood Smith (Deputy Chairperson) Hon Paul Swain Chris Tremain Judy Turner R Doug Woolerton Financial Service Providers (Registration and Dispute Resolution) Bill Key to symbols used in reprinted bill As reported from a select committee text inserted unanimously text deleted unanimously Hon Lianne Dalziel Financial Service Providers (Registration and Dispute Resolution) Bill Government Bill Contents 5A Title Commencement Part 1 Preliminary provisions Overview Interpretation Meaning of ﬁnancial service Meaning of in the business of providing a ﬁnancial service Application of Act Act binds the Crown Part 2 Registration Purpose of this Part Registration and deregistration Subpart 1—No holding out or being in business of providing ﬁnancial service unless registered No being in business of providing ﬁnancial service unless registered No holding out that in business of providing ﬁnancial service unless registered 190—2 Page 5 5 6 6 10 11 11 12 12 13 13 14 1 Financial Service Providers (Registration and Dispute Resolution) Bill Subpart 2—Registration of ﬁnancial service provider Qualiﬁcations for registration as ﬁnancial service provider Disqualiﬁed person Application for registration as ﬁnancial service provider Application to be registered as ﬁnancial service provider Registration of ﬁnancial service provider Changes relating to
 ﬁnancial service provider Duty to notify changes relating to ﬁnancial service provider Deregistration of ﬁnancial service provider Deregistration of ﬁnancial service provider Notice of intention to deregister Objection to proposed deregistration of ﬁnancial service provider Notiﬁcation of deregistration of ﬁnancial service provider Reregistration of ﬁnancial service provider 20A Reregistration of ﬁnancial service provider Responsible ﬁnancial service provider 20B Responsible
 ﬁnancial service provider Subpart 4—Register of ﬁnancial service providers Register established Register of ﬁnancial service providers Operation of and access to register Purposes of register Contents of register Annual conﬁrmation Registrar must amend register in certain circumstances Registrar may refuse to accept document Searches of register Searches of register Search purposes When search breaches information privacy principle 23 24 25 26 27 28 29 30 31 32 33 Sharing information with other persons or bodies Information sharing 2 14 15 15 16 17 17 18 18 19 19 20 21 21 22 22 23 23 24 24 24 25 25 Financial Service Providers (Registration and Dispute Resolution) Bill 34 35 36 37 38 Registrar of Financial Service Providers Appointment of Registrar Power of Registrar to delegate Subpart 5—Registrar’s inspection powers Registrar’s inspection powers Disclosure of information and reports Exercise of powers under section 36 not affected by appeal Subpart 6—Miscellaneous 39 40 41 41A 42 Offence also committed by director Offence to make false or misleading representation Appeals from Registrar’s decisions Decisions continue in effect until appeal Regulations under Part 1 and this Part Review and report on operation of this Part 42A Ministry must review and report on operation of this Part 42B Territorial scope Part 3 Dispute resolution 43 Purpose of this Part Subpart 1—Financial service provider must be member of dispute resolution scheme 44 Financial service provider must be
 member of dispute resolution scheme Subpart 2—Approval of dispute resolution schemes 45 Meaning of approved dispute resolution scheme Approval of dispute resolution schemes 46 47 48 49 50 51 52 53 Application for approval Mandatory considerations for approval Minister must decide application for approval Notiﬁcation and publication of decision Reapplication by unsuccessful applicant Withdrawal of approval Withdrawal of approval Notice of intention to withdraw approval Objection to intended withdrawal of
 approval 26 26 27 28 29 30 30 30 31 31 33 33 33 34 34 34 35 36 37 37 37 39 39 3 Financial Service Providers (Registration and Dispute Resolution) Bill 54 55 56 Approval is withdrawn from date person responsible for scheme is notiﬁed Notiﬁcation and publication of withdrawal of approval Effect of withdrawal of approval on members of dispute resolution scheme List of members of approved dispute resolution scheme 57 List of members 58 59 60 61 61A 62 63 64 Rules about approved dispute resolution scheme Rules about approved dispute resolution scheme Obligation to publish rules Duty to notify change to rules Minister’s consideration of change of rules Duty to co­operate and communicate information in certain circumstances Annual reports and information requests by Minister Annual report Person responsible for approved dispute resolution scheme must supply further information on Minister’s request Annual report and information requested by Minister to be publicly available Subpart 3—Reserve scheme 65 Reserve scheme Appointment of reserve scheme 66 67 68 69 69A Appointment of reserve scheme Revocation of appointment as reserve scheme Notice of intention to recommend revocation of appointment as reserve scheme under section 67(2)(ba) or (bb) Objection to intended recommendation for revocation Duty to co­operate and communicate information in certain circumstances Levy to fund reserve scheme 70 Levy to fund reserve scheme 40 40 40 40 41 43 43 43 43 44 44 45 45 45 47 48 48 49
 49 4 Financial Service Providers (Registration and Dispute Resolution) Bill cl 2 Subpart 4—Miscellaneous Publication of details relating to approved dispute resolution schemes and reserve scheme 74AA Publication of details relating to approved dispute resolution schemes and reserve scheme Regulations under this Part 74 Regulations under this Part Review and report on operation of this Part 74A Ministry must review and report on operation of this Part 75 Consequential amendment Consequential amendment
 Schedule 1 Consequential amendment Schedule 2 Licensing authorities (with relevant licensed providers and enactments) 52 53 54 54 55 56 The Parliament of New Zealand enacts as follows: 1 2 (1) (2) Title This Act is the Financial Service Providers (Registration and Dispute Resolution) Act 2007.
Commencement Part 2 and section 44 come into force on a date to be ap­ pointed by the Governor­General by Order in Council, and 1 or more Orders in Council may be made appointing dif­ ferent dates in respect of different types of ﬁnancial service providers.

The rest of this Act comes into force on the day after the date on which it receives the Royal assent.
5 10 5 Part 1 cl 3 Financial Service Providers (Registration and Dispute Resolution) Bill Part 1 Preliminary provisions Overview This Act requires ﬁnancial service providers to be registered.

There are different requirements for registration depending on 5 whether a provider provides— (a) a ﬁnancial adviser service (a term deﬁned in the Finan­ cial Advisers Act 2007); or a ﬁnancial service.
(b) In order to be registered, ﬁnancial service providers are re­ 10 quired to be members of an approved a dispute resolution scheme if they provide ﬁnancial services to certain people the public.

However, this requirement only applies if the reserve scheme has been appointed.

The Act sets out how a dispute resolution scheme may be ap­ 15 proved by the Minister, why the approval might be withdrawn, and how an approved a dispute resolution scheme may be ap­ pointed as the reserve scheme.
The Act provides that the reserve scheme is to act as the default dispute resolution scheme and is to be capable of resolving 20 disputes relating to all types of ﬁnancial service providers.

