Key findings from the recent re-licensing of supervisors
The FMA completed a review of the licensed supervisors during the process to update their license status in 2022. Following the re-licensing application process, the FMA assessed the supervisors’ submissions, specifically reviewing their approaches to monitoring MIS managers. We wanted to determine whether supervisors were taking a consistent approach to their obligations.
The basic licensing fee payable to apply for both a new or a replacement Supervisor licence is $8,021.25.
We may charge an additional fee where the time to assess a licence application exceeds 52 hours, as set by the Financial Markets Authority (Fees) Regulations 2011. For an FMA staff member this is set at $178.25 per hour, or part-hour pro rata, of work carried out. Please refer to the regulations for further information.
If an additional fee will be incurred for your application, we will notify you in advance, including the reason why.
Applications to vary conditions on an existing licence will incur an application fee of $115 plus $178.25 per hour, or part-hour pro rata, of work carried out.
Please refer to the Financial Markets Authority (Fees) Regulations 2011 for more information.
All amounts are GST inclusive.
This payment is to apply for a Supervisor licence; it does not include any annual levies, or fees to register on the Financial Service Providers Register.
The Financial Markets Authority (Levies) Regulations 2012 (the Regulations), as amended in 2020 and 2022, set out the levies payable by industry. The levies are set by the Ministry of Business, Innovation, and Employment (MBIE).
The FMA receives funding from the Crown and a proportion of our costs is recouped from industry through levies.
A financial markets participant falls within one or more levy ’class’, depending on what financial services they provide.
The table below provides a high-level description of each levy class. For the full description of levy classes, see Schedule 2 in the Regulations.
|Persons making an application for registration on the Financial Service Providers Register
|Registered banks and licensed non-bank deposit takers
|Registered banks and licensed non-bank deposit takers that are required to hold a conduct licence
|Licensed insurers that are required to hold a conduct licence
|Licensed supervisors of debt securities and managed investment products in registered schemes
|Managers (of registered schemes)
|Persons who undertook trading activities on licensed markets, contributory mortgage brokers, trading financial products or foreign exchange on behalf of other persons (other than persons included in class 6A, 6B, 6C or 6D, authorised bodies that only provide the service under a market services licence held by a person in class 6A or 6D and DIMS wholesale providers) or licensed derivatives issuers
|Licensed discretionary investment management service (DIMS) retail providers
|Providers of a regulated client money or property service (as defined in section 6(1) of the FMC Act) other than persons included in class 6(a) or 6C
|Custodians and persons providing custodial services
|Crowdfunding service providers and peer-to-peer lending service providers
|Licensed financial benchmark administrators
|Licensed financial advice providers
|All other financial service providers that are not included in any of classes 2 – 6H
|Listed issuers (other than persons included in class 8A)
|Small listed issuers
|Lodgement of a product disclosure statement (PDS)
|Licensed market operators
|Licensed market operators that operate growth markets (other than persons included in class 10)
|FMC reporting entities that lodge financial statements (or group financial statements) and auditor’s reports
|Licensed overseas auditors
|Persons that apply for registration or incorporation under the Building Societies Act 1965; the Companies Act 1993; the Friendly Societies and Credit Unions Act 1982; or the Limited Partnerships Act 2008
|Persons that are registered or incorporated and required to make annual returns under the Building Societies Act 1965; the Companies Act 1993; the Friendly Societies and Credit Unions Act 1982; or the Limited Partnerships Act 2008
|Climate reporting entities
It is the responsibility of each financial service provider to ensure they are registered for the service(s) they provide and have paid the appropriate levies. As part of their online annual confirmation to the Registrar, they must select all of the applicable classes to determine the levies payable and confirm the information they have provided is true, correct and complete.
Under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (the FSP Act) it is an offence to:
These offences could result in a fine of up to $100,000 and/or imprisonment for individuals, and a fine of up to $300,000 for businesses.
It is also an offence under the FSP Act to fail to notify the Registrar if any of the details contained on the FSPR are no longer correct. Failure to notify could result in a fine of up to $10,000.
We have discretionary power to waive a levy (in whole or part).
We will only do so if we are satisfied that the circumstances or characteristics of the financial markets participant are exceptional when compared with the circumstances or characteristics of others in the same class, so that it would make it inequitable for the person to pay the levy. The threshold is deliberately high.
The waiver power is not intended to be used to revisit settled policy positions.
Once we receive a waiver application and the fee, we will assess it. If we decide to grant the waiver, we must notify our decision in the Gazette, and publish the decision and reasons for it on our website.
You will need to email the following information to [email protected] with the subject line ‘Levy waiver application’.
You can pay by electronic deposit or internet banking. Payment can be made by applicants or law firms making applications on behalf of their clients.
