Financial Services Legislation Amendment Act 2019

1: Title
This Act is the Financial Services Legislation Amendment Act 2019.
2: Commencement
1: Sections 3 6 8 20 47 to 55 56(1) 59(1) to (3) and (5) 61 88 94
2: The rest of this Act comes into force on a date appointed by the Governor-General by Order in Council, and 1 or more orders may be made appointing different dates for different provisions and for different purposes.
3: To the extent that it is not previously brought into force under subsection (1) or (2)
4: In this section, provision Section 2(2) brought into force 26 November 2019 clause 2 Financial Services Legislation Amendment Act Commencement Order (No 2) 2019 Section 2(2) brought into force 15 March 2021 clause 2 Financial Services Legislation Amendment Act Commencement Order 2020
1: Amendments to Financial Markets Conduct Act 2013
3: Principal Act
This Part amends the Financial Markets Conduct Act 2013 principal Act 2019-04-09 Financial Markets Conduct Act 2013 See section 2(1) OIC 2020/131 2021-03-15 Financial Markets Conduct Act 2013 The remaining provisions of the Financial Services Legislation Amendment Act 2019 brought into force on 15 March 2021.
4: Section 5 amended (Overview)
1: In section 5(1)﻿(f)﻿(i) example, providers of financial advice services,
2: After section 5(1)﻿(f)﻿(ii)
iia: imposing other obligations on providers of financial advice services and persons who give financial advice:
iib: providing for disclosure and conduct obligations for providers of client money or property services:
3: In section 5(1)﻿(h)﻿(iv) decisions or (in the case of financial advisers) the disciplinary committee’s decisions
5: Section 6 amended (Interpretation)
1: In section 6(1) authorised body authorised financial adviser category 2 product discretionary investment management service QFE qualifying financial entity QFE adviser
2: In section 6(1) authorised body client clause 2 of Schedule 5 client money or property service section 431W(1) code of conduct code clause 39 of Schedule 5 consumer credit contract contract of insurance custodial service section 431W(2) DIMS facility disciplinary committee clause 49 of Schedule 5 discretionary investment management service DIMS section 432A(1) engaged section 431E financial advice section 431C(1) financial advice product
a: a financial product (as defined in section 7); or
b: a DIMS facility; or
c: a contract of insurance; or
d: a consumer credit contract; or
e: any other product declared by the regulations to be a financial advice product; or
f: a renewal or variation of the terms or conditions of an existing financial advice product financial advice provider see section 431D financial advice service section 431D financial adviser
a: means an individual who is registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 in relation to a financial advice service; but
b: does not include a financial advice provider nominated representative section 431T product provider
a: for a financial product, the issuer:
b: for a DIMS facility, the person to whom the investment authority is granted:
c: for a contract of insurance, the insurer:
d: for a consumer credit contract, the creditor:
e: for any other financial advice product, the person specified in the regulations regulated client money or property service section 431W(4) regulated financial advice section 431C(3) retail client clause 3 of Schedule 5 wholesale client clause 4 of Schedule 5
3: In section 6(1) acquire
c: in relation to a derivative, a contract of insurance, a consumer credit contract, or a DIMS facility, includes entering into the legal relationship that constitutes the derivative, contract, or facility; and
d: in relation to a renewal or variation of the terms or conditions of an existing financial advice product, includes entering into the legal relationship that provides for the renewal or variation
4: In section 6(1) DIMS licensee 392 432A(3)
5: In section 6(1) disclosure document subpart 4 , 5A 5B
6: In section 6(1) dispose of financial product or other financial advice product
7: In section 6(1) dispose of
ba: in relation to a renewal or variation of the terms or conditions of an existing financial advice product, includes withdrawing from or terminating the product or refusing to agree to the renewal or variation; and
8: In section 6(1) investment authority 392 432A(3)
9: In section 6(1) market service
ea: acting as a provider of a financial advice service:
eb: providing a client money or property service:
10: In section 6(1) provider of a discretionary investment management service 392 432A(3)
6: Section 8 amended (Definitions relating to kinds of financial products)
In section 8(1)﻿(b)﻿(iii) option of the entity or a redeemable share in an industrial and provident society
7: Section 9 amended (Definitions of financial benefit and of managed investment scheme)
Replace section 9(2)﻿(b)
b: a discretionary investment management service supplied by a DIMS licensee:
8: New section 14A and cross-heading inserted
After section 14 Transitional, savings, and related provisions
14A: Transitional, savings, and related provisions
The transitional, savings, and related provisions set out in Schedule 4 have effect according to their terms.
9: Section 18 amended (Interpretation in this Part)
In section 18 financial product paragraph (b)﻿(i) financial product (within the meaning of section 5 of the Financial Advisers Act 2008) financial advice product Section 9 amended 14 March 2021 section 52 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
10: Section 28 amended (Certain conduct does not contravene various provisions)
In section 28(1) and (2) or 427 427, 431P 431Y
11: Section 34 amended (Prohibition of offers in course of unsolicited meetings with persons acting otherwise than in trade)
Replace section 34(2)﻿(b) and (c)
b: the offer is through a financial advice provider that is acting in the ordinary course of business as a financial advice provider; or
12: Section 351 amended (Regulations modifying this Part or Part 7 for licensed markets)
Section 12 repealed 14 March 2021 section 52 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
13: Section 386 amended (Overview)
After section 386(1)﻿(e)
ea: subpart 5A
eb: subpart 5B
14: Section 387 amended (Territorial scope for licensing of certain market services)
1: In the heading to section 387 licensing and other regulation
2: Replace section 387(1)
1: This Part applies to the following services received by a client or an investor in New Zealand, regardless of where the person providing the service is resident, is incorporated, or carries on business:
a: a financial advice service:
b: a discretionary investment management service:
c: a prescribed intermediary service:
d: a client money or property service.
15: New section 387A inserted (Other provisions relating to financial advice services and client money or property services)
After section 387
387A: Other provisions relating to financial advice services and client money or property services
The provisions set out in Schedule 5
16: Section 388 amended (When provider of market services needs to be licensed)
After section 388(b)
ba: acting as a provider of a financial advice service ( see section 431D
17: Section 389 amended (Exemptions from need for market services licence)
1: Before section 389(1) General exemptions
2: Replace section 389(2) Exemptions for financial advice service
2: A person is exempt from the licensing requirement under section 388(ba)
a: the service is not provided to any retail clients; or Example
A service provider may provide a financial advice service to a number of clients. As long as the service provider has no retail clients for that service, the provider need not be licensed as a financial advice provider.
b: the service is a prescribed exempt service. Exemptions for DIMS
3: A person is exempt from the licensing requirement under section 388(c) in respect of a service (unless a declaration applies under subpart 3 of Part 9) to the extent that—
a: the service is not a retail service ( see Example
A service provider may provide a discretionary investment management service to a number of investors using a model portfolio. As long as no retail investor is within the relevant class of investors, the provider need not be a DIMS licensee.
b: the service is a prescribed exempt service.
18: Section 392 repealed (Meaning of discretionary investment management service and related terms)
Repeal section 392
19: Section 393 amended (Principles guiding the exercise of FMA powers)
After section 393(a)﻿(iii)
iv: in the case of financial advice services, the additional purpose in section 431B Section 19 replaced 14 March 2021 section 52 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
20: Section 395 amended (Application for licence)
After section 395(1)
1A: The FMA may—
a: specify any of the matters referred to in section 548(1)﻿(p)﻿(i) to (iv); and
b: specify different matters for different classes of applicant or other circumstances (including specifying time frames within which different classes of applicant must make an application for a licence); and
c: refuse to consider the application if the person does not apply for the licence in the specified manner. Example
In order to facilitate the orderly and efficient processing of applications, the FMA specifies that if a particular type of provider wants a licence by a particular date or for a particular purpose, the provider must apply by some other date. A different date may apply to different classes of provider.
21: Section 397 amended (Procedural requirements)
1: In section 397(1)﻿(b) or a member of a QFE group
2: In section 397(2) limits or restrictions under section 403(3)﻿(a) limits, restrictions, or other conditions under section 403(3)﻿(a) or (4)
3: In section 397(2)﻿(a)﻿(i) limits or restrictions limits, restrictions, or other conditions
4: Repeal section 397(3)
22: Section 398 amended (Notice of decision)
In section 398(2) limits or restrictions under section 403(3)﻿(a) limits, restrictions, or other conditions under section 403(3)﻿(a) or (4)
23: Section 400 amended (Licence may cover related bodies corporate as authorised bodies)
1: In the heading to section 400 related bodies corporate as
2: After section 400(1)
1A: A licence may also, in its conditions, authorise 1 or more named entities to provide a financial advice service covered by the licence if the FMA is satisfied that—
a: arrangements are or will be in place to ensure that the licensee will maintain appropriate control or supervision over the provision of that service by the entity under the licence; and
b: the entity is capable of effectively providing that service (having regard to the proposed conditions of the licence); and
c: there is no reason to believe that the entity is likely to contravene the market services licensee obligations; and
d: the entity is, or will be, registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 on and from commencing to provide that service; and
e: the entity meets the eligibility criteria and other requirements prescribed by the regulations for the purposes of this section (if any).