This section is intended as a guide only.
Interpretation In this Act, unless the context otherwise requires,— afﬁliated entity means an afﬁliated entity that has been identi­ 25 ﬁed in an Order in Council in accordance with section 20B(3) annual conﬁrmation means the annual conﬁrmation relating to a registered provider supplied to the Registrar under sec­ tion 27 annual report means the annual report relating to an approved 30 dispute resolution scheme supplied to the Minister under sec­ tion 62 approved dispute resolution scheme has the meaning given by section 45 approved professional body has the meaning given by sec­ 35 tion 35 of the Financial Advisers Act 2007 3 (1) (2) (3) (4) (5) 4 6 Financial Service Providers (Registration and Dispute Resolution) Bill Part 1 cl 4 trade, or undertaking, business includes any profession, whether or not carried on with the intention of making a pecuniary proﬁt chief executive means the chief executive of the department of State that, with the authority of the Prime Minister, is for 5 the time being responsible for the administration of this Act company means a company, or an overseas company, within the meaning of section 2(1) of the Companies Act 1993 controlling owner means, in relation to a ﬁnancial service provider that is not an individual, any person who beneﬁcially 10 owns 50% or more of that provider credit contract— (a) has the meaning given by section 7 of the Credit Con­ tracts and Consumer Finance Act 2003; but does not include— (i) (b) contracts speciﬁed in section 15(1)(a) or (b) of that Act:
 contracts to be treated as credit sales and con­ sumer credit contracts under section 16 of that Act: contracts under which no interest charges as de­ ﬁned in section 5 of that Act are payable (ii) (iii) 15 20 deposit has the meaning given by section 108(2) of the Friendly Societies and Credit Unions Act 1982 director has the meaning given by section 126 of the Com­ 25 panies Act 1993, but also includes, in relation to a body that is not a company, a person who occupies a position comparable to that of a
 director (such as a trustee or a partner) document means— (a) any material, whether or not it is signed or otherwise 30 authenticated, that bears symbols (including words and ﬁgures), images, or sounds, or from which symbols, images, or sounds can be derived, and includes— (i) a label, marking, or other writing that identiﬁes or describes a thing of which it forms a part, or 35 to which it is attached: a book, map, plan, graph, or drawing: a photograph, ﬁlm, or negative; and (ii) (iii) 7 Part 1 cl 4 Financial Service Providers (Registration and Dispute Resolution) Bill (b) information electronically recorded or stored, and infor­ mation derived from that information due date, in relation to an annual conﬁrmation, means the date allocated to a registered ﬁnancial service provider by the Registrar under section 15(1)(b) or 21(b) FATF means the Financial Action Task Force on Money Laun­ dering established in Paris in 1989 FATF Recommendations means all of the following recom­ mendations: (a) 5 the 40 Recommendations adopted by FATF at its ple­ 10 nary meeting on 20 June 2003: the Special Recommendations on Terrorist Financing adopted by FATF at its extraordinary plenary meeting on 31 October 2001: Special Recommendation IX on Terrorist Financing 15 adopted by FATF at its plenary meeting between 20 and 22 October 2004 (b) (c) ﬁnancial adviser has the meaning given by section 7 of the Financial Advisers Act 2007 ﬁnancial adviser service has the meaning given by
 section5 20 sections 10 and 12 of the Financial Advisers Act 2007 ﬁnancial service has the meaning given by section 5 ﬁnancial service provider means a person who provides or offers to provide a ﬁnancial service in the business of providing a ﬁnancial service has the mean­ 25 ing given by section 5A insurance has the meaning given by section 2 of the Insurance Companies’ Deposits Act 1953 lawyer has the meaning given by section 6 of the Lawyers and Conveyancers Act 2006 except that, before that section comes 30
 into force, lawyer means a barrister or solicitor as deﬁned in section 2 of the Law Practitioners Act 1982 licensing authority means a body identiﬁed in Schedule 2 as a body that licenses licensed providers licensed provider means a person who is identiﬁed in Sched­ 35 ule 2 as being licensed by a licensing authority to provide a licensed service 8 Financial Service Providers (Registration and Dispute Resolution) Bill Part 1 cl 4 5 licensed service means a ﬁnancial service that is required by an enactment identiﬁed in Schedule 2 to be provided only by a licensed provider member, in relation to a dispute resolution scheme, has the meaning given by section 4544(2) member of a local authority has the meaning given by sec­ tion 5(1) of the Local Government Act 2002 Minister means the Minister of the Crown who, under the au­ thority of any warrant or with the authority of the Prime Min­ ister, is for the time being responsible for the administration of 10 this Act Minister means— (a) the Minister of the Crown who, under the authority of any warrant or with the authority of the Prime Minister, is for the time being responsible for the administration 15 of this Act and for Parts 1 and 2; and the Minister of the Crown who, under the authority of any warrant or with the authority of the Prime Minister, is for the time being responsible for Part 3 (b) Ministry means the department of State that, with the author­ 20 ity of the Prime Minister, is for the time being responsible
 for the administration of this Act prescribed means prescribed by this Act or by any regulations made under this Act real estate agent means a person who is a licensee under the 25 Real Estate Agents Act 2008 register means the register of ﬁnancial service providers and ﬁnancial advisers established and maintained under section 23 Registrar means the Registrar of Financial Service Providers 30 and Financial Advisers appointed under section 34 related company has the meaning given by section 2(3) of the
 Companies Act 1993 reserve scheme has the meaning given by section 65 responsible ﬁnancial service provider is a person declared 35 to be a responsible ﬁnancial service provider under section 20B(1) 9 Part 1 cl 5 Financial Service Providers (Registration and Dispute Resolution) Bill in relation to a ﬁnancial service senior manager means, provider, a person who is not a director but occupies a pos­ ition that allows the person to exercise signiﬁcant inﬂuence over the management or administration of that provider (for example, a chief executive or a chief ﬁnancial ofﬁcer).
tax agent has the meaning given by section 3(1) of the Tax Administration Act 1994.
5 Meaning of ﬁnancial service In this Act, ﬁnancial service means any of the following ﬁnan­ cial services that is not provided in the context of a ﬁnancial 10 adviser service: (aa) (a) (a) a ﬁnancial adviser service: accepting deposits: acting as a deposit taker as deﬁned in the Reserve Bank of New Zealand Act 1989: 15 (ab) being a registered bank: (b) keeping, investing, administering, or managing money, or securities, or investment portfolios on behalf of other persons: lending money or securities and providing credit (for 20 example, under a credit contract within the meaning of the Credit Contracts and Consumer Finance Act 2003): providing ﬁnancial leases, except under a contract that is not a consumer credit contract under section 15 of the Credit Contracts and Consumer Finance Act 2003: operating a money or value transfer service: issuing and managing means of payment (for example, credit and debit cards, cheques, travellers’ cheques, money orders, bankers’ drafts, and electronic money): giving ﬁnancial guarantees: participating in securities issues the offer of a security to the public as any of the following: (i) an issuer, a contributory mortgage broker, a trustee, a unit trustee, a superannuation trustee, a statutory supervisor, a promoter, or a manager 35 within the meaning of those terms in section 2(1) of the Securities Act 1978: 30 25 (c) (d) (e) (f) (g) (h) 5 10 Financial Service Providers (Registration and Dispute Resolution) Bill Part 1 cl 6 (i) (j) (k) (l) (m) (n) (ii) a public issuer within
 the meaning of that term in section 2(1) of the Securities Markets Act 1988: a provider of lending facilities: (iii) changing foreign currency: entering into derivative transactions, or trading in 5 money market instruments, foreign exchange, interest rate and index instruments, transferable securities (in­ cluding shares), and commodity futures contracts on behalf of another person: providing forward foreign exchange contracts: managing individual or collective investment port­ folios: underwriting and placing insurance: providing any other ﬁnancial service that is prescribed for the purposes of New Zealand complying with the 15 FATF Recommendations, other recommendations by FATF, or other similar international obligations that are consistent with the purpose of this Act.
10 5A Meaning of in the business of providing a ﬁnancial service In this Act, in the business of providing a ﬁnancial service 20 means carrying on a business of providing a ﬁnancial service (whether or not the business is the provider’s only business or the provider’s principal business).

6 (1) (2) Application of Act This Act applies to people who are in the business of providing 25 a ﬁnancial service or a ﬁnancial adviser service.
This Act does not apply to any of The following people are not ﬁnancial service providers to whom this Act applies: (a) a lawyer in the course of that person’s professional prac­ tice as a lawyer if the ﬁnancial service is a necessary in­ 30 cident of legal practice: a chartered accountant in the course of that person’s professional practice as a chartered accountant if the ﬁnancial service is a necessary incident of professional accounting practice: (b) 35 11 Part 1 cl 7 Financial Service Providers (Registration and Dispute Resolution) Bill (ba) (bb) (c) (c) (ca) (cb) (cc) (cd) (ce) (d) (e) 10 a tax agent in the course of that person’s professional practice as a tax agent if the ﬁnancial service is a neces­ sary incident of tax practice: a real estate agent in the course of that person’s pro­ fessional practice as a real estate agent if the ﬁnancial 5 service is a necessary incident of real estate practice: a prescribed Crown agency: the government departments listed in Schedule 1 of the State Sector Act 1988: the Reserve Bank (and any subsidiaries): the statutory entities listed in Schedule 1 of the Crown Entities Act 2004: any person engaged in terminating the business of a ﬁnancial service provider after that provider has been deregistered: a non­proﬁt organisation providing free ﬁnancial ser­ vices: an afﬁliated entity (except to the extent that the entity may be required to be registered under the Financial Advisers Act 2007): an employee, controlling owner, or director of a person listed in paragraph (a), (b), or (c), (ca), (cb), (cc), (cd), or (ce) (while acting as an employee, controlling owner, or director): an employee, controlling owner, or director of a regis­ 25 tered ﬁnancial service provider (while acting as an em­ ployee, controlling owner, or director).
15 20 (3) This Act does not apply with respect to ﬁnancial services pro­ vided between related companies.

Act binds the Crown This Act binds the Crown.
Part 2 Registration Purpose of this Part The purpose of this Part is to— 7 8 12 30 35 Financial Service Providers (Registration and Dispute Resolution) Bill Part 2 cl 10 (a) (b) (c) (ii) establish a compulsory public register of ﬁnancial ser­ vice providers and ﬁnancial advisers to enable— (i) the public to access information about ﬁnancial service providers and ﬁnancial advisers; and the Registrar and other regulators to regulate ﬁ­ 5 nancial service providers and ﬁnancial advisers: prohibit certain people from being involved in the management or direction of registered ﬁnancial service providers: conform with New Zealand’s obligations under the 10 FATF Recommendations.
9 (1) (2) Registration and deregistration Registration under this Act continues until the registered per­ son is deregistered.

Registration may not be transferred and may not vest by op­ 15 eration of law in any person other than the person registered under this Act.

