New Zealand Authorized Financial Activities

Below is the list of New Zealand Authorized Financial Activities that an FSP can legally engage in activities and offer services such as, amongst others

Advantages of New Zealand Financial Companies
NZ Financial Services Provider (FSP) Registration
Authorized Financial Activities
FSP Registration Relevant Requirements
New FMA Role
Financial Services requiring FMA License
NZ Corporate Law – Local Director or Partner Now Required
What you Need to Register as FSP in NZ
FSP Requirements – own Premises and Staff

New Zealand Financial Services Providers Register (FSPR) License

TBA provides a turnkey solution for financial licensing. To facilitate your process of applying for a New Zealand Financial Services Providers Register license, we will:

• Promote your application to the New Zealand regulators
• Assist with answering questions regarding the application process and requirements
• Draft and review application documents and questionnaires
• Follow up with the application and ensure the submission of additional information required by the related departments in New Zealand

Permissions

• Broking service
• Financial adviser service
• Acting as a deposit taker
• Keep, investing, administering, or managing money, securities, or investment portfolios on behalf of other persons
• Provide credit under a credit contract
• Operating a money or value transfer service
• Issue and managing means of payment
• Giving financial guarantees
• Changing foreign currency
• Entering into derivative transactions, or trading in money market instruments, foreign exchange, interest rate and index instruments, transferable securities and futures contracts on behalf of another person.

However, some financial activities, require further regulation by the Financial Markets Authority (FMA), the Crown entity with the mandate to promote and facilitate the development of fair, efficient and transparent financial markets.

The FMA supervises designated business groups (DBGs) and reporting entities listed in Section 130 of the AML/CFT Act. The Reserve Bank supervises banks, life insurers, and non-bank deposit takers.

The FMA issues licences to service providers who meet their requirements. The regulator can also impose penalties and revoke licences. The FMA regulates forex & CFD providers, stock exchanges, financial advisers and managed investment services.

The FMA is responsible for issuing and revoking licences, policy and guidance, monitoring and supervision, investigating and enforcing laws and educating investors.

Activities covered by FMA

The New Zealand FMA is responsible for overseeing a diverse range of financial products provided in New Zealand. The FMA is also responsible for maintaining public trust and confidence in New Zealand’s financial system. It is one of New Zealand’s primary financial regulators operating alongside the Reserve Bank of New Zealand and the Commerce Commission.

The FMA regulates several products and services and issues licences to financial services providers,depending on their activities. Besides licensing firms, the FMA is responsible for administering policy and publishing guidance, monitoring and supervising market participants, investigating and enforcing laws related to financial services and securities markets and educating investors.

The FMA regulates various FSPS, such as financial advisors, trading venues (i.e. stock exchanges such as NZX), crowdfunding platforms and derivatives issuers (forex & CFD brokers). The FMA’s remit is expanding. Currently, it includes:

Derivatives issuers – Derivatives issuers are brokers offering forex and CFD products. The licensing requirements are strict because forex and CFDs are complex products associated with high risks and typically used by self-directed traders. Only a handful of derivatives issuers are licensed in New Zealand.

Crowdfunding – Crowdfunding services as defined by FMA are platforms that raise funds from investors in exchange for equity in a company, i.e. shares. This scheme is known as equity-based crowdfunding. Equity crowdfunding platforms in New Zealand are not required to be licensed, but they can voluntarily apply for a licence that offers credibility and other benefits.

Peer-to-peer lending – The FMA defines peer-to-peer lending services as platforms that enable one person to issue debt security to another. Essentially, one person can loan money to another person and earn interest from the loan repayments. Although the FMA does not require peer-to-peer lending services to be licensed, there is an option to be licensed. Platforms that are not licensed need to take additional product disclosure steps.

Financial advisers – A financial adviser is a professional who is qualified to provide advice and recommendations on managing your finances, selecting insurance products, mortgages & loans, investments and other financial services. Anyone giving financial advice must be licensed by the FMA or be covered by the licence of a financial advice provider (FAP). It’s important to work with licensed financial advisers because they are required to follow a  Code of professional conduct.