1B: However, subsections (1) and (1A)
3: In section 400(2)﻿(a) and (b) subsection (1) subsection (1) or (1A)
24: Section 403 amended (When FMA may impose permitted conditions)
1:
2: In section 403(3)﻿(a) financial products, issuers, or investors, or classes of financial products, issuers, or investors, financial products or other financial advice products, issuers, investors, or clients, or classes of financial products or other financial advice products, issuers, investors, or clients,
3: After section 403(3), insert:
4: In the case of a licence relating to a financial advice service, a condition referred to in subsection (1) may also—
a: state which types of financial advice may, or may not, be given by the following on behalf of the licensee or an authorised body:
i: financial advisers in general, a class or classes of financial advisers, or 1 or more particular financial advisers:
ii: nominated representatives in general, a class or classes of nominated representatives, or 1 or more particular nominated representatives:
b: authorise the licensee or an authorised body ( P
i: engage an entity to give regulated financial advice to P’s retail clients on P’s behalf:
ii: engage an individual through 1 or more interposed persons (as described in section 431E(b)
c: if the licence includes an authorisation under paragraph (b)
d: prohibit (whether absolutely, in specified circumstances, or unless specified requirements are met) P from engaging a financial adviser to give regulated financial advice on P’s behalf if P knows or ought to know that the financial adviser is also engaged by another financial advice provider to give regulated financial advice on that other provider’s behalf. Section 24(1) repealed 14 March 2021 section 52 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
25: New section 406A inserted (Effect of condition requiring giver of advice or interposed person to be authorised by licence or registered)
After section 406
406A: Effect of condition requiring giver of advice or interposed person to be authorised by licence or registered
1: This section applies if, under section 403(4)﻿(b) and (c)
a: authorises the licensee or an authorised body ( P
i: engage an entity ( E
ii: engage an individual through 1 or more interposed persons ( F
b: includes either or both of the following conditions:
i: a condition requiring E or F to be authorised by a licence to provide a financial advice service (a licensing condition
ii: a condition requiring E or F to be registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 ( FSP Act registration condition
2: If the licence includes a licensing condition, for the purpose of enabling compliance with that condition, this Part applies,—
a: in relation to E, as if E, in giving regulated financial advice on behalf of P, were providing a financial advice service; and
b: in relation to F, as if F, in engaging individuals to give regulated financial advice on behalf of P, were providing a financial advice service.
3: If the licence includes a registration condition, for the purpose of enabling compliance with that condition, the FSP Act applies,—
a: in relation to E, as if E, in giving regulated financial advice on behalf of P, were providing a financial advice service; and
b: in relation to F, as if F, in engaging individuals to give regulated financial advice on behalf of P, were providing a financial advice service.
4: This section does not affect the application of this Part or the FSP Act to P.
26: Section 410 amended (Meaning of material change of circumstances)
Replace section 410(b)
b: a change that means that the requirements referred to in section 396(a) to (g) (1A)﻿(a) to (e) Section 26 amended 14 March 2021 section 52 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
27: Section 414 amended (FMA’s powers in case of contravention of market services licensee obligation, material change, etc)
Replace section 414(3)﻿(b)
b: the licensee or an authorised body does not meet, or no longer meets, the requirements referred to in 396(a) to (g) (1A)﻿(a) to (e) Section 27 amended 14 March 2021 section 52 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
28: Section 426 amended (Disclosure statement)
In section 426(1) , the Financial Advisers Act 2008,
29: New subparts 5A and 5B of Part 6 inserted
After section 431
5A: Additional regulation of financial advice and financial advice services
Preliminary matters
431A: Overview of financial advice and financial advice services regime
1: This subpart and other parts of this Act regulate financial advice and financial advice services as follows:
a: a person gives financial advice if the person makes a recommendation, gives an opinion, or provides financial planning of a kind described in section 431C(1) clauses 8 to 18 of Schedule 5 see section 431C(3)
b: a person must not carry on a business of giving regulated financial advice unless the person is authorised by a market services licence or exempt from the licensing requirement ( see sections 388(ba), 389(2), and 431D see
c: there are limitations on who can give regulated financial advice on behalf of a financial advice provider to a retail client ( see section 431F see
d: conditions of the provider’s licence may also limit the types of advice that may be given by financial advisers or nominated representatives ( see sections 403(4)﻿(a) and 546(1)﻿(d)﻿(iv)
e: people who give financial advice, financial advice providers, and any interposed persons are subject to the duties set out in sections 431I to 431R
f: section 431H Sections 431I to 431R
2: This section is a guide only to the general scheme and effect of this Act in relation to financial advice and financial advice services.
431B: Additional purpose of subpart
1: This subpart has the additional purpose (in addition to those set out in sections 3 and 4) of regulating the giving of financial advice and provision of financial advice services with a view to ensuring—
a: the availability of financial advice for persons seeking that advice; and
b: the quality of financial advice and financial advice services.
2: This section does not limit section 3 or 4. Interpretation
431C: Meaning of financial advice and regulated financial advice
1: A person gives financial advice
a: makes a recommendation or gives an opinion about acquiring or disposing of (or not acquiring or disposing of) a financial advice product; or
b: makes a recommendation or gives an opinion about switching funds within a managed investment scheme; or
c: designs an investment plan for a person that—
i: purports to be based on—
A: an analysis of the person’s current and future overall financial situation (including investment needs); and
B: the identification of the person’s investment goals; and
ii: includes 1 or more recommendations or opinions on how to realise 1 or more of those goals; or
d: provides financial planning of a kind prescribed by the regulations.
2: However, a person does not give financial advice merely by doing 1 or more of the things set out in clause 7 of Schedule 5
3: Financial advice is regulated financial advice
a: it is given in the ordinary course of a business; and
b: it is not excluded under any of clauses 8 to 18 of Schedule 5
4: Subsections (1) and (3) section 562(1)﻿(gb)
431D: When financial advice service is provided
1: A person ( P financial advice service
a: P engages 1 or more other persons to give regulated financial advice to P’s clients on P’s behalf; or
b: P gives regulated financial advice to P’s clients on P’s own account.
2: Subsection (1) section 562(1)﻿(gc) Example
ABC Limited ( ABC see section 388(ba) FSP Act As part of ABC’s business, Susan is employed by ABC to give financial advice to ABC’s clients on its behalf. Although Susan is giving advice, she is not giving it on her own account, so she is not providing a financial advice service (and does not need to hold a licence). Under the conditions of ABC’s licence, the type of service that Susan gives may not be given by a nominated representative. The type of service can be given only by a financial adviser (that is, a person who is registered under the FSP Act in relation to a financial advice service). See section 22C If Susan were to leave ABC and set up business giving financial advice on her own account, she would be providing a financial advice service and would therefore be a financial advice provider (who must, therefore, hold a licence).
431E: Meaning of engaged
A person ( A engaged P
a: A is engaged directly by P (for example, if A is an employee or a contractor of P); or
b: A is engaged indirectly through 1 or more interposed persons (for example, if A is an employee of another person who is a contractor of P). Limitations on giving regulated financial advice and holding out
431F: Limitation on who can give regulated financial advice to retail clients on behalf of financial advice provider
1: A person ( A P
a: both of the following apply:
i: A is a financial adviser or a nominated representative nominated under section 431T
ii: A is engaged directly by P (as described in section 431E(a)
b: all of the following apply:
i: A is a financial adviser or a nominated representative nominated under section 431T
ii: A is engaged by P indirectly through 1 or more interposed persons (as described in section 431E(b)
iii: the conditions on P’s licence authorise P to engage A through those interposed persons to give the advice; or
c: both of the following apply:
i: A is an entity:
ii: the conditions on P’s licence authorise P to engage A to give the advice.
2: A financial advice provider or an interposed person must not allow a person engaged by the provider or person to give advice in contravention of subsection (1)
3: In this section, P’s licence
431G: Prohibitions on holding out in relation to giving financial advice
A person must not hold out that the person, or another person,—
a: is a financial advice provider, a financial adviser, or a nominated representative if that is not the case; or
b: is lawfully able to do any of the following if that is not the case:
i: provide a financial advice service:
ii: provide a particular kind of financial advice service:
iii: give regulated financial advice:
iv: give a particular kind of regulated financial advice:
v: give regulated financial advice about a particular financial advice product or a particular kind of financial advice product:
vi: give regulated financial advice to retail clients, to wholesale clients, or to retail and wholesale clients:
vii: provide a financial advice service, or give regulated financial advice, in particular circumstances. Duties on persons giving regulated financial advice
431H: Liability for duties
1: Sections 431I to 431P duty provisions
2: Sections 431Q and 431R
3: If a financial advice provider contravenes a duty provision or section 431Q or 431R
a: may be civilly liable for the contravention:
b: is not liable to disciplinary action or a deregistration or suspension order:
c: may face consequences under subpart 3 (which relates to enforcement of licences).