(3) A person is deregistered when the Registrar enters on the regis­ ter that the person is deregistered.
Subpart 1—No providing holding out or being in business of providing ﬁnancial service or licensed service or holding out that entitled to provide ﬁnancial service unless registered No providing being in business of providing ﬁnancial service or licensed service in course of business unless registered 10 20 25 (1) A person to whom this Act applies must not provide a ﬁnancial service in the course of business be in the business of providing a ﬁnancial service unless that person is registered under this 30 Part.
(2) A person to whom this Act applies must not provide a licensed service in the course of business unless that person is regis­ tered under this Part as a licensed provider in relation to that particular licensed service.
35 13 Part 2 cl 11 Financial Service Providers (Registration and Dispute Resolution) Bill (3) Every person who knowingly breaches subsection (1) or (2) commits an offence and is liable on summary conviction,— (a) in the case of an individual, to imprisonment for a term not exceeding 2 years 12 months or to a ﬁne not exceed­ ing $100,000, or to both; or in the case of a body corporateperson who is not an individual, to a ﬁne not exceeding $300,000.
(b) 5 11 No holding out that in course of business that entitled to provide of providing ﬁnancial service unless registered (1) A person to whom this Act applies must not hold out (whether 10 directly or indirectly) in the course of business that the per­ son is registered under this Act or, entitled, qualiﬁed, able, or willing to be in the business of providing a ﬁnancial ser­ viceprovide a ﬁnancial service unless that person is registered under this Part.
Every person who knowingly breaches subsection (1) com­ mits an offence and is liable on summary conviction,— (a) (2) 15 in the case of an individual, to imprisonment for a term not exceeding 12 months or to a ﬁne not exceeding $100,000, or to both; or in the case of a body corporateperson who is not an individual, to a ﬁne not exceeding $300,000.
20 (b) Subpart 2—Registration of ﬁnancial service provider Qualiﬁcations for registration as ﬁnancial service provider 25 A person is qualiﬁed to be registered as a ﬁnancial service provider if— (a) (b) the person is not disqualiﬁed under section 13; and the person is a member of an approved dispute reso­ lution scheme if required by section 44or the reserve 30 scheme if the person provides a ﬁnancial service to the public; and the person has a licence to provide any licensed services the person provides or offers to provide.
(c) 12 14 Financial Service Providers (Registration and Dispute Resolution) Bill Part 2 cl 14 Disqualiﬁed person 13 (1) A person is disqualiﬁed if,— (a) (b) in the case of an individual, the individual is disqualiﬁed under subsection (2); or in the case of a person who is not an individual, the per­ 5 son has a controlling owner, director, or senior manager who is disqualiﬁed under subsection (2).
(2) (c) The following persons are disqualiﬁed: an undischarged bankrupt: (a) a person prohibited from being a director or promoter 10 (b) of, or concerned in the management of, an incorpor­ ated or unincorporated body under the Companies Act 1993, the Securities Act 1978, the Securities Markets Act 1988, or the Takeovers Act 1993: a person subject to a management banning order under 15 the Securities Act 1978, the Securities Markets Act 1988, the Takeovers Act 1993, or subject to an order under section 108 of the Credit Contracts and Con­ sumer Finance Act 2003: a person who has been convicted of an offence against 20 section 10, 11, or 40 within the past 5 years: a person who has been convicted of an offence relating to fraud or dishonesty under sections 217 to 266 of the Crimes Act 1961) within the past 5 years: a person who has been convicted of a money laundering 25 offence or an offence relating to the ﬁnancing of terror­ ism: a person who is subject to a conﬁscation order under the Proceeds of Crime Act 1991.
(ca) (d) (e) (f) (3) A member of a local authority must be treated as if he or she 30 is not disqualiﬁed.
Application for registration as ﬁnancial service provider 14 Application to be registered as ﬁnancial service provider (1) An application to be registered as a ﬁnancial service provider 35 must be made to the Registrar and— (a) contain the following (as relevant to the applicant): (i) the name and business address of the applicant: 15 Part 2 cl 15 Financial Service Providers (Registration and Dispute Resolution) Bill (ii) the name and business address of the approved dispute resolution scheme or the reserve scheme of which the applicant is a member: (iii) whether the applicant is applying in relation to a licensed service, and if so, which particular li­ 5 censed service; and (d) (b) (c) be in the form (if any) required by the Registrar; and conﬁrm that the applicant is not disqualiﬁed under sec­ tion 13; and contain, or be accompanied by, any other prescribed 10 information or documents; and be accompanied by the prescribed fee (if any).
(e) If the application relates to a licensed service, it must be ac­ companied by any prescribed information required to obtain an appropriate licence.
15 Registration of ﬁnancial service provider If the Registrar accepts that an applicant is qualiﬁed to be reg­ istered as a ﬁnancial service provider, the Registrar must— (a) 20 enter the following details on the register (as relevant to the provider): (i) (ii) the name and business address of the provider: the name and business address of the approved dispute resolution scheme or the reserve scheme of which the provider is a member: if the provider is a licensed provider in relation 25 to a particular licensed service, that fact and the name and business address of the licensing au­ thority that has licensed that provider: any other information prescribed in regulations; and (iii) (iv) 30 (b) allocate a due date for the provider’s annual conﬁrm­ ation, notify the provider of that date, and notify that date on the register.
If the Registrar does not accept that an applicant is qualiﬁed to be registered as a ﬁnancial service provider, the Registrar 35 must notify the applicant and any relevant licensing authority of the Registrar’s decision.
(2) 15 (1) (2) 16 16 (1) Financial Service Providers (Registration and Dispute Resolution) Bill Part 2 cl 17 Changes relating to ﬁnancial service provider Duty to notify changes relating to ﬁnancial service provider Each of the following persons must notify the Registrar about the following relevant changes relating to a ﬁnancial service 5 provider: (a) a ﬁnancial service provider, if the provider knows that the provider is no longer qualiﬁed for registration in accordance with section 12: the licensing authority in relation to a provider who is 10 no longer licensed: the person responsible for an approved dispute reso­ lution scheme or the reserve scheme of which a ﬁnancial service provider was a member, if the person knows that the provider is no longer a member of that scheme.
15 (b) (c) (2) The time within which a person must notify the Registrar under subsection (1) is 10 working days from the date the person comes to know about the change.

(3) A ﬁnancial service provider who breaches subsection (1)(a) commits an offence and is liable on summary conviction to a 20 ﬁne not exceeding $10,000.

(4) A person who breaches subsection (1)(c) commits an of­ fence and is liable on summary conviction to a ﬁne not ex­ ceeding $10,000.
Deregistration of ﬁnancial service provider 25 17 (1) Deregistration of ﬁnancial service provider The Registrar must deregister a ﬁnancial service provider after a notice period in accordance with sections 18 and 19, if the Registrar is satisﬁed that the provider is no longer— (a) is no longer qualiﬁed to be registered in accordance with 30 section 12; or is no longer in the business of providing or offering to provide a ﬁnancial service; or has been registered because of a false or misleading rep­ resentation or omission; or 35 (b) (c) 17 Part 2 cl 18 Financial Service Providers (Registration and Dispute Resolution) Bill (2) (3) 18 (1) (2) (d) has proffered an application fee or annual conﬁrmation fee that has subsequently been dishonoured, declined, or reversed.
The Registrar must deregister a ﬁnancial service provider if the provider so requests in writing, with effect from the any future 5 date requested by the provider.

The Registrar must notify any relevant licensing authority of this deregistration.

For the purposes of this section and sections 18 and 19, notice period means 20 working days from the date of the Registrar’s notiﬁcation under section 18.
10 Notice of intention to deregister The Registrar must notify a ﬁnancial service provider and any relevant licensing authority of the Registrar’s intention to deregister the provider under section 17(1).
The Registrar’s notice must set out— (a) 15 that the Registrar intends to deregister the provider under either section 17(1)(a) or (b) 17(1) (stating whichever paragraph applies); and the reasons why the Registrar considers the relevant paragraph in section 17(1)(a) or (b) 17(1) applies; 20 and that there is a notice period before deregistration occurs during which the provider may object, under section 19, to the deregistration.
(b) (c) 19 Objection to proposed deregistration of ﬁnancial service provider 25 (2) (1) During the notice period, the ﬁnancial service provider may object (with reasons) to the proposed deregistration under sec­ tion 17(1).
If the Registrar receives an objection under subsection (1) 30 within the notice period, the Registrar must consider the ob­ jection and must not proceed with a deregistration under sec­ tion 17(1), unless the Registrar is satisﬁed that the ﬁnancial service provider is no longer— (a) qualiﬁed to be registered in accordance with section 35 12; or 18 (2) 20 Financial Service Providers (Registration and Dispute Resolution) Bill Part 2 cl 20A providing or offering to provide a ﬁnancial service.
(b) If the Registrar receives an objection under subsection (1) within the notice period, the Registrar must consider the objec­ tion and must not proceed with a deregistration under section 17(1), unless the Registrar is satisﬁed that any of paragraphs 5 (a) to (d) of section 17(1) applies.
Notiﬁcation of deregistration of ﬁnancial service provider If the Registrar proceeds with deregistration deregisters a ﬁ­ nancial service provider, the Registrar must notify— (a) the ﬁnancial service provider of the deregistration and, 10 stating the provider’s right of appeal to the High Court against the deregistration under section 41; and any relevant licensing authority of the deregistration; and the public, by a notice that is publicly available on an 15 Internet site (at all reasonable times) for not less than 20 working days.
(b) (c) Reregistration of ﬁnancial service provider 20A Reregistration of ﬁnancial service provider (1) The Registrar may reregister a ﬁnancial service provider who 20 was deregistered— (a) on the grounds set out in section 17(1)(b) if the Regis­ trar is satisﬁed that the ﬁnancial service provider was still in the business of providing a ﬁnancial service at the time of deregistration; or on the grounds set out in section 17(1)(d) if the Regis­ trar is satisﬁed that the application fee or annual con­ ﬁrmation fee has been paid.
(b) (2) A reregistration is effective from the date of deregistration as (3) if the deregistration had not occurred.
If the Registrar reregisters a ﬁnancial service provider, the Registrar must notify— (a) (b) the ﬁnancial service provider; and any relevant licensing authority; and 19 25 30 Part 2 cl 20B Financial Service Providers (Registration and Dispute Resolution) Bill (c) the public, by a notice that is publicly available on an Internet site (at all reasonable times) for not less than 20 working days.
Responsible ﬁnancial service provider (2) 20B Responsible ﬁnancial service provider (1) 5 The Governor­General may, by Order in Council made on the recommendation of the Minister, declare (with or with­ out conditions) that an entity is a responsible ﬁnancial service provider.
The Minister may make a recommendation under subsection 10 (1) only if— (a) the entity has applied to the Minister to be declared a responsible ﬁnancial service provider; and the entity has afﬁliated entities who each would qualify to be registered as a ﬁnancial service provider under 15 section 12; and the entity undertakes to be responsible for the ﬁnancial services provided by any of the afﬁliated entities; and the Minister is satisﬁed that declaring the entity to be a responsible ﬁnancial service provider would be in the 20 public interest.
(b) (c) (d) (3) The Order in Council must identify the afﬁliated entities of the responsible ﬁnancial service provider.
Subpart 3—Registration of provider of ﬁnancial adviser service Registration of provider of ﬁnancial adviser service If an approved professional body notiﬁes the Registrar, under section 51 of the Financial Advisers Bill, of the details of a provider of a ﬁnancial adviser service, the Registrar must— (a) (b) enter those details on the register; and allocate a due date for the provider’s annual conﬁrm­ ation to be sent under section 27, notify the approved professional body of that date, and notify that date on the register.
25 30 21 20 Financial Service Providers (Registration and Dispute Resolution) Bill Part 2 cl 24 22 Deregistration of provider of ﬁnancial adviser service The Registrar must deregister a provider of a ﬁnancial adviser service who has ceased to be a member of an approved pro­ fessional body.
23 24 (1) (2) (3) (2) (3) Subpart 4—Register of ﬁnancial service providers and ﬁnancial advisers Register established 5 Register of ﬁnancial service providers and ﬁnancial advisers The Registrar must establish and maintain a register of ﬁnan­ 10 cial service providers and ﬁnancial advisers.

Operation of and access to register The register may be kept as an electronic register or in any other manner that the Registrar thinks ﬁt.
The register must be available for access and searching by the 15 public at all times unless— (a) the Registrar suspends the operation of the register, in whole or in part, in accordance with subsection (3); or otherwise prescribed.

