The regulated managed funds sector has emerged with a few wins in the just-released final Financial Markets Authority (FMA) advertising guidance.
Simon Haines, chair of the Boutique Investment Group (BIG), said the FMA financial product ad guide addresses most of the major concerns flagged in the earlier draft version.
Haines, also Nikko Asset Management NZ legal counsel, said the FMA financial regulatory guidance removes the draft requirement that would’ve swamped banner advertising with detailed disclosure material, effectively obscuring any product messages.
“The most important change [from the draft] for us is the FMA has now signaled we can include the regulatory disclosure and other information in a landing page rather than in the ads,” he said. “Under the draft proposal, it could’ve created an absurd situation where it was easier to advertise unregulated financial products than regulated ones… it should be the other way around.”
More generally, Haines said the revised FMA guide also includes a welcome focus on more lightly regulated product providers such as wholesale property syndicate offers.
In a note to BIG members, he said the FMA had “clearly widened the lens from a focus on regulated products to include the wild west of unregulated ones”.
Just prior to releasing the ad guidance, the regulator pinged property developer, Du Val, with a ‘direction order’ for potentially misleading advertising of a wholesale investment offer under ‘fair dealing’ provisions of the Financial Markets Conduct Act (FMC).
Du Val was one of the providers singled out in the BIG submission on the FMA advertising proposals tabled late last year.
The move showcased the likely broader ambit of the FMA to police the wholesale market than had previously assumed, Haines said.
“Wholesale offers are still FMC-regulated products and subject to part 2 [fair dealing provisions] of the act,” he said. “The FMA probably hasn’t fully explored its powers in this area.”
While BIG was mostly pleased with the guidance, it had a few minor niggles with the FMA views on advertising returns and comparisons with term deposits.
The regulator was also “holding onto this odd position that they can issue stop orders at a lower threshold than misleading and deceptive – a position that I would ironically describe as confusing”, Haines says in the BIG note.
Created as a semi-formal group of compliance experts from most local regulated fund managers last year, BIG had several items on the agenda, he said, including imminent climate-reporting laws and new ‘value for money’ procedures currently being trialed in a fee pilot program involving a handful of managers and the FMA.