Discretionary investment management service (DIMS) – A discretionary investment management service is someone appointed to make trading and investment decisions on behalf of someone else. A DIMS is sometimes referred to as a money manager. With a DIMS licence, the provider can go a step more than just giving advice, as they can make investment decisions without first consulting the investor.

Managed investment scheme (MIS) – A managed investment scheme is a managed fund that pools multiple investors’ money and manages it collectively. A managed investment scheme is also known as a collective investment scheme.

Market operator – A market operator is an exchange, for example, the New Zealand Exchange (NZX). Market operators are any marketplace that facilitates buying and selling of financial instruments, such as shares of public companies and dairy derivatives. There are six licensed market operators in New Zealand, which include the Australian Securities Exchange, Singapore Exchange, ICE Futures US and ICE Futures Europe.

Products and services NOT regulated by the FMA

Some regions of the financial markets industry are not regulated by the FMA either because the regulations don’t require them to, or they are covered by other agencies. These include:

Brokers – Brokers offering direct market access to products listed on regulated exchanges, such as stocks and exchange-traded funds, do not need to be licensed, but they may need to register with the FMA as a designated business group (DBG) and follow AML and CFT regulations.

Crypto assets – Crypto assets, which can be cryptocurrencies, digital assets or initial coin offerings (ICOs), are not directly regulated in New Zealand. However, the structure of a crypto asset product or service might fall under the framework of another licensed activity, such as issuing derivatives, operating a market or managing investments.

Banks, building societies, credit unions and insurance providers – The RBNZ regulates banks, insurance providers and non-bank deposit takers in New Zealand. The FMA is not directly involved in the supervision of banks, although they play a crucial role in the financial markets.

Credit and debt – Consumer credit and debt products are regulated by the Commerce Commission, which is responsible for supervising the conduct of creditors and investigating wrongdoing. Consumer finance products include credit cards, store cards, hire purchases, buying goods or services on credit, or getting cash loans.

Buying and selling a property – While real estate is a vital asset for building generational wealth, real estate transactions are not regulated by the FMA. Instead, they are regulated by the Real Estate Authority.

FMA vs The Financial Services Provider Register (FPSR) vs Disputes Resolution Schemes (DRS)

FPSR

• The Financial Services Provider Register (FSPR)was established in 2008. The purpose of the register is to provide a public and easily searchable database of financial services providers.
• The FSPR is managed by the Companies Office, not the FMA,and does not grant permission to operate a regulated business. Financial services companies licensed by the FMA must be registered on the FSPR, bar a few rare exceptions.
• However, companies listed on the FSPR are not necessarily licensed or authorised.
• Some activities, particularly services that are only provided to wholesale clients such as other businesses, don’t need to be licensed but still need to be registered as an FSP.
• The FSPR only mandates that a company be incorporated in New Zealand, follow local business laws, file annual reports to the registrar, and ensure the shareholders and directors maintain clean criminal records, are considered fit and proper, remain solvent and disclose any political associations.
• The FSPR was established with the dispute resolution scheme (DRS). Some FSP and FMA-licensed companies need to be a member of a DRS. A prerequisite to joining a DRS is registering with the FSPR.

DRS (New Zealand Dispute Resolution Schemes)

• A dispute resolution scheme is responsible for resolving disputes between consumers and financial services providers.
• If you encounter an issue, your first port of call should be to make an official complaint to your financial services provider. If they do not resolve your dispute, the next step is to submit a complaint to their DRS.
• Not everyone can complain via a DRS. Only individual customers of an FSP or small organisations with 19 or fewer full-time equivalent employees can complain to a DRS.
• There are four approved DRSs in New Zealand – Banking Ombudsman (BOS), Insurance and Financial Services Ombudsman (IFSO), Financial Services Complaints Ltd (FSCL) and the Financial Dispute Resolution Service (FDR).
• Each DRS is specialised in specific financial services. If your FSP is not a member of a DRS, then you can submit your complaint to the FMA.