(b) The Registrar may refuse access to the register or otherwise 20 suspend the operation of the register, in whole or in part, if the Registrar considers that it is not practical to provide access to the register.
The register must be available for access and searching by members of the public at all times unless suspended under sub­ 25 section (3).

The Registrar may refuse access to the register or suspend its operation, in whole or in part,— (a) if the Registrar considers that it is not practical to pro­ vide access to the register; or for any other reason that is prescribed by regulations made under this Act.
Compare: 2008 No 1 s 55(1), (2) (b) 30 21 Part 2 cl 25 Financial Service Providers (Registration and Dispute Resolution) Bill Purposes of register The purposes of the register are— (a) (ii) to enable the public and any person referred to in para­ graph (b) to— (i) identify registered ﬁnancial service providers and 5 ﬁnancial advisers; and access information about— (A) (A) how to contact registered persons; and the name and business address of a regis­ tered ﬁnancial service provider; and the approved dispute resolution scheme or the reserve scheme of which a registered personﬁnancial service provider is a mem­ ber (if required by section 44); and (B) 10 (D) (C) whether a registered ﬁnancial service 15 provider provides a licensed service; and in relation to a ﬁnancial adviser, the ap­ proved professional body of which the ﬁ­ nancial adviser is a member; and to assist any person in the exercise of the person’s 20 powers or the performance of the person’s functions under this Act or any other enactment; and to conform with New Zealand’s obligations under the FATF Recommendations.
(b) (c) Contents of register The register must contain the following information about each registered person (to the extent that the information is relevant): (a) the personregistered ﬁnancial service provider’s name and business address: (b) whether the person is a ﬁnancial service provider or a 25 30 (c) (ca) ﬁnancial adviser: the name and business address of the approved dispute resolution scheme or the reserve scheme of which the person registered ﬁnancial service provider is a mem­ 35 ber: in relation to a licensed provider, the licensed service the provider is licensed to provide: 25 26 22 Financial Service Providers (Registration and Dispute Resolution) Bill Part 2 cl 28 (d) (e) (f) in relation to a licensed provider, the name and business address of the licensing authority that has licensed that provider: in relation to a ﬁnancial adviser, the name and business address of the approved professional body of which that 5 ﬁnancial adviser is a member: any other information prescribed in regulations.
Annual conﬁrmation Each registered ﬁnancial service provider must supply to the Registrar each year by the due date an annual conﬁrmation of 10 details relating to that provider.

Each approved professional body (on behalf of each registered member) must supply to the Registrar each year by the due date an annual conﬁrmation of details relating to that member.

The annual conﬁrmation must be in the form required by the 15 Registrar (if any) and be accompanied by the prescribed fee (if any).
The annual conﬁrmation must— (a) be in the form (if any) required by the Registrar and be accompanied by the prescribed fee (if any); and conﬁrm that the provider is not disqualiﬁed under sec­ tion 13; and contain, or be accompanied by, any other prescribed in­ formation or documents.
(b) (c) 20 If a registered ﬁnancial service provider does not comply with 25 subsection (1) within 3 months of by the due date, the Regis­ trar may assume that the provider is no longer in the business of providing or offering to provide a ﬁnancial service and sec­ tions 17 to 19 apply.
Registrar must amend register in certain circumstances The Registrar must amend the register if— (a) an annual conﬁrmation contains information that is different from the information entered on the register (where the Registrar is satisﬁed that the situations described in section 17(1) do not apply); or 30 35 23 27 (1) (2) (3) (3) (4) 28 Part 2 cl 29 Financial Service Providers (Registration and Dispute Resolution) Bill (b) (b) (c) (d) (e) 5 a ﬁnancial service provider or an approved professional body (on behalf of a registered member) informs the Registrar of changes to the name and business address of the provider or to the approved dispute resolution scheme to which the provider belongs; or a ﬁnancial service provider informs the Registrar of in­ formation that is different from the information entered on the register (where the Registrar is satisﬁed that the situations described in section 17(1) do not apply); or a licensing authority informs the Registrar that a regis­ 10 tered ﬁnancial service provider has become a licensed provider in relation to a particular licensed service; or the Registrar is satisﬁed at any time that the register contains a typographical error, or a mistake, or omits information that was supplied to the Registrar; or any other information prescribed by regulations.
15 Registrar may refuse to accept document The Registrar may refuse to accept a document received by the Registrar under this Act if that document— is not in the required form (if any); or (a) does not comply with prescribed requirements.

(b) 20 Searches of register Searches of register The register may be searched only by reference to criteria to be speciﬁed in the regulations the criteria speciﬁed in section 25 26(a) to (f) and any other criteria prescribed in regulations.
Search purposes The register may be searched for the following purposes: (a) by an individual, or a person with the consent of the individual, for the purpose of searching for information 30 about that individual in accordance with the Privacy Act 1993: by a person for a purpose referred to in section 25: (b) 29 30 31 24 Financial Service Providers (Registration and Dispute Resolution) Bill Part 2 cl 33 (c) by a person for the purpose of advising another person in connection with any of the purposes referred to in this section.
32 When search breaches information privacy principle A person who searches a public register for personal informa­ 5 tion for a purpose that is not a purpose set out in section 31 must be treated, for the purposes of Part 8 of the Privacy Act 1993, as if that person has breached an information privacy principle under section 66(1)(a)(i) of that Act.
Compare: 2006 No 55 s 456 10 Information sharing 33 (1) (2) (3) (4) Sharing information with other agencies persons or bodies The Registrar may communicate to any of the agencies per­ sons or bodies referred to in subsection (4) any information that the Registrar— (a) holds (other than on the register) in relation to the exer­ cise of the Registrar’s powers or the performance of the Registrar’s functions and duties; and considers may assist the agency person or body in the exercise of its powers or the performance of its func­ 20 tions and duties.
(b) 15 The Registrar may use any information communicated to the Registrar by an agency a person or body referred to in subsec­ tion (4) in the Registrar’s exercise of the Registrar’s powers or the performance of the Registrar’s functions and duties.

This section applies despite anything to the contrary in any enactment, contract, deed, or document.
The agencies persons or bodies to which this section applies are— (a) (b) (ba) (bb) (bc) the Securities Commission; and the Reserve Bank of New Zealand; and a licensing authority identiﬁed in Schedule 2: the New Zealand Police: the person responsible for an approved dispute reso­ lution scheme: the person responsible for the reserve scheme: (bd) 25 30 35 25 Part 2 cl 34 Financial Service Providers (Registration and Dispute Resolution) Bill (c) (d) a prescribed agency that carries out supervisory or en­ forcement functions relating to money laundering or ter­ rorist ﬁnancing; and: a prescribed overseas agency that is the equivalent of the Registrar or of a body referred to in paragraphs (a) 5 to (c), but only where there is a written agreement be­ tween the overseas agency and the Minister about shar­ ing the information.
Registrar of Financial Service Providers and Financial Advisers 10 Appointment of Registrar The chief executive must appoint a Registrar of Financial Ser­ vice Providers and Financial Advisers under the State Sector Act 1988.

The person holding ofﬁce as Registrar of Companies under the 15 Companies Act 1993, immediately before the commencement of this Act, is deemed to have been appointed as the ﬁrst Regis­ trar of Financial Service Providers and Financial Advisers in accordance with this section.
Compare: 1999 No 126 s 136 20 Power of Registrar to delegate The Registrar may delegate to any person, either generally or particularly, any of the Registrar’s functions, duties, and powers except the power of delegation.
34 (1) (2) 35 (1) (2) A delegation— 25 (a) must be in writing; and (b) may be made subject to any restrictions and conditions (c) (d) the Registrar thinks ﬁt; and is revocable at any time, in writing; and does not prevent the performance or exercise of a func­ 30 tion, duty, or power by the Registrar.
(3) A person to whom any functions, duties, or powers are dele­ gated may perform and exercise them in the same manner and with the same effect as if they had been conferred directly by this Act and not by delegation.

35 26 Financial Service Providers (Registration and Dispute Resolution) Bill Part 2 cl 36 (4) A person who appears to act under a delegation is presumed to be acting in accordance with its terms in the absence of evidence to the contrary.
Compare: 2003 No 12 s 62 Subpart 5—Registrar’s inspection powers 5 36 (1) (2) Registrar’s inspection powers The Registrar, or a person authorised by the Registrar, may take any of the steps listed in subsection (2) for the purpose of ascertaining whether a person— (a) is in the business of providing or has provided a ﬁnan­ 10 cial service in breach of section 10; or is offering or has offered to provide a ﬁnancial service; or is holding out or has held out that the person provides or has provided is in the business of providing a ﬁnancial 15 service in breach of section 11; or is qualiﬁed or has been qualiﬁed to be registered in ac­ cordance with section 12; or has made a false or misleading representation or omis­ sion in breach of section 40.
20 (b) (c) (d) (e) The steps referred to in subsection (1) are the following: (a) requiring a person to produce for inspection relevant documents within that person’s possession or control: inspecting and taking copies of relevant documents: taking possession of relevant documents and retaining 25 them for a reasonable time for the purpose of taking copies.

(b) (c) (2A) Any person who exercises powers under subsection (1) must make his or her authorisation from the Registrar available on request.
30 (3) Nothing in this section limits or affects the Tax Administration Act 1994 or the Statistics Act 1975.

