Australian fund managers have been served a mild alert to tidy up their NZ paperwork for products issued under trans-Tasman Mutual Recognition (TTMR) exemptions.
Last week the Financial Markets Authority (FMA) handed Vanguard a formal warning for failing to notify NZ investors of a recent greenwashing allegation by the Australian regulator.
But the FMA fired a broader TTMR compliance message to Australian fund managers in the Vanguard warning with a reminder that offshore issuers “must ensure they are complying with the New Zealand regime as well as the regime in their local jurisdiction, particularly as they have fewer obligations to comply with than issuers not utilising the [TTMR] regime to offer products in New Zealand”.
“A warning may also lead other overseas issuers utilising the [TTMR] regime to offer products in New Zealand, to review their compliance procedures to ensure they are adequate,” the FMA warning says.
Under TTMR rules offshore firms with products offered in NZ through the regime must publish a notice on the Disclose website of any “enforcement action or exercise of power by Australian regulator” within five working days.
Vanguard missed the Disclose deadline by 50 days.
However, the Vanguard case has highlighted a potential gap in the disclosure regime with hundreds of Australian products registered in NZ under TTMR amid more active policing of fund manager compliance across the Tasman.
The Australian Securities and Investments Commission (ASIC) has pinged several managers over the last 12 months for breaches of new design and distribution obligations (DDO) including, for example, issuing an interim stop on the Perpetual Geared Australian Share Fund in November 2022.
In December Perpetual published an amended product disclosure statement (PDS) for the fund, offered in NZ under TTMR, which has yet to appear on the Disclose website (or any notification of the interim stop order).
Like all Australian retail fund managers, Perpetual is also required to publish a Target Market Determination (TMD) under DDO rules. It’s not clear whether the TMD notices (sort of a long-winded version of the risk indicators used by managers here) apply to NZ investors but at any rate no Australian product providers publish the compliance document on Disclose.
In a statement, Paul Gregory, executive director regulatory response, said there “are serious consequences for failing to meet these [TTMR] obligations”.
“Compliance with the requirements of the… regime supports fair, efficient and transparent markets in NZ, and the FMA will take regulatory action, where necessary,” Gregory said.
About 1,400 of the 2,000 or so product offers registered on Disclose are linked to offshore issuers.