The Financial Markets Authority said today it had removed 23 entities from the Financial Services Provider Register and prevented another 20 from completing registration.
The Registrar of Companies maintains this register, but the Financial Markets Authority has powers to direct the registrar to remove companies from it where it’s likely a company is giving a false or misleading impression about the extent to which it is regulated in New Zealand.
FMA general counsel Liam Mason said the authority had been reviewing referrals from the registrar where there were concerns about whether the substantive business activities of a firm required it to be registered on the New Zealand register.
“The FMA has concerns that some offshore companies have registered on the Financial Services Provider Register 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 register.
“We are aware of instances where the register 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.”
Mr Mason said the authority was concerned that local registration agents were 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 authority will look closely at the ability of such directors to carry out their duties under the Companies Act, especially where multiple directorships are held.”
The process allows firms to submit reasons they should stay on the register.
As part of the ongoing statutory review of the Financial Advisers Act and the Financial Service Providers Dispute Resolution Act, the authority will release an issues paper for feedback shortly.
Link: FMA, warnings & alerts
Attribution: FMA release.