4: If a person ( A P
a: if A is a financial adviser, A—
i: is not civilly liable for the contravention; but
ii: may be subject to either or both of the following:
A: disciplinary action:
B: a deregistration or suspension order:
b: if A is an individual but not a financial adviser, A is not civilly liable for the contravention:
c: if A is an entity, A may be civilly liable for the contravention:
d: P—
i: may be civilly liable for contravening the duty provision as a result of the operation of sections 535 and 536 (which relate to the attribution of state of mind and conduct) (but see also section 431U
ii: may be liable for contravening section 431Q
e: if A was engaged by P indirectly through 1 or more interposed persons (as described in section 431E(b)
i: may be civilly liable for contravening the duty provision as a result of the operation of sections 535 and 536 (which relate to the attribution of state of mind and conduct); and
ii: may be liable for contravening section 431Q
5: If an interposed person (as described in section 431E(b) section 431Q or 431R
a: may be civilly liable for the contravention:
b: is not liable to disciplinary action or a deregistration or suspension order:
c: if they are a licensee or an authorised body, may face consequences under subpart 3 (which relates to enforcement of licences).
6: The fact that an interposed person may be liable under subsection (4)﻿(e) or (5)
7: This section—
a: does not affect any liability that a person may have for a contravention as a person who is involved in the contravention ( see
b: does not affect any criminal liability that a person may have for a contravention (for example, under section 511 for contravening section 431P
c: does not limit the exercise by the FMA or a court of any of its powers under Part 8 other than subpart 3.
8: In this section,— civil liability see deregistration or suspension order section 469(2) disciplinary action Part 5 of Schedule 5
431I: Duty to meet standards of competence, knowledge, and skill
A person must not give regulated financial advice to a retail client unless the person meets—
a: the standards of competence, knowledge, and skill (including any continuing professional development requirements) provided in the code of conduct for giving the advice; and
b: any prescribed eligibility criteria in relation to the giving of the advice.
431J: Duty to ensure client understands nature and scope of advice
A person must not give regulated financial advice to a retail client unless the person has taken reasonable steps to ensure that the client understands the nature and scope of the advice being given, including any limitations on the nature and scope of the advice.
431K: Duty to give priority to client’s interests
1: This section applies if—
a: a person ( A C
b: A knows, or ought reasonably to know, that there is a conflict between—
i: C’s interests; and
ii: A’s own interests or the interests of a person connected with the giving of the advice.
2: In giving the advice, A must give priority to C’s interests by taking all reasonable steps to ensure that the advice is not materially influenced by any of the following:
a: A’s own interests:
b: the interests of a person connected with the giving of the advice.
3: In this section, each of the following is a person connected with the giving of the advice
a: a person associated with A:
b: if A gives the advice on behalf of a financial advice provider,—
i: the financial advice provider:
ii: a person associated with the financial advice provider:
iii: if A is engaged by the provider through 1 or more interposed persons,—
A: an interposed person:
B: a person associated with an interposed person.
431L: Duty to exercise care, diligence, and skill
A person who gives regulated financial advice to a client must exercise the care, diligence, and skill that a prudent person engaged in the occupation of giving regulated financial advice would exercise in the same circumstances. 2008 No 91 s 33
431M: Duty to comply with code of conduct
A person who gives regulated financial advice to a retail client must comply with the standards of ethical behaviour, conduct, and client care required by the code of conduct. 2008 No 91 s 37
431N: Duty relating to offer that contravenes Act or regulations
1: A person ( A C
a: the product is a contravening product; and
b: A knows, or ought reasonably to know, that the product is a contravening product.
2: A financial product is a contravening product
a: if the product is being offered under a regulated offer and that offer contravenes this Act or the regulations; or
b: if,—
i: when the product was offered, the offer was a regulated offer and contravened this Act or the regulations; and
ii: the contravention has not been remedied.
431O: Duty to make prescribed information available
1: A person who gives regulated financial advice to a client must make the prescribed information available in the prescribed manner when required to do so by the regulations.
2: The regulations may (without limitation) require information to be made available—
a: at the request of a prescribed person, at prescribed times, or when a prescribed event occurs:
b: to a particular person or persons or to the public. Examples
ABC Limited ( ABC C ABC must (if required by the regulations) provide information to C when the service is first provided (for example, about fees, material interests, relationships and associations, the type of advice, dispute resolution arrangements, and other matters relevant to the performance of the service). ABC must also (if required by the regulations) provide ongoing information to C. 2008 No 91 ss 21–31
431P: False or misleading statements and omissions
1: A person must not make information available under section 431O
a: there is—
i: a statement in the information that is false or misleading or is likely to mislead; or
ii: an omission from the information that is required by the regulations; and
b: the statement or omission is materially adverse from the point of view of the client.
2: For the purposes of this section, information about a future matter (including the doing, or not doing, of an act) is misleading if the person making the statement does not have reasonable grounds for making it.
3: Subsection (2)
4: This section does not limit section 431O
5: See 2008 No 91 s 34 Additional duties on financial advice providers and interposed persons that engage others to give advice
431Q: Persons engaging others to give advice must ensure compliance with duties
1: A financial advice provider that engages another person ( A sections 431I to 431P
2: If A is engaged by the provider indirectly through 1 or more interposed persons (as described in section 431E(b) sections 431I to 431P
431R: Duties of persons who engage nominated representatives
1: A financial advice provider ( P
a: limit the nature and scope of the advice that the nominated representatives give; and
b: allow P to regulate what advice is given and the circumstances in which it is given.
2: The processes and controls must ensure that the advice given by a nominated representative is commensurate with their competence, knowledge, and skill.
3: P and any interposed person through whom any of the nominated representatives are engaged must—
a: ensure that the nominated representatives comply with P’s processes and controls; and
b: monitor the nominated representatives and the advice they give to ensure that—
i: those processes and controls are effective and are complied with; and
ii: the nominated representatives comply with their duties under this subpart.
4: Neither the provider nor any interposed person may give, or offer to give, to any of its nominated representatives any kind of payment or other incentive that is intended to encourage, or is likely to have the effect of encouraging, a nominated representative to engage in conduct that contravenes any duty under sections 431I to 431P Miscellaneous provisions
431S: Protection of individual who reports breach
1: This section applies if an individual who gives regulated financial advice ( A
a: reasonably believes that a person has contravened a provision of this Act that relates to the giving of financial advice or the provision of a financial advice service; and
b: reports that belief to the FMA.
2: If A makes the report in good faith,—
a: no civil, criminal, or disciplinary proceedings may be brought against A as a result of A having made the report; and
b: no person may terminate A’s employment or appointment as a result of A having made the report; and
c: no tribunal, body, or authority that has jurisdiction in respect of A’s professional conduct may make an order against, or do any act in relation to, A as a result of A having made the report.
431T: Nomination of nominated representatives
1: A financial advice provider ( P A
a: P holds, or is authorised to provide a service under, a licence that covers financial advice services; and
b: A—
i: is engaged by P to give financial advice on P’s behalf; and
ii: is not a financial adviser or a financial advice provider; and
iii: is not a nominated representative of any other financial advice provider.
2: However, subsection (1)﻿(b)﻿(iii)
a: the providers are authorised to provide a financial advice service under the same licence; or
b: the nomination of the same individual as a nominated representative of 2 or more providers is authorised by conditions on the providers’ licences and those conditions are related to an arrangement referred to in section 403(4)﻿(b)﻿(ii)
3: A nomination must be made in the manner (if any) specified by the FMA.
4: A nomination—
a: takes effect on the date it is made or any later date specified in it; and
b: remains in force until the first to occur of the following:
i: P revokes the nomination by giving written notice to A:
ii: P ceases to comply with subsection (1)﻿(a)
iii: A ceases to comply with subsection (1)﻿(b)
5: A financial advice provider must keep an up-to-date record of its nominated representatives in the prescribed manner.
431U: Limitation on pecuniary penalty orders against financial advice providers
1: This section applies if—
a: a financial adviser contravenes a duty provision (as defined in section 431H(1)
b: the financial advice provider on whose behalf the financial adviser was acting is civilly liable for the contravention of a duty provision (as described in section 431H(4)﻿(d)﻿(i)
c: the financial advice provider took all reasonable steps to ensure that the financial adviser did not contravene the duty provision.
2: A pecuniary penalty order may not be made under section 489 against the financial advice provider in relation to the contravention of the duty provision.
5B: Regulation of client money or property services
431V: Overview of client money or property services regime
1: This subpart and other legislation regulate client money or property services as follows:
a: the Financial Service Providers (Registration and Dispute Resolution) Act 2008 provides for when a person in the business of providing the service must be registered under that Act and when that provider must be a member of an approved dispute resolution scheme. The provider is not required to hold a market services licence:
b: a person who provides the service must—
i: disclose information to retail clients under section 431X
ii: exercise care, diligence, and skill under section 431ZA
iii: handle client money and property in accordance with sections 431ZC to 431ZH section 431Z(2)
c: section 431ZI
2: This section is a guide only to the general scheme and effect of this subpart and other legislation in relation to client money or property services. Interpretation
431W: Meaning of client money or property service and certain other terms
1: A client money or property service
a: is the receipt of client money or client property by a person and the holding, payment, or transfer of that client money or client property; and
b: includes a custodial service.
2: A custodial service A C
3: The mere transmission of a non-transferable instrument payable to another person is not a client money or property service.
