The Financial Markets Authority (FMA) is seeking industry feedback on four regulatory loose-ends in another burst of pre regime-change housekeeping.
In a consultation document released last week, the FMA attempts to tidy up a range of technical issues including the legal status of licensed independent trustees (LITs) under certain corporate structures.
“Questions have been raised with us about the practical ability of restricted schemes to comply with the licensed independent trustee requirement when they use a sole corporate trustee (SCT),” the FMA document says.
Under the Financial Markets Conduct Act (FMC), due to come into full force this December, all restricted schemes (ie KiwiSaver, superannuation or other similar savings schemes that have defined membership criteria or are closed to new members) will be required to appoint a LIT.
However, under some common industry SCT structures, the LIT would not be considered ‘independent’ based on the current legal definition.
Where the SCT is a related party of the restricted scheme investment manager, administrator or sponsoring employer, the regulator has proposed an exemption from strict LIT independence rules until a legislative fix is in place.
Furthermore, the FMA says the same exemption should resolve the LIT problem where a company has two restricted schemes that share the same corporate trustee.
In the same consultation document, the FMA also proposes a “lighter compliance path” for offshore banks (not registered in NZ) to sell “simple debt products to New Zealand investors”.
“The exemption would allow overseas banks to offer simple debt products to New Zealand investors without having to prepare a part 3 disclosure documents or comply with the part 4 governance requirements (trust deed and supervisor), and part 7 financial reporting requirements of the FMC Act,” the FMA says.
However, the exemption would come with several conditions, including the need to “attach certain New Zealand-specific disclosures” with any offer.
“These disclosures will highlight the risks associated with the investment (namely the fact the bank would not be registered in New Zealand and the challenges of enforcing New Zealand securities law),” the FMA proposal says.
The FMA is also touting for industry responses to proposals on balance date alignment for NZ subsidiaries of offshore entities, and recognition of overseas auditors used by custodians.
Submissions on all proposals must be lodged by March 24 this year.