The person paying the application fee must be the person who pays the subsequent fees and costs. For example, if a law firm pays the application fee, that law firm must also pay any additional fees and costs.
We recommend if law firms apply for waivers on behalf of their clients, the parties discuss and agree who will be responsible for paying the FMA’s fees before submitting a waiver application.
|How to pay
|Electronic deposit or internet banking
|Where bill pay is available please select ‘Financial Markets Authority - Other'
Otherwise, our bank details are:
Account name: Financial Markets Authority
Account number: 03-0584-0198005-000
|To ensure we process your payment correctly please provide the following information:
Particulars: Payer’s name*
Reference: Applicant’s name
You do not need to forward a hard copy of your application if paying electronically
* This is the name of the person paying the application fee. This person will be invoiced for any subsequent fees and costs. Payment by credit card is not available for this application process.
Supervisors must comply with the Financial Markets Supervisors Act 2011 (the FMS Act) and supporting regulations. Your duty to meet your professional standard of care and your obligation to act in the best interests of investors need to be at the forefront of determining how you go about your role as supervisor. Compliance involves the following activities:
Disclosing contraventions or potential contraventions by issuers is an important part of the licensing regime. It enables us to monitor the extent and nature of non-compliance by the issuers being supervised; assess whether the supervisor has adequate plans to respond to a breach; monitor the effectiveness of that action; if necessary work collaboratively, where appropriate, with supervisors to ensure they take steps to address any breach.
Under section 203 of the FMC Act, the supervisor of a debt security or registered scheme must report to us a material contravention, or a possible material contravention, of an issuer’s obligations. The supervisor must also tell how they plan to act, and the timeline for the action. The obligation to report contains a materiality threshold, which requires a judgment to be made. We recommend a supervisor takes a precautionary approach and matters are reported where they have begun an internal discussion between supervisor staff as to whether the matter is material or not. This approach is consistent with:
In particular, if a potential contravention relates to a matter that may result in a statutory penalty for the issuer, the contravention should only go unreported if deemed immaterial, and the supervisor is comfortable that the relevant regulator will not take action.
If a supervisor thinks a contravention or likely contravention has occurred which may adversely impact the investors' interests, the contravention should be reported. It may be helpful to view the matter from an investor's perspective (ie, if you were an investor in the licensed entity, would you consider the contravention to be material?).
Following a section 203 report to us, we might not necessarily direct the supervisor to take a course of action, unless we see a clear need to do so to protect investors. There have been concerns that a supervisor could be liable to action (from a supervised entity) should a contravention reported be found to be immaterial. Both sections 203 and 204 of the FMC Act have provisions detailing that the protections of section 214 of the FMC Act apply to reports made in good faith.
We expect each report under section 203 to fully comply with sections 203(1)(a) and 203(1)(b) to tell us:
A date range can be provided. You need to tell us if you do not plan further action.
Following the initial section 203 notification, we may ask the supervisor for reports on the progress and success of the action taken by the supervisor to ensure the supervised entity is taking remedial action. We should be told if the supervised entity does not respond to the supervisor's plan.
Under the FMS Act, the High Court may fine a supervisor up to $600,000, if the supervisor contravenes a licensee obligation. Licensee obligations mean an obligation imposed on a supervisor by one, any or all of the following:
Supervisors may also be liable to compensate investors as a result of the contravention. Under the FMS Act, anyone acting as a supervisor without a licence or claim to hold a licence may be fined up to $600,000.
For managed investment schemes, you must actively supervise the manager’s performance of its functions and issuer obligations, and the financial position of the manager and the scheme. This is overlaid with the need to act on behalf of scheme participants in relation to the manager, the governing document, and issuer obligations. FMA’s licensing of MIS managers does not take away from your need to fulfil these requirements. Different MIS product classes will have different supervisory approaches and documentation. This reflects the need for a ‘fit for purpose’ tailored supervisory focus.
For debt issuers, you must supervise the issuer’s performance of its issuer obligations. You must also satisfy yourself that the issuer’s assets are sufficient to discharge the amounts of the debt securities as they become due. Again this is overlaid with the responsibility to act on behalf of the debt security holders in relation to the issuer and the trust deed. Since debt securities are fundamentally different products with different risks, and with governing documents that serve a number of purposes, we expect that your supervisory approach to debt issuers will be different to that of MIS.
As an FMC reporting entity, you must do all of the following:
The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the Act) imposes several obligations:
The FMC Act sets out minimum compliance standards of behaviour for people operating in the financial markets. It prohibits:
The FMA completed a review of the licensed supervisors during the process to update their license status in 2017. Following the re-licensing application process, the FMA assessed the supervisors’ submissions, specifically reviewing their approaches to monitoring MIS managers. We wanted to determine whether supervisors were taking a consistent approach to their obligations.