4: A client money or property service is a regulated client money or property service clauses 19 to 23 of Schedule 5
5: In this subpart,— client money
a: received in connection with acquiring, holding, or disposing of a financial advice product or otherwise in connection with a financial advice product; and
b: received from, or on account of, a client by a person ( A client property
a: the property is a financial advice product, is a beneficial interest in a financial advice product, or is received in connection with a financial advice product; and
b: the property is received from, or on account of, the client by a person ( A provider 2008 No 91 s 77B Disclosure obligations for services for retail clients
431X: Provider must make disclosure before receiving client money or client property from retail client
A person who provides a regulated client money or property service to a retail client must, in the prescribed manner, disclose the prescribed information to the retail client—
a: before receiving client money or client property from or on behalf of the client; or
b: if not practicable before, as soon as practicable after receiving client money or client property from or on behalf of the client. 2008 No 91 s 77E
431Y: False or misleading statements and omissions
1: A person must not provide information under section 431X
a: there is—
i: a statement in the information that is false or misleading or is likely to mislead; or
ii: an omission from the information that is required by the regulations; and
b: the statement or omission is materially adverse from the point of view of a client.
2: For the purposes of this section, information about a future matter (including the doing, or not doing, of an act) is misleading if the person making the statement does not have reasonable grounds for making it.
3: Subsection (2)
4: This section does not limit section 431X
5: See Conduct obligations
431Z: Application of conduct obligations
1: Sections 431ZA and 431ZB
2: Sections 431ZC to 431ZH
a: apply to regulated client money or property services provided to a retail client; and
b: apply to custodial and other regulated client money or property services provided to every investor under a retail service of a DIMS licensee (as provided by section 446); and
c: otherwise apply to client money or property services provided to a wholesale client only if provided by the regulations; and
d: do not apply to a broker within the meaning of the Insurance Intermediaries Act 1994 in relation to any money to which section 14 or 15 of that Act applies. 2008 No 91 s 77J
431ZA: Provider must exercise care, diligence, and skill
A provider must, when providing a regulated client money or property service, exercise the care, diligence, and skill that a prudent person engaged in the business of providing the service would exercise in the same circumstances. 2008 No 91 s 77K
431ZB: Provider must not receive client money if offer contravenes Act or regulations
1: A provider must not receive client money or client property from a person for the acquisition of a financial product if—
a: the product is a contravening product; and
b: the provider knows, or ought reasonably to know, that the product is a contravening product.
2: A financial product is a contravening product
a: if the product is being offered under a regulated offer and that offer contravenes this Act or the regulations; or
b: if,—
i: when the product was offered, the offer was a regulated offer and contravened this Act or the regulations; and
ii: the contravention has not been remedied. 2008 No 91 s 77O Obligations for handling client money and client property
431ZC: Provider must pay client money into separate trust account and hold client property on trust
1: A provider who receives client money or client property, as part of a client money or property service,—
a: must hold the client money or client property, or ensure the client money or client property is held, on trust for the client; and
b: must ensure that the client money is paid promptly into a bank in New Zealand (or into any other prescribed entity) to—
i: a trust account of the provider or of a related body corporate specified in the regulations; or
ii: if section 445 applies, a trust account of a person permitted to hold the money under that section.
2: A provider must ensure that the client money and client property are held separate from money or property held by or for the provider, or other person referred to in subsection (1)﻿(b)﻿(i) or (ii)
3: However,—
a: subsection (2)
b: money or property that is not held separate from client money or client property—
i: must be treated as client money or client property for all or any purposes if the regulations so provide:
ii: must be separated from client money or client property if required by the regulations or may be so separated if permitted by the regulations.
4: A provider must comply with any prescribed duties and other requirements in relation to the client money and client property held on trust under this section. 2008 No 91 s 77P
431ZD: Provider must account for client money and client property
A provider who receives or holds client money or client property on trust for a client must account properly, or ensure that account is properly made, to the client for that client money or client property. 2008 No 91 s 77Q
431ZE: Provider must keep records of client money and client property
1: A provider who receives or holds client money on trust for a client must keep, or ensure that there are kept, trust account records that disclose clearly the position of the client money in the trust account.
2: A provider who receives or holds client property on trust for a client must keep, or ensure that there are kept, records that—
a: identify the client property; and
b: show the date when the client property was received; and
c: if the client property has been disposed of, show when the client property was disposed of and to whom.
3: A provider must also keep all other prescribed records.
4: A provider must—
a: keep the records required by this section, or ensure that they are kept, in a manner that enables those records to be conveniently and properly audited, reviewed, or inspected; and
b: comply with the prescribed requirements (if any) relating to those records and their audit, review, or inspection. 2008 No 91 s 77R
431ZF: Provider must report on client money and client property
1: A provider must, in the prescribed circumstances, provide confirmation information to a client or other prescribed persons in respect of client money or client property received or held on behalf of the client.
2: The confirmation information must be provided in the prescribed manner.
3: In this section, confirmation information 2008 No 91 s 77RA
431ZG: Restrictions on use of client money and client property
A person must not use or apply client money or client property received or held on trust for a client by a provider in any way except—
a: as expressly directed by the client (either generally or specifically); or
b: in accordance with section 431ZC 2008 No 91 s 77S
431ZH: Protection of client money and client property held on trust
1: The client money or client property that is received or held by a provider on trust for a client—
a: is not available for the payment of the debts owing to any other creditor of the provider; and
b: is not liable to be attached or taken in execution under the order or process of any court at the instance of another creditor of the provider.
2: Nothing in section 431ZG 2008 No 91 s 77T Persons acting in course of business of employers or principals
431ZI: Who is responsible for obligations
1: If a client money or property service is provided by a person ( A B
2: This section does not affect the liability of A or B under any other Act or rule of law for A’s actions. 2008 No 91 s 77U Application of Trusts Act 2019
431ZJ: Application of Trusts Act 2019
1: This section applies to a trust constituted (or to be constituted) for the purposes of section 431ZC.
2: The following provisions of the Trusts Act 2019 do not apply to a trust referred to in subsection (1)
a: section 29
b: section 39
c: sections 45 to 48
d: sections 49 to 55
e: section 56
f: section 72
g: sections 81 to 85
h: sections 142 to 148
i: sections 153 to 158
3: If this section commences before the commencement of the Trusts Act 2019 under section 2(1) Section 29 amended 31 July 2019 section 182 Trusts Act 2019
30: New section 432A inserted (Meaning of discretionary investment management service and related terms)
After section 432
432A: Meaning of discretionary investment management service and related terms
1: In this Act, a person ( A discretionary investment management service DIMS
a: A—
i: decides which financial products to acquire or dispose of on behalf of an investor ( B
ii: in doing so, is acting under an authority granted to A to manage some or all of B's holdings of financial products; or
b: A gives financial advice in the ordinary course of, and incidentally to, providing a discretionary investment management service under paragraph (a)
2: In determining whether A has an authority under subsection (1)﻿(a)﻿(ii)
3: In this Act,— DIMS licensee investment authority provider of a discretionary investment management service
31: Section 446 replaced (Certain broker obligations of Financial Advisers Act 2008 may be enforced also under this Act)
Replace section 446
446: Certain client money or property service obligations under subpart 5B apply
1: A DIMS licensee, and a custodian of investor money or investor property under the service, must provide the custodial and other client money or property services under the service to every investor in accordance with sections 431ZC to 431ZH
2: Those sections apply as if every reference to a client were to the investor and every reference to client money or client property were to investor money or investor property.
3: This section does not limit the application of those sections to a DIMS licensee or a custodian as a provider of a client money or property service.
32: Section 449 amended (Part 6 services provisions)
1: After section 449(3)﻿(e)
ea: section 431P section 431H
eb: section 431Y
2: Replace section 449(3)﻿(g)
g: section 446 subpart 5B
3: After section 449(4)﻿(ga)
gb: section 431F
gc: section 431G
gd: sections 431I to 431O section 431H
ge: sections 431Q, 431R, and 431T(5)
gf: section 431X
gg: sections 431ZA and 431ZB
gh: sections 431ZC to 431ZH
33: Section 451 amended (Meaning of FMC reporting entity)
1:
2: In section 451(2)﻿(a) financial benchmark or a financial advice service (or both) Section 33(1) repealed 14 March 2021 section 52 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019 Section 33(2) replaced 14 March 2021 section 52 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
34: Section 452 amended (Company that issues equity securities not FMC reporting entity if fewer than 50 shareholders)
Section 34 repealed 14 March 2021 section 52 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
35: Section 462 amended (When FMA may make stop orders)
1: Replace section 462(1)﻿(g)
g: disclosure relating to financial products under subpart 4 of Part 3, or a disclosure document relating to market services under subpart 4, 5A 5B
i: is false or misleading, or is likely to mislead or confuse, in a material particular; or
ii: contains any material misdescription or material error or any material matter that is not clearly legible; or
iii: does not comply with this Act or the regulations; or
2: In section 462(1)﻿(h) or 423 , 423, 431G, 431O, or 431X
36: Section 469 amended (Terms of direction orders)
In section 469
2: If the FMA is satisfied that the relevant person ( A sections 431I to 431P subsection (1)
a: direct the Registrar to deregister A under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (the FSP Act
b: direct the Registrar to—
i: deregister A under the FSP Act; and
ii: prevent A for a specified period from being reregistered for a financial advice service under the FSP Act:
c: direct the Registrar to suspend A's registration under the FSP Act for a period of no more than 12 months or until A meets specified conditions relating to the registration (but, in any case, not for a period of more than 12 months).
