The Financial Markets Authority (FMA) has just published two consultation papers proposing a range of new obligations for financial services licence-holders.
Under one proposal, all Financial Markets Conduct Act (FMC) licensees would have to supply a written annual declaration to the regulator stating “they have complied with each condition of their licence”.
“We believe this new condition will support and enhance our strategic objectives in the areas of governance and culture. The proposed condition ensures that compliance is on the agenda of licensees’ governing bodies each year,” the FMA discussion document says. “It also supports and enhances our supervision and monitoring functions by ensuring we receive accurate information on a regular basis to confirm licensees are complying with the FMC Act.”
The financial industry watchdog has also issued another discussion document detailing changes to how certain FMC-licensed entities– including derivative issuers and discretionary investment management service (DIMS) providers – calculate and disclose financial resources information as well as changes to auditing procedures.
“In some instances, we are proposing to make minor changes to terminology, or to clarify our expectations in terms of timing,” the FMA discussion document says. “Other proposed variations are more substantial. This is the case for auditors’ procedures related to licensees’ financial resources requirements.”
For example, FMA has clarified its powers to request small DIMS providers (less than $250 million under management) have their accounts professionally audited.
“The proposed amendments are intended to reflect that it may not be appropriate to require a qualified auditor to be engaged as a matter of course due to the cost implications relative to the size of the small DIMS provider’s business,” the discussion document says. “However, the FMA needs the ability to require this in certain circumstances.”
Mike Woodbury, Chapman Tripp partner, said the FMA proposals don’t contain “anything particularly noteworthy in high level terms”.
“The details (at least as regards managed funds) make sense and seem navigable,” Woodbury said.
Interested parties have until December 14 to submit feedback on the financial resources/auditing proposals while submissions on the compliance declaration proposal close December 21.
