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Balancing burden and investor protection

Paul Gregory, Director of External Communications and Investor Capability


Conduct regulation is a balancing act. On one side is the impact on industry, including the costs of new and different regulatory requirements.


On the other side is the benefit to industry - and New Zealand in general - of a well-regulated financial services sector where investors are confident participants.

The ‘burden’ of regulation is an ongoing concern and certainly a conversation topic for the industry. Some burden is inherent within the regulation we’re required to implement. And some comes from how we choose to do our job. As the regulator we must be aware of both, but we focus on what we can control.

There is also a difference between imposing unnecessary burden, and doing something which is simply unpopular. Risk is what separates them. Provided we are addressing a genuine risk of harm, we shouldn’t be overly concerned if those activities are not universally applauded. Changing our plans based on lack of popularity would make even less sense.


This update contains a number of examples of how we address regulatory burden.


  • We work with others to be more efficient. Our behavioural insights partnerships will have solid results for us and for providers. And through our consultation process – for example our upcoming paper on robo-advice - we  listen to industry, and people outside the industry who have an interest in what we’re doing.
  • We provide direct relief. We consider granting exemptions where we think a case can be made to make current processes more efficient. For example, we will soon be consulting on use of market indices and on bundled unit trusts (see our What's on the horizon - coming soon section below).


Paul Gregory

Director of External Communications and Investor Capability

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31 May

Consultation paper: Improving financial information in an equity PDS. Read more ›


16 June

Consultation paper: Proposed guidance on substantial product holder disclosures. Read more ›


3 July - 31 August


Annual AML/CFT reports - reporting entities supervised by us are required to submit their annual AML/CFT report through our online system between 3 July and 31 August 2017. Read more ›


AFAs - 7 tips to make the most of your PDPs


In response to queries from AFAs, see our top tips on how you can make the most of your professional development plan (PDP) opportunities.



Changes for investment companies offering shares, to protect investors

From 19 May a class designation comes into effect so we will treat newly issued shares in investment companies as a managed investment product (MIP). Investors will benefit because of enhanced disclosure, governance and licensing requirements. 

Understanding investor decision making

In 2016 we released a white paper explaining how behavioural insights can be used to improve financial capability. Since then we have been working with two KiwiSaver providers - Kiwi Wealth and ANZ on separate trials to test the theory.

We ran a seven month trial with Kiwi Wealth from August 2016 to February 2017 to see if behavioural prompts increased the number of active fund choices made by members. The results of have been positive and are due to be released in the next few weeks.

Our trial with ANZ aims to find out if behavioural prompts can encourage KiwiSaver members to get retirement advice or use retirement planning tools when they hit 56 years old. You can read the media release here. Results from the trial will be published in 2018.


What's on the horizon - coming soon

Look out for the following consultation and publications we’ll be releasing soon:

  • Report: Licensing overview: This report outlines the common areas of challenge we saw during FMC Act licensing last year. It also offers helpful tips  for new applicants when preparing their application, and signals to current licence-holders  our future focus areas for on-going monitoring.
  • Consultation: Market index: We will be consulting on potential exemption relief for MIS managers. The proposed exemption is for managers that cannot provide an ‘appropriate market index’ for managed funds, where these funds have significant direct or underlying investment into alternative asset classes.  Any relief would be on the basis of alternative requirements, such as a peer group index. 
  • Consultation: Bundled unit trusts: We will be consulting on a potential exemption for MIS managers.  The exemption would grant relief from the requirement to prepare scheme financial statements where the scheme is composed of a number of unit trusts that do not have joint liabilities. If granted, MIS managers will still have to prepare financial statements for each of the unit trusts (separate funds).
  • Consultation: Robo-advice: We will be consulting on possible exemption relief to facilitate personalised robo-advice services under the Financial Advisers Act.  Under current regulation, development of digital advice models are impeded.  Proposed reforms to financial adviser laws will address this but there is interest in having personalised robo-advice enabled sooner.
  • Consultation on content of regulatory returns for DIMS, MIS and DI licensees. As part of the licence conditions we will be consulting on the questions we propose to ask in annual regulatory returns.  It will also include an updated proposal for the annual compliance declaration for all FMC Act licensees.

Exemptions issued

The following is a list of exemptions we have decided to issue. These will be published on our website.


  • Companies and schemes in wind-up: An exemption from the new ongoing requirements of the FMC Act for companies that issued debt under the Securities Act regime, where they commenced (but had not completed) winding up before 1 December 2016.  We expect the exemption will come into effect before the end of May.  We have also decided to grant an exemption from the ongoing requirements of the FMC Act for superannuation schemes, unit trusts and group investment funds, where the managers of those schemes commenced (but had not completed) winding up the relevant schemes before 1 December 2016.  We expect the exemption will come into effect in late May or early June. 
  • CIMA qualification: An exemption from the requirement under the Code to attain the Core Component and Investment Strand of the New Zealand Certificate in Financial Services (Level 5) for AFA applicants who are Certified Investment Management Analyst certificate holders.  We expect this exemption will come into effect by the end of May.
  • Non-NZX brokers client money separation:  A limited transitional class exemption for non-NZX participant brokers from the requirement to keep client money and property separate from their own money and property.  This will allow non-NZX brokers to maintain a limited buffer of their own money in their client money trust account. We intend to finalise a notice to give effect to this decision by mid-2017. Further details are on our website.

We’re hiring!

Do you want to join a vibrant and dynamic team that embraces work-life balance, a commitment to employee well-being, and opportunities for learning and development?  We have a range of roles available so please check our website to find out more.


FMA news

18 MayFormer financial adviser pleads guilty to four charges under Crimes Act


15 May - Changes for investment companies offering shares to protect investors


10 May - Media Statement on NZX updated code of corporate governance


9 May IMF NZ FSAP Assessment 2017


8 May - KiwiSaver trial to target decision-making a decade out from retirement


1 May - Forestlands – update for investors


Industry insights

Three steps to beating unconscious bias
CFA Institute


Current research on how ETFs can affect financial markets

Alpha Architect


Is future of NZVIF…NZVIF2.0?






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