37: Section 475 amended (FMA must follow steps before making orders)
After section 475(2)
3: In the case of a direction order under section 469(2)
38: Section 489 amended (When court may make pecuniary penalty orders)
In section 489(3)﻿(b) section 431U or
39: Section 499 amended (General defences for person in contravention)
In section 499(3) or 427(2) or (6) 427(2) or (6), 431P 431Y
40: Section 500 amended (Disclosure defences for person in contravention)
In section 500(1) and (2) or 427(2) or (6) 427(2) or (6), 431P 431Y
41: Section 501 amended (Additional disclosure or financial reporting defence for directors who are treated as contravening)
In section 501(2) and proper
42: Section 503 amended (General defences for person involved in contravention)
1: In section 503(2)﻿(b) and proper
2: In section 503(4) and 427 427, 431P 431Y
43: Section 507 amended (No pecuniary penalty and fine for same conduct)
In section 507 Financial Advisers Act 2008 Financial Service Providers (Registration and Dispute Resolution) Act 2008
44: Section 511 amended (Offence of knowingly or recklessly contravening other provisions relating to defective disclosure)
1: In section 511(1) and (2) section 99 or 427(2) or (6) or clause 27 of Schedule 1 a disclosure provision
2: In section 511(1)﻿(a) and (2)﻿(b)﻿(i) statement referred to in section 99(1)﻿(a)﻿(i) or 427(1)﻿(a)﻿(i) or (6)﻿(a)﻿(i) or clause 27(1)﻿(a)﻿(i) of Schedule 1 (as the case may be) relevant statement
3: In section 511(1)﻿(b) and (2)﻿(b)﻿(ii) an omission as referred to in section 99(1)﻿(a)﻿(ii) or 427(1)﻿(a)﻿(ii) or (6)﻿(a)﻿(ii) or clause 27(1)﻿(a)﻿(ii) of Schedule 1 (as the case may be) a relevant omission
4: Replace section 511(4)
4: In this section,— disclosure provision 431P, or 431Y relevant act
a: in relation to section 99, the act of providing or making available the ongoing disclosure:
b: in relation to section 427(2), the act of providing the disclosure statement to a person:
c: in relation to section 427(6), the act of providing or making available the further disclosure:
d: in relation to section 431P 431Y
e: in relation to clause 27 of Schedule 1, the act of providing the limited disclosure document to a person relevant omission 431P(1)﻿(a)﻿(ii), or 431Y(1)﻿(a)﻿(ii) relevant statement 431P(1)﻿(a)﻿(i), or 431Y(1)﻿(a)﻿(i)
45: Section 518 amended (Terms of banning orders)
Replace section 518(1)﻿(b)
b: providing financial advice services or client money or property services, or contributing, as employee or agent, to the provision of those services.
46: New sections 532A to 532C inserted
After section 532
532A: Appeals against decisions of disciplinary committee
1: A person may appeal to the District Court against a decision of the disciplinary committee to take any action referred to in clause 46 of Schedule 5
2: The decision of the District Court on an appeal under this section is final, except as provided in section 532C
532B: Orders as to publication of names
1: On an appeal under section 532A
2: In deciding whether to make an order, the court must have regard to—
a: the interests of any person (including, without limitation, the privacy of any complainant); and
b: the public interest. 2008 No 91 s 145
532C: Appeal on question of law
A party to an appeal under section 532A 2008 No 91 s 146
47: Section 543 amended (Regulations for purposes of Part 3 (Disclosure of offers of financial products))
Replace section 543(1)﻿(l)
l: prescribing kinds of financial products or currency forwards for the purposes of clause 21(a) 38(4)﻿(a)
48: Section 546 amended (Regulations for purposes of Part 6 (market services))
1: In section 546(1)﻿(a)﻿(i) related body corporate or an entity referred to in section 400(1A)
2: Replace section 546(1)﻿(c)
c: exempting (on terms and conditions, if any) services from the licensing requirement for providers of financial advice services for the purposes of section 389(2)﻿(b)
ca: exempting (on terms and conditions, if any) services from the licensing requirement for providers of discretionary investment management services for the purposes of section 389(3)﻿(b)
3: After section 546(1)﻿(d)﻿(iii)
iv: in the case of a licence relating to a financial advice service, conditions of a kind described in section 403(4)
4: After section 546(1)﻿(m) Financial advice services and client money or property services
ma: prescribing kinds of financial planning for the purposes of section 431C(1)﻿(d)
mb: prescribing eligibility criteria for the purposes of section 431I
mc: prescribing the information that must be made available under section 431O
md: prescribing the information that must be disclosed under section 431X
me: prescribing documents or information the giving of which does not constitute the giving of financial advice under clause 7(f) of Schedule 5
mf: prescribing activities for the purposes of clause 7(g) of Schedule 5
mg: prescribing occupations for the purposes of clause 8(2) or 19(1) of Schedule 5
mh: prescribing circumstances in which financial advice is not regulated financial advice for the purposes of clause 17 of Schedule 5
mi: prescribing circumstances in which a client money or property service is not a regulated client money or property service for the purposes of clause 22 of Schedule 5
mj: providing for any or all of sections 431ZC to 431ZH
mk: prescribing the duties and obligations of providers of client money or property services in relation to client money and client property:
ml: prescribing entities for the purposes of section 431ZC
mm: specifying who may be a related body corporate for the purposes of section 431ZC
mn: prescribing circumstances for the purposes of section 431ZC(3)﻿(a)
mo: providing for the matters referred to in section 431ZC(3)﻿(b)
mp: regulating the establishment and operation of a trust account under subpart 5B of Part 6
mq: regulating the keeping, retention, reconciliation, inspection, and audit or review of trust account records and other records and procedures of providers of client money or property services:
mr: prescribing any other requirements necessary or desirable to ensure that trust accounts are duly kept and that persons on whose behalf client money and client property are held by providers are informed of the client money and client property held and of the transactions made in connection with it (including prescribing what confirmation information must be made available and any other matters for the purposes of section 431ZF
ms: prescribing matters to regulate the delivery of client money or client property to the person on whose behalf they are held, and other steps to be taken or provisions to apply, in connection with the termination of any client money or property service:
5: Before section 546(1)﻿(p)
oa: prescribing the procedure of the code committee:
ob: prescribing the procedure of the disciplinary committee:
6: In section 546(2) (c), (ca), (me), (mf), (mg), (mh), (mi), (mn)
49: Section 548 amended (Other regulations)
1: In section 548(1)﻿(a) financial products (within the meaning of section 5 of the Financial Advisers Act 2008) financial advice products
2: After section 548(1)﻿(d)﻿(i)
ia: declaring products to be financial advice products:
3: After section 548(1)﻿(d)﻿(iv)
iva: specifying persons as product providers for the purposes of the definition of product provider in section 6(1):
4: After section 548(1)﻿(j)
ja: prescribing criteria, requirements, or both for the purposes of clause 2(1)﻿(b)﻿(iv)
50: Section 550 amended (Procedural requirements for regulations relating to exemptions, exclusions, and definitions)
1: In section 550(1)﻿(c) (d), (da) (db)
2: In section 550(2)﻿(d) and (c) , (c), and (ca)
3: After section 550(2)﻿(d)
da: section 546(1)﻿(me), (mf), (mg), (mh), and (mi)
db: section 546(1)﻿(mn)
51: Section 562 amended (FMA’s designation power)
1: In section 562(1)﻿(g) type class
2: Replace section 562(1)﻿(h)
ga: declare that a person or class of person that would otherwise be a wholesale investor or a wholesale client is, or is to become, a retail investor or a retail client:
gb: declare that advice—
i: that would not otherwise be financial advice is financial advice; or
ii: that would otherwise be financial advice is not financial advice; or
iii: that would not otherwise be regulated financial advice is regulated financial advice; or
iv: that would otherwise be regulated financial advice is not regulated financial advice:
gc: declare that a service—
i: that would not otherwise be a financial advice service is a financial advice service; or
ii: that would otherwise be a financial advice service is not a financial advice service:
h: declare a person, service, or conduct to be not exempt under any exemption that would otherwise apply under any of the following provisions (and accordingly the licensing requirement under this Act applies):
i: section 389(2)
ii: section 389(3)
52: Section 563 amended (Procedural requirements)
After section 563(1)﻿(c)
ca: in the case of section 562(1)﻿(gb), (gc), or (h)﻿(i) section 431B
53: New section 571A inserted (Deferral of obligations to publish, notify, and make available non-class exemptions)
After section 571
571A: Deferral of obligations to publish, notify, and make available non-class exemptions
The FMA may defer complying with section 571(3) in relation to an exemption granted under subpart 2 if the FMA is satisfied on reasonable grounds that it is proper to do so on the ground of commercial confidentiality.
54: Heading to subpart 8 of Part 9 amended
In the heading to subpart 8 Transitional and miscellaneous Miscellaneous
55: Section 597 repealed (Transitional provisions)
Repeal section 597
56: Schedule 1 amended
1: In Schedule 1, replace clause 19(1)﻿(e)
e: in the case of an offer by way of sale, the offeror has reasonable grounds to believe that the financial products will, immediately after sale, be quoted; and
2: In Schedule 1, in the heading to clause 21 category 2 products prescribed financial products
3: In Schedule 1 clause 21(a)
a: financial products of a kind prescribed for the purposes of this paragraph that are issued by a registered bank; or
4: In Schedule 1, clause 21(c) category 2 financial
5: In Schedule 1, replace clause 37(1)﻿(a)﻿(iii) and (iv)
iii: providing a financial advice service; or
iv: providing a client money or property service; or
6: In Schedule 1, replace clause 37(1)﻿(g)
g: a financial adviser.