(4) A person must not obstruct or hinder the exercise of a power (5) conferred by subsection (1).
If a registered ﬁnancial service provider does not comply with 35 a requirement under subsection (2)(a) within 20 working days from the date the requirement was notiﬁed to the provider, 27 Part 2 cl 37 Financial Service Providers (Registration and Dispute Resolution) Bill the Registrar may assume that the provider is no longer in the business of providing or offering to provide a ﬁnancial service and sections 17 to 19 apply.
(6) A person who knowingly fails to comply with a requirement under subsection (2) commits an offence and is liable on 5 summary conviction,— (a) in the case of an individual, to a ﬁne not exceeding $30,000: in the case of a body corporateperson who is not an individual, to a ﬁne not exceeding $300,000.
(b) 10 (7) A person who breaches subsection (4) commits an offence and is liable on summary conviction,— (a) in the case of an individual, to a ﬁne not exceeding $30,000: in the case of a body corporateperson who is not an 15 individual, to a ﬁne not exceeding $300,000.
(8) In this section, relevant document means a document that contains information relating to whether a person— (a) is in the business of providing or has provided a ﬁnan­ cial service; or is offering or has offered to provide a ﬁnancial service; or is holding out or has held out that the person provides or has provided is in the business of providing a ﬁnancial service in breach of section 11; or is qualiﬁed or has been qualiﬁed to be registered in ac­ cordance with section 12; or has made a false or misleading representation or omis­ sion in breach of section 40.
20 25 30 Compare: 1993 No 105 s 365 (b) (b) (c) (d) (e) Disclosure of information and reports 37 (1) A person authorised by the Registrar for the purposes of sec­ tion 36 who has obtained a document or information in the course of making an inspection under that section or prepared a report in relation to an inspection under that section must, if 35 directed to do so by the Registrar, give the document, infor­ mation, or report to— the Registrar; or (a) 28 Financial Service Providers (Registration and Dispute Resolution) Bill Part 2 cl 38 (b) (c) (d) the Minister; or the chief executive; or any person authorised by the Registrar to receive the document, information, or report for the purposes of this Act.
(2) A person authorised by the Registrar for the purposes of sec­ tion 36 who has obtained a document or information in the course of making an inspection under that section or prepared a report in relation to an inspection under that section must not disclose that document, information, or report, except— (a) (b) in accordance with subsection (1); or subject to the approval of the Registrar, with the consent of the person to whom it relates; or subject to the approval of the Registrar, for the purposes of this Act; or to the extent that the information, or information con­ tained in the document or report, is available under any Act or in a public document.
(c) (d) 5 10 15 (3) A person who fails to comply with this section commits an offence and is liable on summary conviction to a ﬁne not ex­ 20 ceeding $10,000.
Compare: 1993 No 105 s 366 38 Exercise of powers under section 36 not affected by appeal (1) Despite any other provision of any Act or any rule of law, if a person appeals or applies to the High Court in relation to an 25 act or decision of the Registrar or a person authorised by the Registrar under section 36, until a decision on the appeal or application is given,— (a) the Registrar, or that authorised person, may continue to exercise the powers under that section as if no such 30 appeal or application had been made; and no person is excused from fulﬁlling an obligation under that section by reason of that appeal or application.
(b) (2) (3) Subsection (3) overrides subsection (1).
If the appeal or application is allowed or granted,— (a) the Registrar must ensure that, as soon as is reasonably practicable after the Court’s decision is delivered, any 35 29 Part 2 cl 39 Financial Service Providers (Registration and Dispute Resolution) Bill (b) copy of a document taken or retained under section 36 is destroyed; and no information acquired under section 36 is admis­ sible in evidence in any proceedings unless the Court hearing the proceedings in which it is sought to adduce 5 the evidence is satisﬁed it was not obtained unfairly.
Compare: 1993 No 105 s 371 39 40 (1) Subpart 6—Miscellaneous Offence also committed by director If any ﬁnancial service provider that is not an individual com­ 10 mits an offence against this Act, every director of the provider who knowingly authorises or knowingly fails to prevent the offence also commits an offence against this Act.
Offence to make false or misleading representation Every person commits an offence who, in any document or 15 information required by or for the purposes of this Part or by regulations (whether or not supplied to the Registrar),— (a) makes a representation knowing that it is false or mis­ (b) leading in a material particular; or omits any matter knowing that the omission is false or 20 misleading in a material particular.
(2) A person who is convicted of an offence under subsection (1) is liable on summary conviction,— (a) in the case of an individual, to imprisonment for a term not exceeding 2 years or to a ﬁne not exceeding 25 $100,000, or to both; or in the case of a body corporateperson who is not an individual, to a ﬁne not exceeding $300,000.
(b) Appeals from Registrar’s decisions 41 (1) A ﬁnancial service provider who is not satisﬁed with any of the 30 following decisions of the Registrar may appeal to the High Court: (a) not registering an applicant as a ﬁnancial service provider under section 15: a deregistration under section 17: 35 (b) 30 Financial Service Providers (Registration and Dispute Resolution) Bill Part 2 cl 42 (c) an act or a decision of the Registrar or a person author­ ised by the Registrar under section 36.
(2) The time within which an appeal under subsection (1) may be made is 20 working days after the date of notiﬁcation of the decision, or within any further time that the Court allows.
5 (3) On appeal, the Court may do any of the following: (a) (b) (c) conﬁrm, modify, or reverse the act or decision or any part of it: exercise any of the powers that could have been exer­ cised by the Registrar in relation to the matter to which 10 the appeal relates: refer the act or decision back to the Registrar with di­ rections to reconsider the whole or a speciﬁed part of the act or decision.
41A Decisions continue in effect until appeal Unless the High Court orders otherwise, a decision appealed against under section 41 continues in effect.
42 (1) Regulations under Part 1 and this Part The Governor­General may, by Order in Council, make regu­ lations for all or any of the following purposes: (a) (b) (c) (d) specifying prescribing a ﬁnancial service for the pur­ poses of section 5(n): prescribing the Crown agencies to whom this Act does not apply under section 6: specifying information or documents to be included in, 25 or attached to, application forms, and requiring those forms provided with, applications, and requiring docu­ ments to be signed by speciﬁed persons: prescribing procedures, requirements, and other mat­ ters, not inconsistent with this Part or with the purposes 30 described in section 25, for relating to the register, in­ cluding matters that relate to— (i) (ii) the operation of the register: the information or documents to be contained in the register: access to the register: search criteria for the register: (iii) (iv) 35 15 20 31 Part 2 cl 42 Financial Service Providers (Registration and Dispute Resolution) Bill (v) fees that may be payable in order to search the register: (e) (f) (g) prescribing either of the following types of agency: (i) an agency that carries out supervisory or enforce­ ment functions relating to money laundering or 5 terrorist ﬁnancing for the purposes of section 33(4); or an overseas agency that is the equivalent of the Registrar or of a body referred to in section 33(4)(a) to (c) for the purposes of section 10 33(4): (ii) prescribing fees payable to the Registrar in respect of any matter under this Part Act or the manner in which fees may be calculated: providing for any other matters contemplated by Part 15 1 or by this Part, necessary for its administration, or necessary for giving it full effect.
(2) Without limiting subsection (1)(c), information or docu­ ments may be prescribed under that subsection for the purpose of assisting any person with the person’s powers, functions, or 20 duties as a licensing authority under any enactment providing for the licensing of licensed providers (regardless of whether or not that information or documentation is collected for the purposes of this Part).

The Registrar may refuse to perform a function or exercise a 25 power until the a prescribed fee is paid.
(3) (4) Any Order in Council made under subsection (1)(f) may— (a) (b) prescribe the method of payment of a fee; and authorise the Registrar to refund or waive, in whole or in part and on any prescribed conditions, payment of a 30 fee in relation to any person or class of persons.

(5) Any fee or amount payable to the Registrar is recoverable by the Registrar in any court of competent jurisdiction as a debt due to the Registrar.
32 Financial Service Providers (Registration and Dispute Resolution) Bill Part 3 cl 44 Review and report on operation of this Part 42A Ministry must review and report on operation of this Part The Ministry must, not later than 5 years after the commence­ (1) ment of this section,— (a) review the operation of this Part since the commence­ 5 ment of this section; and (b) prepare a report on the review for the Minister.
The report on the review must include recommendations to the Minister on whether any amendments to the Act concerning the matters dealt with in this Part are necessary or desirable.

(2) 10 (3) As soon as practicable after receiving the report, the Minister must present a copy of that report to the House of Representa­ tives.
42B Territorial scope This Act applies to the provision in New Zealand of a ﬁnan­ 15 cial service by a person who is in New Zealand, regardless of where the ﬁnancial service provider is resident, is incorpor­ ated, or carries on business.

Part 3 Dispute resolution 20 43 Purpose of this Part The purpose of this Part is to promote conﬁdence in ﬁnan­ cial service providers and ﬁnancial advisers by improving con­ sumers’ access to redress from providers through schemes to resolve disputes.
the establishment of approved dispute reso­ 25 lution schemes.

The schemes are intended to be accessible, independent, fair, accountable, efﬁcient, and effective.
Subpart 1—Financial service provider must be member of approved dispute resolution scheme 30 44 Financial service provider must be member of approved dispute resolution scheme Every ﬁnancial service provider must be a member of an ap­ proved dispute resolution scheme— 33 Part 3 cl 44 Financial Service Providers (Registration and Dispute Resolution) Bill (a) (b) if the provider provides a ﬁnancial service to— (i) (ii) consumers who are natural persons; or businesses that have no more than 19 full­time­ equivalent employees; and if the reserve scheme has been appointed under section 5 66.
44 (1) Financial service provider must be member of dispute resolution scheme Every ﬁnancial service provider must be a member of either an approved dispute resolution scheme or the reserve scheme 10 if the provider provides a ﬁnancial service to the public.

(2) A member, in relation to an approved dispute resolution scheme or the reserve scheme, is a ﬁnancial service provider who may be the subject of a complaint to that scheme.
Subpart 2—Approval of dispute resolution schemes 15 45 Meaning of approved dispute resolution scheme and meaning of member of approved dispute resolution scheme A dispute resolution scheme is an approved dispute reso­ 20 lution scheme if it has been approved by the Minister in ac­ cordance with this Part and that approval has not expired or been withdrawn.

(2) An approval expires 10 years after the date it was issued.
(3) A member of an approved dispute resolution scheme is a 25 ﬁnancial service provider or a provider of a ﬁnancial adviser service who may be the subject of a complaint to that scheme.

