The Financial Markets Conduct Act 2013 fundamentally changed the regulatory landscape for financial markets participants in New Zealand. Understanding your obligations is essential.
The Financial Markets Conduct Act 2013 (FMCA) is the primary legislation governing financial markets in New Zealand. It replaced a patchwork of earlier legislation and introduced a comprehensive, principles-based regulatory framework.
Who does the FMCA apply to?
The FMCA applies to a wide range of financial markets participants, including issuers of financial products, licensed financial advisers, fund managers, derivatives issuers, and market operators. It also imposes obligations on directors and senior managers of regulated entities.
Key obligations
The FMCA imposes a range of obligations on financial markets participants, including:
- Disclosure obligations: Issuers of financial products must provide investors with a product disclosure statement (PDS) that meets the requirements of the FMCA. - Fair dealing obligations: Financial markets participants must not engage in misleading or deceptive conduct, or make false or misleading representations, in connection with financial products or services. - Licensing obligations: Many financial markets activities require a licence from the FMA. Licensed entities must comply with the conditions of their licence and the applicable regulatory requirements. - Governance obligations: Directors and senior managers of regulated entities have specific obligations under the FMCA, including obligations to act in the best interests of investors.
Consequences of non-compliance
Breaches of the FMCA can result in significant civil and criminal liability. The FMA has broad enforcement powers, including the power to seek civil pecuniary penalties, injunctions, and compensation orders. In serious cases, criminal prosecution is possible.
If you are uncertain about your obligations under the FMCA, or if you have received an FMA information request or are under investigation, specialist legal advice is essential.