7: In Schedule 1, replace clause 38(4)﻿(a)
a: financial products of a kind prescribed for the purposes of this paragraph:
8: In Schedule 1, clause 41(1)﻿(a)﻿(i) subclause (2) or (2A)
9: In Schedule 1, clause 41(1)﻿(c) an authorised financial adviser a financial adviser
10: In Schedule 1, after clause 41(2)
2A: In relation to the supply of a financial advice service or a client money or property service (or a class of those services), A must certify that A has previous experience in acquiring or disposing of financial advice products that allows A to assess—
a: the merits of the service or services to be provided (including assessing their value and the risks involved); and
b: A’s own information needs in relation to the service or services; and
c: the adequacy of the information provided by any person involved in the service or services.
11: In Schedule 1, after clause 41(5)
6: In relation to the supply of a financial advice service or client money or property service (or a class of those services), the certification under subclause (1)﻿(a)﻿(ii) must include a certificate that A understands that the competency standards and requirements of the code of conduct will not be applicable (if relevant) and that the financial adviser or provider may not be a member of an approved dispute resolution scheme.
12: In Schedule 1, clause 42(1) 41(2), (2A)
13: In Schedule 1, clause 42(2)﻿(a) and (b) authorised financial adviser financial adviser
14: In Schedule 1, clause 43(1) An authorised financial adviser A financial adviser
15: In Schedule 1, clause 49(1) relevant person
ab: the supply of a financial advice service or a client money or property service to a person, means the provider of the service:
16: In Schedule 1, clause 49(1) relevant time
ba: the supply of a financial advice service or a client money or property service to a person, means immediately before the service is supplied:
17: In Schedule 1, clause 49(1) relevant transaction
ab: the supply of a financial advice service or client money or property service; or
57: Schedule 2 amended
In Schedule 2, clause 2(d) perform a financial adviser service (within the meaning of the Financial Advisers Act 2008) give financial advice
58: Schedule 3 amended
1: In Schedule 3, replace clause 2(b)﻿(iii)
iii: the trustees have contravened the trust deed; or
iv: the trustees apply for the approval to be withdrawn and the FMA is satisfied that the prescribed criteria and requirements (if any) are satisfied.
2: In Schedule 3, clause 2
2: If a Schedule 3 scheme is wound up, the approval of the scheme must be treated as withdrawn as soon as the distribution of assets has been completed.
3: In Schedule 3, replace clause 4
4: Procedure for exercising powers
The FMA must not exercise a power under clause 2(1)﻿(b)﻿(i) to (iii)
a: the FMA gives the trustees no less than 10 working days’ written notice of the following matters before it exercises the power:
i: that the FMA may exercise the power or refuse the application; and
ii: the reasons why it may do so; and
b: the FMA gives the trustees or the trustees’ representative an opportunity to make written submissions on the matter within that notice period.
4: In Schedule 3, clause 5(1) 2(b) 2(1)﻿(b)
59: Schedule 4 amended
1: In the heading to Schedule 4 s 597 s 14A
2: In the heading to Schedule 4 Transitional , savings, and related
3: In Schedule 4, after clause 1(1)﻿(e)
f: Part 6
4:
5: In Schedule 4, after clause 70 Part 6 Part 1 of Schedule 1
6: In Schedule 4, after clause 80 subsection (5) subpart 4 of Part 6 Part 2 of Schedule 1 Section 59(4) repealed 14 March 2021 section 52 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
60: New Schedule 5 inserted
After Schedule 4 Schedule 5 Schedule 2
2: Amendments to Financial Service Providers (Registration and Dispute Resolution) Act 2008
61: Principal Act
This Part amends the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (the principal Act 2019-04-09 Financial Service Providers (Registration and Dispute Resolution) Act 2008 OIC 2020/131 2021-03-15 Financial Service Providers (Registration and Dispute Resolution) Act 2008 The remaining provisions of the Financial Services Legislation Amendment Act 2019 brought into force on 15 March 2021.
62: Section 4 amended (Interpretation)
1: In section 4 broker broking service financial adviser service
2: In section 4 disciplinary committee Part 5 of Schedule 5 engaged section 431E see section 44A financial advice provider financial advice service financial markets legislation regulated client money or property service section 431W(4) regulated financial advice section 431C(3)
3: In section 4 licensing authority licensing authority see section 44B
63: Section 5 amended (Meaning of financial service)
1: Replace section 5(1)﻿(a) and (ab)
a: a financial advice service:
ab: a regulated client money or property service (including a custodial service):
2: Replace section 5(1)﻿(g)
g: issuing or managing the means of payment (for example, credit or debit cards, cheques, travellers’ cheques, money orders, bankers’ drafts, or electronic money):
3: Replace section 5(1)﻿(i)
i: acting as an offeror of financial products offered under an FMC offer:
4: Replace section 5(1)﻿(ib)
ib: any of the following market services if the service is, or is required to be, provided under a market services licence (whether as a licence holder or as an authorised body):
i: acting as a manager of a registered scheme (other than a restricted scheme):
ii: acting as an independent trustee of a restricted scheme:
iii: acting as a provider of a discretionary investment management service:
iv: acting as a derivatives issuer:
v: acting as a provider of prescribed intermediary services:
vi: acting as an administrator of a financial benchmark:
5: After section 5(1)﻿(m)
ma: providing a prescribed service—
i: that is the same, or substantially the same, as a service referred to in paragraph (ib); but
ii: in respect of which the provider is not required to provide the service under a market services licence because of an exemption under section 389(3)﻿(b)
6: Replace section 5(2)
2: Any term or expression that is defined in the Financial Markets Conduct Act 2013 and used in this section, but not defined in this Act, has the same meaning as in the Financial Markets Conduct Act 2013. Section 63(4) amended 14 March 2021 section 52 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
64: Section 6 amended (Meaning of in the business of providing a financial service)
In section 6 or offering to provide
65: Section 7 amended (Application of Act)
1: Replace the heading to section 7 Persons who are not in business of providing financial service
2: Repeal section 7(1)
3: Replace section 7(2)﻿(i)
i: a nominated representative (within the meaning of section 6(1) of the Financial Markets Conduct Act 2013) while acting in that capacity on behalf of the financial advice provider that nominated the person:
66: New section 7A inserted (Application of Act)
After section 7
7A: Application of Act
1: This Act applies to every person ( A
a: A’s financial services are provided to persons in New Zealand by or on behalf of A; or
b: A is, or is required to be, a licensed provider under a licensing enactment; or
c: A is required to be registered under this Act by or under any other enactment (including under a licence condition); or
d: A provides the service in the prescribed circumstances; or
e: A is a reporting entity to which the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 applies.
2: The following apply for the purposes of subsection (1)﻿(a)
a: the paragraph does not apply merely because A’s financial services are accessible by persons in New Zealand:
b: the paragraph does not apply if A—
i: does not have a place of business in New Zealand; and
ii: does not provide the service to any retail client in New Zealand:
c: the paragraph does not apply if the extent to which the financial service is provided to persons in New Zealand is less than any prescribed threshold:
d: the paragraph applies regardless of where the financial service is provided from.
3: Subsection (2)﻿(c)
4: This Act may also apply to a person who registers for financial advice services under section 22C
5: See section 12(1A)
6: This section is subject to section 7.
67: Section 8A replaced (Territorial scope)
Replace section 8A
8A: Transitional, savings, and related provisions
The transitional, savings, and related provisions set out in Schedule 1AA
68: Section 10 amended (Registration and deregistration)
After section 10(3)
4: This section is subject to section 22B
69: Heading to subpart 1 of Part 2 replaced
Replace the heading to subpart 1
1: Requirements for registration and being member of approved dispute resolution scheme and prohibition against holding out
70: Section 11 amended (No being in business of providing financial service unless registered and member of approved dispute resolution scheme)
1: Replace the heading to section 11 Person in business of providing financial service must be registered and member of approved dispute resolution scheme
2: Replace section 11(1)
1: A person to whom this Act applies who is in the business of providing a financial service must—
a: be registered for that service under this Part; and
b: if required by section 48, be a member of an approved dispute resolution scheme.
71: Section 12 amended (No holding out that in business of providing financial service unless registered and member of approved dispute resolution scheme)
Replace section 12(1)
1: A person must not—
a: hold out that the person is registered under this Act unless that person—
i: is registered under this Part; and
ii: is, if required by section 48, a member of an approved dispute resolution scheme; or
b: hold out that the person is registered under this Act in respect of a particular service unless that person—
i: is registered for that service under this Part; and
ii: is, if required by section 48, a member of an approved dispute resolution scheme; or
c: hold out that the person is entitled, qualified, able, or willing to be in the business of providing a financial service to persons in New Zealand unless that person—
i: is, if required by this Part, registered for that service under this Part; and
ii: is, if required by section 48, a member of an approved dispute resolution scheme.