Approval of dispute resolution schemes Application for approval The person responsible for a dispute resolution scheme may 30 apply to the Minister for approval of the scheme.
The applicant must submit the following with the application: (a) the rules about the scheme: 46 (1) (2) 34 Financial Service Providers (Registration and Dispute Resolution) Bill Part 3 cl 47 (b) any other information that is prescribed concerning the considerations outlined in section 47: any annual reports relating to the scheme: any internal reviews of the scheme: the prescribed fee (if any).
(c) (d) (e) The Minister may request the applicant to supply further in­ formation or documentation relating to the matters referred to in subsection (2)(a) to (d) or (b).
5 (3) 47 Mandatory considerations for approval (1) When considering an application under section 46, the Min­ 10 ister must have regard to the following considerations in light of the principles listed in subsection (2): (a) whether the scheme has an appropriate purpose: (b) whether the applicant has undertaken appropriate rea­ sonable consultation on the scheme with members or 15 potential members of the scheme and representatives of the people referred to in section 44(a), and persons (or their representatives) likely to be substantially affected by the scheme: whether the scheme’s proposed dispute resolution pro­ 20 cesses are timely and appropriate: the extent to which the applicant’s governance arrange­ ments ensure the independence and accountability of the scheme: whether the applicant has adequate funding to enable 25 it to operate the scheme according to the scheme’s pur­ pose and in accordance with the rules about the scheme: whether the applicant’s directors and senior managers are competent to manage a dispute resolution scheme: the cost, if any, to lodge a complaint with the scheme, 30 and whether that cost is reasonable and appropriate: (c) (d) (e) (f) (g) (h) whether the scheme is capable of resolving disputes about the types of ﬁnancial services provided by the members or potential members of the scheme: the amounts of money that complaints lodged with the 35 scheme may be about, and whether those amounts are reasonable and appropriate: (i) 35 Part 3 cl 48 Financial Service Providers
 (Registration and Dispute Resolution) Bill 5 (l) (j) (j) (k) the principles listed in subsection (2); and the requirements of section 58: whether the rules about the scheme are adequate and comply with the principles listed in subsection (2): whether the rules about the scheme are adequate and comply with— (i) (ii) the number of currently approved dispute resolution schemes: the types of ﬁnancial service providers that may be members of currently approved dispute resolution 10 schemes: the proposed size of the scheme: the types of ﬁnancial service providers that may be po­ tential members of the scheme: any other applications for approval that have been 15 made.
The principles are— accessibility: (a) independence: (b) fairness: (c) accountability: (d) efﬁciency: (e) effectiveness.

(f) (la) (lb) (m) 20 (2) 48 Minister must decide application for approval (1) The Minister must decide an application under section 46 by 25 approving it (with or without conditions) or by rejecting it.
The Minister may only make a decision under subsection (1) after consultation with— (a) (b) The Minister may impose conditions on the approval about any or all of the following matters: (a) (b) the Minister of Finance; and the Minister of Consumer Affairs Commerce.

the applicant’s governance arrangements: training requirements for people employed or engaged in the operation of the scheme: other prescribed matters that relate to the principles listed in section 47(2).
(c) 35 30 (2) (3) 36 Financial Service Providers (Registration and Dispute Resolution) Bill Part 3 cl 51 49 5 Notiﬁcation and publication of decision The Minister must, as soon as practicable after deciding the application,— (a) (b) published in the Gazette; and notify the applicant in writing of the decision; and ensure that the decision is— (i) (ii) made available to the public by making copies of it available for inspection, free of charge, at the head ofﬁce of the Ministry (during ordinary ofﬁce hours), and for a reasonable period of time 10 on an Internet site in an electronic form that is publicly available (at all reasonable times).
if the decision is to approve the application, ensure that— (i) (ii) the approval is published in the Gazette; and the chief executive updates the details described in section 74AA(2).

(b) 15 50 Reapplication by unsuccessful applicant An applicant whose application has been rejected may at any time reapply under section 46.
20 Withdrawal of approval 51 Withdrawal of approval (1) 25 The Minister may withdraw the approval of an approved dis­ pute resolution scheme after a notice period in accordance with sections 52 and 53 for any or all of the following reasons: (a) (b) (c) there has been a breach of a prescribed requirement: there has been a breach of a condition of approval: there has been a failure to comply with the rules about the scheme: the person responsible for the scheme has not main­ 30 tained or published a list of current members as required by section 57: the person responsible for the scheme has not published the rules as required by section 59: the person responsible for the scheme has not supplied 35 the Minister with an annual report by 1 July as required by section 62: (d) (da) (e) 37 Part 3 cl 51 Financial Service Providers (Registration and Dispute Resolution) Bill (e) (f) (g) (ga) (h) the person responsible for the scheme has not supplied the Minister with any of the following: (i) (ii) an annual report as required by section 62: any further information requested by the Minister under section 63: an independent review as required by the rule described in section 58(m): (iii) 5 10 the person responsible for the scheme has not supplied the Minister with any further information requested by the Minister under section 63: the person responsible for the scheme has not notiﬁed the Minister within 10 working days after the date of any change made to in accordance with section 60 before changing the rules about the scheme: the person responsible for the scheme has not complied 15 with section 61A: the rules about the scheme have changed since the scheme’s approval was given, and that change means the rules— (i) (ii) are no longer adequate; or do not comply with the principles listed in sec­ tion 47(2): 20 (i) the scheme no longer satisﬁes the principles in section 47(2).
(3) (2) When considering whether to withdraw an approval, the Min­ 25 ister must have regard to the considerations referred to in sec­ tion 47(1) 47(1)(a) to (j) in light of the principles listed in section 47(2).

The Minister must withdraw the approval of an approved dispute resolution scheme if the person responsible for the 30 scheme so requests, with effect from the any future date requested.
For the purposes of this section and sections 52 and 53, notice period means 20 working days from the date of the Minister’s notiﬁcation under section 52(1).

(4) 35 38 Financial Service Providers (Registration and Dispute Resolution) Bill Part 3 cl 53 52 (1) (2) (3) Notice of intention to withdraw approval The Minister must notify the person responsible for the ap­ proved dispute resolution scheme of the Minister’s intention to withdraw the scheme’s approval under section 51(1).
The Minister’s notice must set out— (a) that the Minister intends to withdraw the scheme’s ap­ proval for any or all of the grounds described in section 51(1) (stating which apply); and the reasons why the Minister considers any or all of the grounds described in section 51(1) apply; and that there is a notice period before the withdrawal of the scheme’s approval during which the person responsible for the scheme may object, under section 53, to the intended withdrawal.
(b) (c) 5 10 The Minister’s notice may require the person responsible for 15 the scheme to— (a) notify all members of the Minister’s intention to with­ draw the scheme’s approval; or provide the Minister with a list of the names and busi­ ness addresses of current members so that the Minister 20 can, if the Minister wishes, notify all members of the Minister’s intention to withdraw the scheme’s approval.
(b) Objection to intended withdrawal of approval 53 (1) During the notice period, the person responsible for an ap­ proved dispute resolution scheme may object (with reasons) to 25 the intended withdrawal of the scheme’s approval under sec­ tion 51(1).

(1) During the notice period, the person responsible for an ap­ (2) proved dispute resolution scheme— (a) may object (with reasons) to the intended withdrawal of 30 the scheme’s approval under section 51(1); and (b) must not accept any new members.
If the Minister has received an objection under subsection (1) within the notice period, the Minister must consider it and must not proceed with a withdrawal under section 51(1) un­ 35 less the Minister is satisﬁed that any or all of the reasons set out in section 51(1) apply.
39 Part 3 cl 54 Financial Service Providers (Registration and Dispute Resolution) Bill Approval is withdrawn from date person responsible for scheme is notiﬁed If the Minister withdraws a scheme’s approval, the scheme’s approval is withdrawn from the date the person responsible for the scheme is notiﬁed under section 55(a).
5 Notiﬁcation and publication of withdrawal of approval The Minister must, as soon as practicable after withdrawing the approval of a dispute resolution scheme,— (a) 10 published in the Gazette; and notify the person responsible for the scheme in writing of the withdrawal of the scheme’s approval; and notify the Registrar of the withdrawal of the scheme’s approval; and ensure that the withdrawal is— (i) (ii) made available to the public by making copies 15 of it available for inspection, free of charge, at the head ofﬁce of the Ministry (during ordinary ofﬁce hours), and for a reasonable period of time on an Internet site in an electronic form that is publicly available (at all reasonable times).
ensure the withdrawal is published in the Gazette; and ensure the chief executive updates the details described in section 74AA(2).

