Financial Markets Conduct Act

The Financial Markets Conduct Act 2013 (FMC Act) lays the groundwork for us to provide high-quality regulation in capital markets and financial services here in New Zealand.

The purpose of the FMC Act is to promote and facilitate the development of fair, efficient and transparent financial markets, and to promote the confident and informed participation of businesses, investors and consumers.

The FMC Act governs the way financial products are offered, promoted, issued and sold. This includes the on-going responsibilities of those who offer, issue, manage, supervise, deal in and trade financial products. The FMC Act also regulates the provision of certain financial services (which includes financial advice services) and the conduct of financial institutions.

How the FMC Act affects you

The FMC Act impacts everyone living in New Zealand in some way, whether you are conscious of it or not. As a result of the changes brought in by the FMC Act and the big-picture vision for our country, a financially healthy New Zealand includes:

• Well-informed investors and consumers
• Healthy and robust businesses
• Competitive markets
• Good conduct by businesses, financial institutions and professionals
• Global recognition as a strong business environment.
• A world leading climate reporting regime.

Features of the FMC Act

• A fair dealing requirement covering all firms or professionals that are dealing in financial products or supplying financial services.
• A proportionate liability regime - relative to that under previous securities laws - applying to directors of firms making offers of financial products under the FMC Act.
• Concise and timely financial and climate reporting.
• Providers of peer-to-peer lending and equity crowd funding services required to be licensed by the FMA.
• Financial advice service providers required to be licenced by the FMA with oversight of financial advisors
• Some new exclusions contained in the FMC Act providing streamlined processes for certain types of offers of financial products, including ‘same class’ offers, making it easier to raise further capital.
• Product disclosure statements for offers of financial products required to be clear, concise, and effective and subject to page limits. An online register includes all the material information on offers under the FMC Act.
• The following also required to be licenced by the FMA: managers of registered schemes (managed investment schemes), derivatives issuers, and independent trustees of restricted schemes. Providers of discretionary investment managements services (DIMS) and persons acting as an administrator of a financial benchmark also required to be licensed.
• Oversight of the conduct of financial institutions.

What the FMC Act governs (amongst other things)

• Prohibition on misleading and deceptive conduct, false and misleading representations, and unsubstantiated representations, in relation to dealing in financial products and the provision of financial services.
• mandatory disclosure to investors for offers of financial products and directors’ responsibilities in making offers for financial products.
• governance requirements for financial products.
• on-market trading of financial products, including the licencing financial product markets, substantial product holder disclosure, and the prohibition of insider trading and market manipulation.
• licensing of firms and professionals who provide certain market services.
• provision of financial advice services and custodial services.
• financial and climate reporting.
• conduct of financial institutions, which includes registered banks, insurers and non-bank deposit takers.

The FMA oversees a range of financial markets legislation. We also have certain powers, monitor compliance, investigate and enforce conduct that may constitute a contravention of other legislation, where it applies to financial market firms, products offered, services and individuals.