1A: This section applies to a person even if this Act would otherwise not apply to the person under section 7A
72: New section 12A inserted (Registration for certain overlapping services not required)
After section 12
12A: Registration for certain overlapping services not required
1: This section applies if—
a: a person ( A (a) (ib) (ma)
b: A also provides a financial service referred to in section 5(1)﻿(d), (f), (g) paragraph (a)
c: regulations provide for this section to apply in the circumstances in which A provides the service; and
d: A complies with the terms and conditions (if any) prescribed for the purposes of this section.
2: A—
a: is not required to be registered for the financial service referred to in subsection (1)﻿(b)
b: is not prevented from holding out that A is entitled, qualified, able, or willing to be in the business of providing that financial service.
73: Section 14 amended (Disqualified person)
1: Replace section 14(2)﻿(a)
a: an undischarged bankrupt, or a person who has a substantially similar status in a country, State, or territory outside New Zealand:
2: After section 14(2)﻿(d)
da: a person who, within the past year, has been deregistered, or been a director or senior manager of an entity that has been deregistered, under section 18(1)﻿(ca)
3: Replace section 14(2)﻿(ea)
ea: a person who has been convicted within the past 5 years, in a country, State, or territory outside New Zealand, of an offence that is substantially similar to an offence specified in paragraph (e):
4: Replace section 14(2)﻿(g)
g: a person who is subject to a forfeiture order under the Criminal Proceeds (Recovery) Act 2009 or to a substantially similar order in a country, State, or territory outside New Zealand.
74: Section 15 amended (Application to be registered as financial service provider)
After section 15(1)﻿(a)
ab: if the applicant is applying to be registered under section 22C B
75: Section 16 amended (Registration of financial service provider)
1: After section 16(1)﻿(a)﻿(iii)
iiia: if the provider ( A section 22C B
2: After section 16(1)
1A: The Registrar may, at any time, require a person to provide prescribed information in the prescribed manner for the purpose of ascertaining whether—
a: the person is in the business of providing a financial service to persons in New Zealand; or
b: any other matter referred to in section 7A
1B: The Registrar may treat section 18(1)﻿(b) subsection (1A)
76: Section 17 amended (Duty to notify changes relating to financial service provider)
1: After section 17(1)﻿(c)
d: a financial advice provider, if the provider engages a financial adviser:
e: a financial advice provider that is recorded on the register as having engaged a financial adviser, if the financial adviser is no longer engaged by the provider.
2: In section 17(4) (1)﻿(c) (1)﻿(c), (d), or (e)
77: Section 18 amended (Deregistration of financial service provider)
1: Replace section 18(1)﻿(b)
b: at any time after the expiry of 3 months after registration, is not in the business of providing a financial service or is otherwise no longer required to be registered under section 11; or
2: Replace section 18(1)﻿(c)
c: has made a representation to the Registrar or the FMA that is false or misleading in any material particular in connection with obtaining or maintaining its registration under this Act or any other matter relating to this Act (for example, false information about the extent to which the person is in the business of providing a financial service); or
ca: has failed to comply with a duty provided for under regulations made under section 44(1)﻿(bb) and (bc) subsection (1AB)
3: After section 18(1AA)
1AB: In considering whether a failure is serious under subsection (1)﻿(ca)
a: must have regard to—
i: the nature and extent of the failure; and
ii: the circumstances in which the failure occurred; and
iii: whether the provider has previously failed to comply with the duty referred to in that paragraph or has otherwise previously failed to provide any material information that it is required to provide by or under this Act; and
b: may have regard to any other matters that the Registrar thinks relevant.
4: Replace section 18(1B)
1B: The Registrar must deregister a financial service provider if—
a: the FMA gives a direction under section 18B(3)﻿(c)﻿(i); or
b: the FMA gives a direction under section 469(2)﻿(a) or (b)
c: the disciplinary committee gives a direction under clause 46(3)﻿(a) or (b) of Schedule 5
1C: Deregistration under subsection (1B)﻿(c)
78: Section 20 amended (Objection to proposed deregistration of financial service provider)
After section 20(2)
3: In the case of section 16(1B) section 16(1A)
79: Section 21 amended (Notification of deregistration of financial service provider)
In section 21
2: In the case of a deregistration in accordance with a direction referred to in section 18(1B)﻿(b) or (c)
80: Section 22 amended (Reregistration of financial service provider)
1: Replace section 22(1)﻿(a)
a: on the grounds set out in section 18(1)﻿(b)
2: After section 22(3)
4: A financial service provider may not apply to be reregistered under this section after the date that is 60 days after the date of deregistration.
5: This section does not prevent a person from making a new application for registration under section 15.
81: New sections 22A to 22D and cross-headings inserted
After section 22
22A: Registrar must not reregister financial adviser if direction has been made
The Registrar must not reregister a person ( A section 469(2)﻿(b)﻿(ii) clause 46(3)﻿(b)﻿(ii) of Schedule 5 Suspension of registration
22B: Suspension of registration
1: The Registrar must suspend the registration of a person ( A section 469(2)﻿(c) clause 46(3)﻿(c) of Schedule 5
2: The suspension is in effect—
a: for the period specified in the direction; or
b: until A meets the conditions specified in the direction (but, in any case, not for a period of more than 12 months).
3: A person whose registration is suspended is taken not to have that registration while it is suspended.
4: However, the FMA or the disciplinary committee may specify in the direction that subsection (3) Registration of financial advisers
22C: Registration of financial advisers
1: An individual ( A Example
Susan is employed by ABC Limited ( ABC ABC is required to be licensed under section 388(ba) section 431D However, under the conditions of ABC’s market service licence, the type of service that Susan gives may not be given by a nominated representative. That type of service can be given only by a financial adviser (that is, a person who is registered under this Act). Subsection (1)
2: Sections 15 to 16 apply with all necessary modifications for the purposes of registration under this section.
3: If A becomes registered under this section, this Act (and the rules of an approved dispute resolution scheme) apply with all necessary modifications to A as if A were in the business of providing a financial advice service and A were registered under section 16.
4: However,—
a: A may not be deregistered in respect of the financial advice service under section 18(1)﻿(b)
b: section 18(1)﻿(b)
i: A is treated as being no longer in the business of providing a financial advice service under section 22D
ii: A does not comply with section 28(1) by the due date ( see
iii: section 37(6)
5: For the purposes of Part 3, A must be treated as providing a financial advice service to a client ( C
a: A is engaged by a financial advice provider to give regulated financial advice on the provider’s behalf; and
b: C is a client of that provider; and
c: A gives financial advice to C.
6: See section 48A
7: In this section and section 22D retail client clause 3 of Schedule 5
22D: Financial adviser may be deregistered if not engaged by provider for extended period
1: This section applies if the Registrar is satisfied that—
a: an individual ( A section 22C
b: for a continuous period of at least 3 months (or a longer period that applies under subsection (4)
2: A must be treated as being no longer in the business of providing a financial advice service (and, accordingly, must be deregistered for that service under section 18(1)﻿(b)
3: Any period before A is registered under section 22C
4: The regulations may provide—
a: that, in 1 or more types of circumstances specified in the regulations, a period longer than 3 months applies under subsection (1)﻿(b)
b: that the period that applies in particular circumstances is a period specified in the regulations or is a period determined on a case-by-case basis by the Registrar:
c: for how the Registrar determines the period that applies.
82: Section 26 amended (Purposes of register)
1: After section 26(a)
ab: to enable the public to otherwise access information to assist members of the public to make decisions relating to the provision of financial services; and
2: In section 26(b) functions or duties
83: Section 27 amended (Contents of register)
After section 27(1)﻿(c)
ca: if the provider ( A section 22C B
84: Section 29 amended (Registrar must amend register in certain circumstances)
After section 29(c)
ca: a financial advice provider notifies the Registrar of a change under section 17(1)﻿(d) or (e)
85: Section 34 amended (Sharing information with other persons or bodies)
1: Replace section 34(4)﻿(a)
a: the Financial Markets Authority:
ab: the Reserve Bank of New Zealand:
ac: any other licensing authority identified in Schedule 2:
2: After section 34(4)﻿(d)
da: the disciplinary committee:
86: Section 37 amended (Registrar’s inspection powers)
1: Before section 37(1)﻿(a)
aaa: provides a financial service to persons in New Zealand as referred to in section 7A(1)﻿(a)
2: After section 37(2)
2A: The Registrar, or a person authorised by the Registrar, may, under subsection (1), require a person ( A
a: produce a relevant document relating to another person; or
b: confirm that information provided by another person is correct, or correct that information, if A is reasonably able to give that confirmation or to make that correction. Example
A is a director of ABC Limited. A may be required to produce a document relating to ABC Limited’s business or to confirm information provided by ABC Limited.
3: Replace section 37(6)
6: If a registered financial service provider, or a director of such a provider, does not comply with a requirement made under subsection (2)﻿(a) or (ab) in relation to the provider (including compliance with the specifications in subsection (2)﻿(ac)) within 20 working days from the date the requirement was notified to the provider or director, the Registrar may assume that the provider is no longer in the business of providing a financial service and sections 18 to 20 apply.
4: Before section 37(9)﻿(a)
aaa: provides a financial service to persons in New Zealand as referred to in section 7A(1)﻿(a)
87: Section 42 amended (Appeals from Registrar’s decisions and FMA directions)
Replace section 42(1)
1: A person ( A
a: a decision not to register A as a financial service provider under section 16 or 22C
b: a decision to deregister A under section 18:
c: a decision of the Registrar or a person authorised by the Registrar under section 37 to require A to do something.
1AA: This section does not apply to a decision that may be appealed under subpart 9 of Part 8 of the Financial Markets Conduct Act 2013.
88: Section 44 amended (Regulations under Part 1 and this Part)
1: In section 44(1)﻿(a) section 5(1)﻿(n) section 5(1) (ma)
2: After section 44(1)﻿(a)
aaa: prescribing circumstances for the purposes of section 7A(1)﻿(d)
aab: prescribing a threshold or thresholds for the purposes of section 7A(2)﻿(c)
3: After section 44(1)﻿(ab)
ac: providing for the circumstances in which section 12A
4: In section 44(1)﻿(b) applications or other documents required under this Act
5: After section 44(1)﻿(b)
ba: prescribing information to be provided under section 16(1A)
bb: specifying warnings or other information about, or in connection with, the registration of a financial service provider that must be included in advertising for the service, in information or documents provided to persons who receive or may receive the service, or otherwise in information or documents of the classes specified in the regulations (for example, a warning that registration does not mean that the provider is subject to active regulation or oversight):
bc: prescribing the circumstances in which the duty referred to in paragraph (bb)
bd: providing for matters referred to in section 22D(4)
6: After section 44(1)
1AA: The Minister must, before making a recommendation under subsection (1)﻿(aaa)
a: to promote 1 or more of the purposes of this Act as specified in section 2A, 9, or 47; and
b: to protect, or prevent damage to, the integrity or reputation of—
i: New Zealand’s financial markets; or
ii: New Zealand’s law or regulatory arrangements for regulating those markets.
7: Replace section 44(2)
2: Information or documents may be prescribed under subsection (1)﻿(b) or (c)﻿(ii) for either or both of the following purposes (whether or not that information or documentation is collected or contained in the register for the purposes of this Part):
a: the purpose of assisting any person in the exercise of the person’s powers or the performance of the person’s functions or duties under this Act or any other relevant legislation:
b: the purpose of assisting a Minister, a department of State, or the Reserve Bank of New Zealand in administering this Act or any other relevant legislation.
2A: In subsection (2) other relevant legislation
a: any licensing enactment:
b: any financial markets legislation:
c: the Credit Contracts and Consumer Finance Act 2003.
2B: Subsection (2)
89: New sections 44A and 44B inserted
After section 44
44A: Who financial adviser is treated as engaged by when engaged indirectly
1: For the purposes of this Act, if a person ( A B C section 431E(b)
a: both B and C, if both B and C are required to be registered under this Act for a financial advice service; or
b: B (and not C), in any other case.
2: In this section, required to be registered
a: by this Act; or
b: by or under any other enactment (including under a licence condition).
44B: FMA acts as licensing authority in relation to operators of financial product markets
1: This section applies in relation to a person that operates a financial product market that is licensed under Part 5 of the Financial Markets Conduct Act 2013.
2: The references to a licensing authority in sections 15 to 22, 27, and 29 must be treated as references to the FMA.
90: Section 48 amended (Financial service provider must be member of dispute resolution scheme)
After section 48(3)﻿(b)
ba: an individual who is exempted from the obligation by section 48A
91: New section 48A inserted (When financial adviser is exempt from being member)
After section 48
48A: When financial adviser is exempt from being member
1: An individual who is registered under section 22C A B
2: The exemption applies to the extent that A’s obligation to be a member of an approved dispute resolution scheme arises only because of the regulated financial advice given by A on B’s behalf (or on behalf of any other financial advice provider that is a member of an approved dispute resolution scheme).
92: Section 49 amended (Who are retail clients)
1: Repeal section 49(2)﻿(c) and (d)
2: Replace section 49(2)﻿(h)
h: if the financial service is a financial advice service or a regulated client money or property service, a person who is a wholesale client in respect of that service under clause 4 of Schedule 5
93: Section 67 replaced (Duty to co-operate and communicate information in certain circumstances)
Replace section 67
67: Duty to co-operate and communicate information in certain circumstances
1: The person responsible for an approved dispute resolution scheme ( A
a: co-operate with other approved dispute resolution schemes if a complaint involves members of those other schemes (for example, by disclosing personal information in accordance with the Privacy Act 1993 and protecting information that is subject to an obligation of confidence); and
b: co-operate with the Registrar, including by communicating information to the Registrar in accordance with sections 17 and 34; and
c: if A has reasonable grounds to believe that a member that is a registered bank, a licensed insurer, or a licensed NBDT has contravened or is likely to contravene any of the following Acts in a material respect, communicate that fact to the Reserve Bank:
i: the Reserve Bank of New Zealand Act 1989:
ii: the Insurance (Prudential Supervision) Act 2010:
iii: the Non-bank Deposit Takers Act 2013; and
d: if A has reasonable grounds to believe that a member that is a financial markets participant has contravened or is likely to contravene any financial markets legislation in a material respect, communicate that fact to the FMA; and
e: if A has reasonable grounds to believe that a member that is a creditor under a consumer credit contract has contravened or is likely to contravene the Credit Contracts and Consumer Finance Act 2003 in a material respect, communicate that fact to the Commerce Commission; and
f: otherwise provide information to a prescribed person in the prescribed manner if required to do so by regulations made under this Act.
2: In this section,— consumer credit contract
a: has the same meaning as in section 11 of the Credit Contracts and Consumer Finance Act 2003; and
b: includes a credit contract to which Part 3A of that Act applies financial markets participant
94: Section 79 amended (Regulations under this Part)
After section 79(1)﻿(d)
da: prescribing matters for the purposes of section 67(1)﻿(f)
95: New Schedule 1AA inserted
Insert the Schedule 1AA Schedule 3 OIC 2019/283 2019-11-26 Financial Service Providers (Registration and Dispute Resolution) Act 2008 Schedule 3 (except clause 3(1)﻿(b) and (c) of new schedule 1AA)
96: Schedule 2 amended
1: In Schedule 2 bodies or persons
2: In Schedule 2, replace paragraph (b) with:
b: persons that are licensed providers; and
3: In Schedule 2 This table is small in size and has 3 columns. This table is an amendment to Schedule 2 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 and should be read with that table to provide understanding of the context. The Minister (within the meaning of the Financial Markets Conduct Act 2013) Persons that operate a financial product market that is licensed under Part 5 of the Financial Markets Conduct Act 2013 Financial Markets Conduct Act 2013
3: Repeals and amendments to other Acts
97: Repeals and revocations
1: The Financial Advisers Act 2008
2: The following regulations are revoked:
a: Financial Advisers (Custodians of FMCA Financial Products) Regulations 2014
b: Financial Advisers (Definitions, Voluntary Authorisation, Prescribed Entities, and Exemptions) Regulations 2011
c: Financial Advisers (Disclosure) Regulations 2010
d: Financial Advisers (Fees) Regulations 2010
e: Financial Advisers (Personalised DIMS) Regulations 2014
3: The following notices are revoked:
a: Financial Advisers (Australian Licensees) Exemption Notice 2011
b: Financial Advisers (NZX Brokers—Client Money and Client Property) Exemption Notice 2015
c: Financial Advisers (Non-NZX Brokers—Client Money) Exemption Notice 2017
d: Financial Advisers (Overseas Custodians—Assurance Engagement) Exemption Notice 2018
e: Financial Advisers (Personalised Digital Advice) Exemption Notice 2018
f: every other notice made under section 148
g: Financial Markets Conduct (Offers of Financial Products Through Authorised Financial Advisers Supplying Personalised DIMS) Exemption Notice 2015 OIC 2020/131 2021-03-15 Financial Advisers Act 2008 Financial Advisers (Custodians of FMCA Financial Products) Regulations 2014 Financial Advisers (Definitions, Voluntary Authorisation, Prescribed Entities, and Exemptions) Regulations 2011 Financial Advisers (Disclosure) Regulations 2010 Financial Advisers (Fees) Regulations 2010 Financial Advisers (Personalised DIMS) Regulations 2014 Financial Advisers (Australian Licensees) Exemption Notice 2011 Financial Advisers (NZX Brokers—Client Money and Client Property) Exemption Notice 2015 Financial Advisers (Non-NZX Brokers—Client Money) Exemption Notice 2017 Financial Advisers (Overseas Custodians—Assurance Engagement) Exemption Notice 2018 Financial Advisers (Personalised Digital Advice) Exemption Notice 2018 Financial Markets Conduct (Offers of Financial Products Through Authorised Financial Advisers Supplying Personalised DIMS) Exemption Notice 2015 The remaining provisions of the Financial Services Legislation Amendment Act 2019 brought into force on 15 March 2021.
98: Consequential amendments
Amend the enactments specified in Schedule 4 OIC 2020/131 2021-03-15 Anti-Money Laundering and Countering Financing of Terrorism Act 2009 Credit Contracts and Consumer Finance Act 2003 Financial Markets Authority Act 2011 KiwiSaver Act 2006 Veterans’ Support Act 2014 The remaining provisions of the Financial Services Legislation Amendment Act 2019 brought into force on 15 March 2021.