20 (b) (c) (c) (d) Effect of withdrawal of approval on members of dispute resolution scheme On the date that a dispute resolution scheme’s approval is with­ drawn, members of the scheme become a members of the re­ serve scheme (if any).
List of members of approved dispute resolution scheme List of members The person responsible for an approved dispute resolution scheme must maintain a list of the scheme’s current members and must publish this list on an Internet site that is publicly available (at all reasonable times).
25 30 35 54 55 56 57 40 Financial Service Providers (Registration and Dispute Resolution) Bill Part 3 cl 58 Rules about approved dispute resolution scheme 58 Rules about approved dispute resolution scheme The person responsible for an approved dispute resolution scheme must issue rules about that scheme, and those rules must provide for, or set out, the following: (a) 5 which types of ﬁnancial service providers and providers of a ﬁnancial adviser service may be members of the scheme (all providers of that type must be eligible): how ﬁnancial service providers and providers of a ﬁ­ nancial adviser service become members of the scheme 10 and how membership is terminated: that consumers and businesses that have no more than 19 full­time equivalent employees may make com­ plaints for resolution by the scheme: how complaints about a member may be made to for 15 resolution by the scheme: a period after which the scheme, if asked by a com­ plainant, must investigate a complaint that has been made directly to a member: that complaints about members must be investigated in 20 a way that is consistent with the rules of natural justice: that complaints about members may be made relating to any of the following things: (i) breaches of contract by the member: (ii) breaches of statutory obligations by the member: 25 (iii) breaches of industry codes by the member: any other matters provided for in the rules: (iv) that any information may be considered in relation to a complaint and any inquiry made that is fair and reason­
 able in the circumstances: the sanctions that can be imposed on a member of the scheme following remedial action that the scheme can impose on a member to resolve a complaint (for ex­ ample, a requirement to change systems or to compen­ sate a complainant up to a certain amount stated in the 35 rules) and the compensation that can be awarded to the complainant:: how sanctions imposed and compensation awarded remedial action may be enforced against the scheme’s 30 (b) (ba) (c) (ca) (d) (e) (f) (g) (h) 41 Part
 3 cl 58 Financial Service Providers (Registration and Dispute Resolution) Bill the including after members have left members, scheme: that a ﬁnancial service provider who has not taken re­ medial action imposed on that provider by another ap­ proved dispute resolution scheme or the reserve scheme 5 cannot join the scheme: any provision for allocating the costs of resolving the dispute between the member complained about and the complainant: that the scheme will not charge a fee to any complainant 10 to investigate or resolve a complaint: that a decision made on resolution of a complaint about a member of the scheme is binding on the member con­ cerned, subject to an appeal under section 71: that a decision made on resolution of a complaint about 15 a member of the scheme is binding on the complainant concerned, subject to an appeal under section 71, if the complainant accepts the decision resolution: that the complainant may take alternative court action against the member at any time, including if the com­ 20 plainant rejects the decision resolution: that the scheme may cease investigating and resolving a complaint if the complainant takes alternative court action against the member: that an internal independent review of the scheme must 25 occur at least once every 3 5 years after the date of the scheme’s approval and must be supplied to the Minister within 3 months of completion: that the person responsible for the scheme must co­op­ erate with other approved dispute resolution schemes if 30 a complaint involves members of those other schemes: that the person responsible for the scheme and the scheme’s members must inform the people referred to in section 44(a)paragraph (ba) about the scheme to the extent that the members provide a ﬁnancial service 35 to those people.
(ha) (i) (i) (j) (k) (l) (la) (m) (n) (o) 42 59 60 61 (1) Financial Service Providers (Registration and Dispute Resolution) Bill Part 3 cl 61A Obligation to publish rules A The person responsible for an approved dispute resolution scheme must make copies of the rules about the scheme avail­ able for inspection by the public, free of charge,— (a) at the scheme’s head ofﬁce (during ordinary ofﬁce 5 hours); and on an Internet site in an electronic form that is publicly available (at all reasonable times).
(b) Duty to notify change to rules A The person responsible for an approved dispute resolution 10 scheme must notify the Minister of a if the person wishes to change made to the rules about the scheme within 10 working days after the date of the change.
15 Change to rules may lead to withdrawal of approvalMinister’s consideration of change of rules Following receipt of After receiving a notiﬁcation of a change of rules under section 60, the Minister may notify the person responsible for a scheme that the Minister— (a) (b) approves the change; or intends to withdraw considers the proposed change is 20 not adequate and does not comply with—the scheme’s approval under section 51(1), and sections 51 to 56 apply.
(i) (ii) the principles listed in section 47(2); and the requirements of section 58.

25 (1A) (2) If subsection (1)(b) applies, the rule change must not be made.

If the Minister does not notify the person responsible for the scheme in accordance with subsection (1) within 45 working days of the notiﬁcation of the change of rules, the change is 30 treated as having been approved by the Minister.
61A Duty to co­operate and communicate information in certain circumstances The person responsible for an approved dispute resolution scheme must— 35 43 Part 3 cl 62 Financial Service Providers (Registration and Dispute Resolution) Bill (a) (b) (c) co­operate with other approved dispute resolution schemes and with the reserve scheme if a complaint involves members of those other schemes (disclosing personal information in accordance with the Privacy Act 1993 and protecting information that is subject to 5 an obligation of conﬁdence); and co­operate with the Registrar, including by communi­ cating information to the Registrar in accordance with sections 16 and 33; and if there is a series of complaints about a particular li­ 10 censed provider or class of licensed provider, commu­ nicate that fact to the relevant licensing authority.
Annual reports and information requests by Minister Annual report A The person responsible for an approved dispute resolution scheme must supply to the Minister, by 1 July each year within 3 months after the end of the ﬁnancial year applying to the scheme, an annual report containing prescribed information about the scheme in relation to the 12 months ending on 31 20 March in that year that ﬁnancial year.
15 Person responsible for approved dispute resolution scheme must supply further information on Minister’s request A person responsible for an approved dispute resolution 25 scheme must supply to the Minister any further information requested by the Minister about the information that is re­ quired by regulations to be in an annual report.
Person responsible for approved dispute resolution scheme must supply further information on Minister’s request The person responsible for an approved dispute resolution scheme must supply to the Minister— 30 62 63 63 (1) 44 Financial Service Providers (Registration and Dispute Resolution) Bill Part 3 cl 66 (a) (b) any further information requested by the Minister about the information that is required by regulations to be in an annual report; and any information requested by the Minister about the scheme’s compliance with the principles listed in sec­ 5 tion 47(2).
In supplying the information to the Minister, the person must disclose personal information in accordance with the Privacy Act 1993 and protect information that is subject to an obliga­ tion of conﬁdentiality.
10 Annual report and information requested by Minister to be publicly available A The person responsible for an approved dispute resolution scheme must make copies of its annual report and any infor­ mation requested under section 63 available for inspection 15 by the public, free of charge,— (a) at the scheme’s head ofﬁce (during ordinary ofﬁce hours); and on an Internet site in an electronic form that is publicly available (at all reasonable times).
(b) Subpart 3—Reserve scheme Reserve scheme The reserve scheme is an approved a dispute resolution scheme that has been appointed by Order in Council under section 66 to fulﬁll the functions of the reserve scheme.
20 25 Appointment of reserve scheme Appointment of reserve scheme The Governor­General may, by Order in Council made on the recommendation of the Minister, appoint an approved dispute resolution scheme to be the reserve scheme (with or without 30 conditions) for a term not exceeding the term of the scheme’s approval.
The Governor­General may, by Order in Council made on the recommendation of the Minister,— 45 (2) 64 65 66 (1) (1) Part 3 cl 66 Financial Service Providers (Registration and Dispute Resolution) Bill (a) (b) appoint a dispute resolution scheme to fulﬁl the func­ tions of the reserve scheme (with or without conditions) for a term recommended by the Minister; and prescribe rules about scheme.
the functions of the reserve (1A) Rules made under subsection (1)(b) must provide for equiva­ lent matters to those required by section 58 to be provided for, or set out, in the rules of an approved dispute resolution scheme.
The Minister may only make a recommendation only if— (a) (2) 5 10 (c) (b) the person responsible for the scheme consents in writ­ ing to the scheme being appointed to fulﬁl the functions of the reserve scheme in accordance with the rules made under subsection (1)(b); and the scheme is the Minister is satisﬁed that the person 15 responsible for the scheme and the scheme itself are capable of resolving disputes relating to all types of providers of all types of ﬁnancial services and ﬁnancial adviser services; and the Minister is satisﬁed that the scheme is a formally 20 constituted dispute resolution body with demonstrable experience; and the Minister is satisﬁed that the person responsible for the scheme and the scheme itself are capable of fulﬁll­ ing the functions of the reserve scheme in accordance 25 with the rules made under subsection (1)(b).
The Minister may only make a recommendation only after consultation with— (a) (b) (c) the Minister of Finance; and the Minister of Consumer Affairs Commerce; and any persons (or their representatives) that the Minister considers are likely to be substantially affected by the recommendation.

(d) 30 (3) (4) A failure to comply with subsection (3)(c) does not affect the validity of an Order in Council made under subsection 35 (1).
Conditions that may be imposed by an Order in Council may relate to any or all of the following: (5) 46 (6) 67 (1) (2) (3) Financial Service Providers (Registration and Dispute Resolution) Bill Part 3 cl 67 (a) (b) (c) the governance arrangements of the person responsible for relating to the reserve scheme: training requirements for people employed or engaged in the operation of the reserve scheme: other prescribed matters that relate to the principles 5 listed in section 47(2).
The Minister’s ﬁrst recommendation for an Order in Council referred to in subsection (1) must be made within 2 years of this section coming into force.

Revocation of appointment as reserve scheme The Governor­General may, by Order in Council made on the recommendation of the Minister, revoke thean appointment of an approved dispute resolution scheme as the reserve scheme made under section 66(1)(a).
The Minister may only make a recommendation only for any 15 or all of the following reasons: (a) 10 the reserve scheme’s approval as an approved dispute resolution scheme has been withdrawn: the Minister is no longer satisﬁed that the reserve scheme is capable of resolving disputes relating to all 20 types of providers of all types of ﬁnancial services and ﬁnancial adviser services: there has been a failure to fulﬁl the functions of the re­ serve scheme as required by rules made under section 66(1)(b): there has been a breach of a condition of appointment: the person responsible for the reserve scheme requests that its the scheme’s appointment as the reserve scheme be revoked.
25 (b) (ba) (bb) (c) The Minister may only make a recommendation for the rea­ 30 sons set out in subsection (2)(ba) or (bb) only after consult­ ation with— (a) (b) (c) the Minister of Finance; and the Minister of Consumer Affairs Commerce.

any persons the Minister considers are likely to be sub­ 35 stantially affected by the recommendation.
47 Part 3 cl 68 Financial Service Providers (Registration and Dispute Resolution) Bill (4) A failure to comply with subsection (3)(c) does not affect the validity of an Order in Council made under subsection (1).

(5) At the same time as making a recommendation under sub­ section (1), the Minister must recommend that the Governor­ 5 General appoint another dispute resolution scheme to fulﬁl the functions of the reserve scheme under section 66(1)(a) for a term recommended by the Minister.
68 (1) (2) Notice of intention to recommend revocation of appointment as reserve scheme under section 67(2)(ba) or (bb) The Minister must notify the person responsible for the reserve scheme that the Minister intends, under section 67(2)(b) 67(2)(ba) or (bb), to recommend a revocation of the reserve scheme’s appointment.
The Minister’s notice must set out— (a) 10 15 or to under recommend the Minister intends, (bb), section a that 67(2)(b)67(2)(ba) revocation of the reserve scheme’s appointment; and the reasons why the Minister considers that section 20 67(2)(b) 67(2)(ba) or (bb) applies apply; and that there is a notice period during which the person responsible for the reserve scheme may object, under section 69, to the intended recommendation.
(b) (c) (3) For the purposes of this section and section 69, notice period 25 means 20 working days from the date of the Minister’s notiﬁ­ cation under subsection (1).

