Media Release
MR No. 2015 – 16
19 May 2015
The Financial Markets Authority (FMA) today confirmed that a number of offshore firms have recently been removed from the Financial Services Provider Register (FSPR). While the Registrar of Companies maintains the FSPR, the FMA has powers to direct the Registrar to remove companies from the FSPR where it is likely that a company is giving a false or misleading impression about the extent to which it is regulated in New Zealand.
The FMA has been reviewing referrals from the Registrar where there are concerns about whether the substantive business activities of a firm require it to be registered on the FSPR in New Zealand.
The FMA has concerns that some offshore companies have registered on the FSPR primarily to take advantage of New Zealand’s reputation as a well-regulated jurisdiction. The FMA has received complaints from offshore investors who have lost their money to forex companies, or other types of service providers operating abroad that are registered on the FSPR.
“We are aware of instances where the FSPR is not being used for its intended purpose. This is taking advantage of New Zealand’s good reputation for being a well-regulated jurisdiction and a good place to do business,” said Liam Mason, FMA General Counsel.
So far this year the FMA has removed 23 entities from the register. The FMA has also taken action to prevent a further 20 firms from completing registration on the FSPR.
The FMA is concerned that local registration agents in New Zealand are facilitating the registrations of these entities, including by taking a role as a director and by providing local registered office facilities to these offshore companies. These activities give the appearance of offering a financial service from New Zealand, when in fact the substantive business, where there is any, takes place offshore.
The FMA will look closely at the ability of such directors to carry out their duties under the Companies Act, especially where multiple directorships are held.
There is a statutory process the FMA must follow in using its powers to direct de-registration from the FSPR. This allows firms to respond to the FMA’s concerns and to submit reasons why they should be allowed to remain on the register.
Mr Mason added “the process follows the natural justice principles that are important to our integrity as a regulator. But this process also takes time and we recognise that in some circumstances we need to alert investors to concerns we may have about a particular offshore company.
“Where we receive complaints about investors either being unable to access their funds, or being unable to contact a company who is holding their money, then we are warning people to take extreme caution when dealing with those particular companies,” Mr Mason said.
The FMA may issue warnings where it has received complaints, or has concerns about a firm and the firm has failed to respond adequately to enquiries from the regulator.
ENDS
Background:
As part of the ongoing statutory review of the Financial Advisers Act and the Financial Service Providers Dispute Resolution Act an issues paper will be released for feedback in the coming weeks.
View warnings on the FMA website.
Contact:
Andrew Park
09 967 1215
021 220 6770
[email protected]
