New Zealand

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FAQ

FSP
Financial Services Provider

FAQ – Frequently Asked Questions about FPS

What is a Financial Service Provider (FSP)?
Who has to be registered as a FSP?
What is the legal definition of a financial service?
What is a Dispute Resolution Scheme (DRS)?
Do all FSPs have to join a Dispute Resolution Scheme?
What is the definition of a retail client?
What is the definition of a wholesale client?
Do I have to register as a FSP if I only offer services to non NZ residents?
Will the Reserve Bank regulate my FSP as “Deposit Taker” if I offer services to non NZ residents only?
Is a FSP subject to capital reserve requirements?
Is my FSP required to obtain a credit rating?
Who can be director/partner/manager/owner of an FSP?
How can I start a FSP registered Company?
What do I need to keep my FSP in legal good standing?

What is a Financial Service Provider (FSP)?

Any person or Company providing Financial Services in or from within New Zealand, including Banks, Building Societies, Brokers, Credit Unions, Currency Exchangers, Finance Companies, Financial Advisers, Investment Managers, Insurers among others.

Who has to be registered as an FSP?

All providers of financial services in New Zealand should register as FSPs, regardless of if they are providing services to residents or non-residents.

What is the legal definition of a financial service?

In this Act, financial service means any of the following financial services:

• (a) a financial adviser service:
• (ab) a broking service:
• (b) acting as a deposit taker as defined in the Reserve Bank of New Zealand Act 1989:
• (c) being a registered bank:
• (d) keeping, investing, administering, or managing money, securities, or investment portfolios on behalf of other persons:
• (e) providing credit under a credit contract:
• (f) operating a money or value transfer service:
• (g) issuing and managing means of payment (for example, credit and debit cards, cheques, travellers’ cheques, money orders, bankers’ drafts, and electronic money):
• (h) giving financial guarantees:
• (i) participating in an offer of securities to the public in either of the following capacities (within the meaning of those terms under section 2(1) of the Securities Act 1978):
  • (i) as an issuer of the securities:
  • (ii) as a promoter:
• (ia) acting in any of the following capacities (within the meaning of those terms under section 2(1) of the Securities Act 1978) in respect of securities offered to the public:
  • (i) as a trustee:
  • (ii) as a unit trustee:
  • (iii) as a superannuation trustee:
  • (iv) as a manager:
• (j) changing foreign currency:
• (k) entering into derivative transactions, or trading in money market instruments, foreign exchange, interest rate and index instruments, transferable securities (including shares), and futures contracts on behalf of another person:
• (l) providing forward foreign exchange contracts:
• (m) acting as an insurer:
• (n) providing any other financial service that is prescribed for the purposes of New Zealand complying with the FATF Recommendations, other recommendations by FATF, or other similar international obligations that are consistent with the purpose of this Act.

What is a Dispute Resolution Scheme (DRS)?

A DRS is an arbitrary facility provided by a third party organisation authorized by the government. The DRS is meant to strengthen consumer protection and to assist with the resolution of any conflict a retail customer might have with a Financial Institution.

Do all FSPs have to join a Dispute Resolution Scheme?

Only FSPs offering services to retail clients are required to join a DRS.

What is the definition of a retail client?

A retail client is any person who receives a financial service who is not a wholesale client.

What is the definition of a wholesale client?

The following persons who receive a financial service are wholesale clients in respect of that financial service:

• (a) a person who is in the business of providing any financial service and receives the financial service in the course of that business:
• (b) a person whose principal business is the investment of money or who, in the course of and for the purposes of the person’s business, habitually invests money:
• (c) an entity to which at least 1 of the following applied at the end of each of the last 2 completed accounting periods:
  • (i) at the balance date, the net assets of the entity exceeded $1 million:
  • (ii) the turnover of the entity for the accounting period exceeded $1 million:
• (d) a related body corporate (within the meaning of section 5B(2) of the Securities Markets Act 1988) of an entity to which paragraph (c) applies:
• (e) a local authority, a Crown entity, a State enterprise, the Reserve Bank of New Zealand, and the National Provident Fund (and a company appointed under clause 3(1)(b) of Schedule 4 of the National Provident Fund Restructuring Act 1990):
• (f) a person who falls within 1 or more of the categories listed in section 3(2), 5(2CB), or 5(2CBA) of the Securities Act 1978 if the service relates to securities that may be offered to that person, or that have been subscribed for by that person, in a private offer of securities:
• (g) an eligible investor under section 49A:
• (h) if the financial service is a financial adviser service or a broking service, a person who is a wholesale client in respect of that service under the Financial Advisers Act 2008.

(3) If subsection (2) applies to a person (A), it applies equally to any controlling owner, director, employee, agent, or other person acting in the course of, and for the purposes of, A’s business to the same extent as it applies to A.

(4) In this section,—

entity—

• (a) includes a body corporate and an unincorporated body (including partners in a partnership, members of a joint venture, or the trustees of a trust) and the sole trustee of a trust acting in his, her, or its capacity as trustee of that trust; but
• (b) does not include an individual

private offer of securities means an offer of securities that—

• (a) does not constitute an offer of securities to the public under section 3 of the Securities Act 1978; or
• (b) is exempt from Part 2 (other than sections 38B and 58) of that Act under section 5(2CB) or 5(2CBA) of that Act.

Do I have to register as an FSP if I only offer services to non NZ residents?

Yes, if you offer services from New Zealand you must be registered as an FSP.

Will the Reserve Bank regulate my FSP as “Deposit Taker” if I offer services to non NZ residents only?

No, the Non-Bank Deposit Taker (NBDT) regime and its regulatory requirements only apply if you offer services to the public in New Zealand. See our FSP Laws section.

Is an FSP subject to capital reserve requirements?

Only if services are offered to the New Zealand resident public (Deposit Taker Regulations).

Is my FSP required to obtain a credit rating?

Only if services are offered to the New Zealand resident public (Deposit Taker Regulations).

Who can be director/partner/manager/owner of an FSP?

Anyone, resident anywhere in the world and of any nationality; however at least one of the directors or partners must be resident in New Zealand. Principals cannot have a criminal record or a history of bankruptcy in New Zealand.

What do I need to keep my FSP in legal good standing?

You need to maintain a physical address in New Zealand that is compliant with the Companies Act 1993 for Registered Office purposes. The office must also be considered a physical “place of business” in accordance with the FSP legislation. Although typical virtual office solutions and mail forwarding addresses do not qualify, the FSP is not required to have its own dedicated office premises per se. An FSP is also required to file annual returns to the Companies Register as well as to the FSP Register. Finally, at least one of the Directors ought to be resident in New Zealand.