Objection to intended recommendation for revocation 69 (1) During the notice period, the person responsible for the reserve scheme may object (with reasons) to the Minster’s intention, 30 under section 67(2)(b) 67(2)(ba) or (bb), to recommend a revocation of the reserve scheme’s appointment.
If the Minister has received an objection under subsection (1) within the notice period, the Minister must consider the objection and must not proceed with a recommendation for 35 a revocation of the reserve scheme’s appointment under sec­ (2) 48 Financial Service Providers (Registration and Dispute Resolution) Bill Part 3 cl 70 tion 67(2)(b) 67(2)(ba) or (bb) unless the Minister is satisﬁed that section 67(2)(b) 67(2)(ba) or (bb) applies apply.
69A Duty to co­operate and communicate information in certain circumstances The person responsible for a reserve scheme must— (a) 5 co­operate with approved dispute resolution schemes if a complaint involves members of those schemes (dis­ closing personal information in accordance with the Pri­ vacy Act 1993 and protecting information that is subject to an obligation of conﬁdence); and co­operate with the Registrar, including by communi­ cating information to the Registrar in accordance with sections 16 and 33; and if there is a series of complaints about a particular li­ censed provider or class of licensed provider, commu­ 15 nicate that fact to the relevant licensing authority.
10 (b) (c) Levy to fund reserve scheme 70 (1) Levy to fund reserve scheme The Governor­General may, by Order in Council made on the recommendation of the Minister, make regulations— (a) 20 25 different types of ﬁnancial adviser services; or different types of ﬁnancial service: specifying that levies to fund the reserve scheme are payable by all members or by any class of members, and that different levies may apply to members who provide— (i) (ii) specifying that levies to fund the reserve scheme are payable by all members or by any class of members, and that different levies may apply to members who provide different types of ﬁnancial service: specifying the amounts of levies payable under this sec­ tion: providing for the method by which levies will be calcu­ lated: specifying the criteria and other requirements by and 35 against which levies will be set or reset: 30 (a) (b) (c) (d) 49 Part 3 cl 71 Financial Service Providers (Registration and Dispute Resolution) Bill (e) (f) (g) (h) (i) (j) specifying the ﬁnancial year or part­ﬁnancial year to which levies apply: providing for the payment and collection of levies: exempting any member from paying levies: providing for waivers or refunds of the whole or any 5 part of any levy paid by any member or class of mem­ bers: providing for interest to be paid if a member fails to pay levies by the due date speciﬁed in the regulations: enabling the reserve scheme to terminate the member­ 10 ship of a member who has failed to pay levies by the due date speciﬁed in the regulations.
(2) (3) Regulations made under subsection (1) must provide that no other membership fee apart from the levies may be charged by the reserve scheme.

The Minister may only make a recommendation under sub­ section (1) after consultation with any persons (or their rep­ resentatives) that the Minister considers are likely to be sub­ stantially affected by the regulations.

15 (4) A failure to comply with subsection (3) does not affect the 20 validity of an Order in Council made under subsection (1).
Subpart 4—Miscellaneous Appeals 71 (1) Appeals Either party may appeal to a District Court against a deci­ 25 sion made in accordance with an approved dispute resolution scheme on a complaint about a member of the scheme on the grounds that the dispute resolution process was unfair to the appellant and prejudicially affected the result of the decision.
(2) Without limiting the generality of subsection (1), a deci­ 30 sion maker is deemed to have conducted the dispute resolution process in a manner that was unfair to the appellant and preju­ dicially affected the result if— (a) the decision maker failed to have regard to either of the following: 35 50 Financial Service Providers (Registration and Dispute Resolution) Bill Part 3 cl 72 (i) any provision of any enactment that was brought to the attention of the decision maker before the decision maker’s decision; or any rule about the scheme; and (ii) as a result of the failure referred to in paragraph (a), 5 the decision is unfair to the appellant.
(b) (3) An appeal may be brought by ﬁling a notice of appeal in the District Court within 28 days of the decision, or within any further time as a District Court Judge may, on application, al­ low.

10 (5) (6) (4) As soon as practicable after a notice of appeal has been ﬁled, the appellant must serve a copy of the notice of appeal on the other party to the decision and on the person responsible for the scheme.
The District Court Registrar must ﬁx the time and place for the 15 hearing of the appeal and must notify both parties.

The ﬁling of a notice of appeal against a decision operates as a stay of any process for the enforcement of that decision, but the District Court may at any time, on the application of either party, order that any process may be resumed or commenced 20 or, the process having been resumed or commenced, order that it be further stayed.
In this section,— appellant means the person who appeals the decision, and may be the complainant or the member of the approved dis­ 25 pute resolution scheme party means a person who was a party to the decision, whether the person is the complainant or the member of the approved dispute resolution scheme.
Compare: 1988 No 110 s 50 (7) 30 Decision maker to ﬁle report 72 (1) Within 28 days after the notice of appeal is served on the per­ son responsible for an approved dispute resolution scheme under section 71(4), the decision maker must ﬁle with the District Court Registrar a report on the manner in which the 35 complaint was considered and the reasons for the decision on the complaint.
51 Part 3 cl 73 Financial Service Providers (Registration and Dispute Resolution) Bill (2) Apart from ﬁling the report under subsection (1), the deci­ sion maker, and the person responsible for the approved dis­ pute resolution scheme (if different), may not be parties to the District Court’s decision on the appeal (except in relation to the costs of preparing and ﬁling the report under subsection 5 (1)).
The District Court Registrar must serve a copy of the report ﬁled under subsection (1) on both parties a reasonable period of time before the hearing of the appeal.

Compare: 1988 No 110 s 51 (3) 10 Powers of District Court Judge on appeal 73 (1) On the hearing of an appeal, a District Court Judge may— (a) quash the decision appealed from and order the com­ plaint to be reheard on any terms the Judge thinks ﬁt; or dismiss the appeal.
(b) In ordering a rehearing under subsection (1)(a), the Judge may give any directions the Judge thinks ﬁt about the rehearing of the complaint.

15 (2) (3) An appeal under this section is to be heard by a District Court Judge in chambers, and the procedure at the hearing may be 20 determined by the Judge.
Compare: 1988 No 110 s 53 Publication of details relating to approved dispute resolution schemes and reserve scheme 74AA Publication of details relating to approved dispute 25 (1) resolution schemes and reserve scheme The chief executive— (a) must ensure that the details described in subsection (2) are available for inspection by the public, free of charge, at the head ofﬁce of the Ministry (during ordin­ 30 ary ofﬁce hours), and on an Internet site that is publicly available (at all reasonable times): (b) may make copies of the details available in any other way that the chief executive considers appropriate in the circumstances.
35 (2) The details are— 52 Financial Service Providers (Registration and Dispute Resolution) Bill Part 3 cl 74 (a) (b) the names of approved dispute resolution schemes and the name and business address of the person responsible for each scheme; and the name of the reserve scheme and the name and busi­ ness address of the person responsible for the reserve 5 scheme.
Regulations under this Part 74 (1) Regulations under this Part The Governor­General may, by Order in Council, make regu­ lations for all or any of the following purposes: (a) 10 (b) (c) (d) (e) (f) prescribing the information or documents to be supplied to the Minister as part of an application under this Part: prescribing processes for applications for the approval of dispute resolution schemes: prescribing rules for a class of approved dispute reso­ 15 lution scheme or for all approved dispute resolution schemes in the event that approval of those schemes is withdrawn: prescribing the information that must be included in every annual report supplied in accordance with sec­ 20 tion 62, which must include— (i) independent information about any internal review that occurred within the previous 12 months; and information about a scheme’s operation (includ­ 25 ing complaints received): (ii) prescribing fees payable in respect of any matter under this Part or the manner in which fees may be calculated: providing for any other matters contemplated by this Part, necessary for its administration, or necessary for 30 giving it full effect.
(2) The Minister may refuse to make a decision under this Part until the prescribed fee is paid.

(3) Any Order in Council made under subsection (1) may— (a) prescribe the method of payment of a fee; and 35 53 Part 3 cl 74A Financial Service Providers (Registration and Dispute Resolution) Bill (b) authorise the Minister to refund or waive, in whole or in part and on any prescribed conditions, payment of a fee in relation to any person or class of persons.
(4) Any fee or amount payable under this Part is recoverable in any court of competent jurisdiction as a debt due to the Crown.

5 Review and report on operation of this Part 74A Ministry must review and report on operation of this Part The Ministry must, not later than 5 years after the commence­ (1) ment of this section,— (a) review the operation of this Part since the commence­ 10 ment of this section; and (b) prepare a report on the review for the Minister.
The report on the review must include recommendations to the Minister on whether any amendments to the Act concerning the matters dealt with in this Part are necessary or desirable.

(2) 15 (3) As soon as practicable after receiving the report, the Minister must present a copy of that report to the House of Representa­ tives.

Consequential amendment 75 Consequential amendments amendment The enactment speciﬁed in the Schedule Schedule 1 is amended in the manner indicated in that schedule.
20 54 Financial Service Providers (Registration and Dispute Resolution) Bill Schedule 1 Schedule 1 Consequential amendments to other enactments s 75 Privacy Act 1993 (1993 No 28) Part 1 of Schedule 2: insert the following item in its appropriate al­ phabetical order: 5 Financial Service Providers (Registration and Dispute Resolution) Act 2007 Section 23 55 Schedule 2 Financial Service Providers (Registration and Dispute Resolution) Bill Schedule 2 Licensing authorities (with relevant licensed providers and enactments) s 4 Government Actuary: registered superannuation schemes (Super­ 5 annuation Schemes Act 1989) Government Actuary: registered KiwiSaver schemes (KiwiSaver Act 2006) Securities Commission: authorised ﬁnancial advisers and qualify­ ing ﬁnancial entities (Financial Advisers Act 2007) Reserve Bank: registered banks (Reserve Bank of New Zealand Act 1989) 10 4 December 2007 11 December 2007 Legislative history Introduction (Bill 190–1) First reading and referral to Finance and Expenditure Committee 12 56 Published under the authority of the House of Representatives—2008 Wellington, New Zealand: