The Financial Markets Authority (FMA) could reprise its 2020 COVID-related regulator reporting relief measures if the recent delta wave rolls on.
In a note issued last week, the FMA said while regulated entities affected by the new lockdowns could seek ‘no action’ relief on a case-by-case basis it “may also grant class exemptions as a result of the current Delta variant outbreak”.
Under the no-action approach, businesses where compliance “may lead to unnecessary operational/regulatory burden and investor detriment” must apply to the FMA for an exemption.
“We will consider whether the relief requested is specific to the individual circumstances of the entity, or appropriate for a wide range of market participants on a class basis,” the note says.
Post the first coronavirus lockdown imposed early last year, the FMA granted broad no-action relief to a raft of reporting entities including KiwiSaver schemes, discretionary investment management schemes (DIMS) and fund managers.
The regulator also issued two class exemptions allowing a two-month financial reporting extension for most firms as well as specific relief to custodians.
“If you are covered by a class exemption, you do not need to seek ‘no action’ relief,” the FMA says.
However, no-action remains the preferred method of managing regulatory stress, the note says, allowing temporary respite for businesses caught out by extraordinary circumstances.
But exempted firms must continue to communicate with and treat “their customers fairly at all times”, the FMA says.
“Accordingly, as part of this approach, there is a general expectation that where possible, breaches will be remediated at a later date, and as such the requirement to comply is being delayed rather than removed. We also expect market participants will take steps to mitigate any risks resulting from the breach,” the note says.
“The ‘no-action’ approach is not intended to apply to ongoing and open-ended breaches, or where there is significant risk of customer detriment.”
Businesses relying on no-action relief, though, may not be immune from third-party legal moves “in relation to the same conduct or conduct of that kind”, the FMA says.
Auckland remains locked-down under government COVID Level 4 restrictions while the rest of the country eased down to Level 2 freedoms last week.