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Goldsmith approves second tranche of FMCA regulation

Tuesday 4th November 2014

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The second phase of regulation of the Financial Markets Conduct Act, which overhauled the decades old Securities Act, has been approved by newly installed Commerce Minister Paul Goldsmith.

The new regulations, which cover the governance of financial products, licensing requirements for financial service providers and conduct obligations for discretionary investment management services, come into full effect on Dec. 1, Goldsmith said in a statement. Goldsmith took over the portfolio after the Sept. 20 general election, which saw former commerce minister Craig Foss demoted to a minister outside of cabinet. 

"One of the key changes in these regulations is the introduction of a new disclosure regime that will mean shorter, clearer documents that are much more tailored to investors’ needs,” Goldsmith said.“In addition, a new online register for offers of financial products will ensure that information on financial products and managed investment schemes is easily accessible and comparable. This will also be up and running from 1 December."

The new legislation arose out of the Capital Markets Development Taskforce in 2009, which looked to deepen New Zealand's capital markets while beefing up investor protection and regulatory oversight after the collapse of the finance companies. The legislation overhauled the country's decades-old securities law with a goal of improving public confidence in New Zealand's capital markets. 

“The reforms are an important part of the Government’s Business Growth Agenda to build confidence in our financial markets and allow firms to raise capital efficiently so they can grow their business and the economy," Goldsmith said. 

The second tranche of regulation follows the first phase of regulation, which came into effect April 1 and covered general fair dealing obligations, key growth-focused initiatives including employee share schemes and licensing for new financial markets such as equity crowd funding and peer-to-peer lending. 

In a separate announcement the Financial Markets Authority welcomed the adoption of the regulation. The market watchdog is in the final stages of bedding in the new legislation, which saw its powers beefed up with a wider scope to enforce updated regulation and chase misconduct.

"In the interests of improving standards and setting expectations up front, the new Act imposes a significant requirement on us to act as a gatekeeper for those wishing to offer financial services and financial products,"  FMA chief executive Rob Everett told the Institute of Finance Professionals New Zealand conference in Auckland last week. "We're using all the types of regulation we have at our disposal, ranging from licensing through to enforcement and all the means inbetween."

The regulation approved today allows market participants two years to comply with the new disclosure and governance requirements. 


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