New Zealand’s Financial Markets Authority (FMA) has confirmed the removal of several offshore firms from the Financial Services Provider Register (FSPR), according to an FMA statement.
Despite the Registrar of Companies maintaining the FSPR, it is New Zealand’s watchdog regulator, the FMA that maintains the teeth and power to ultimately advise the Registrar. The most common grounds for removing companies from the FSPR are necessitated following false or misleading impressions emanating from companies regarding the context or even extent to which it is regulated in the country.
Moreover, the FMA is fully within its legal doctrine to issue warnings upon receiving complaints or when a given firm has failed to respond adequately to enquiries from the regulator.
In particular, the FMA maintains tangible concerns regarding the intent of some offshore firms to register with the FSPR with the sole intent to gain advantage of New Zealand’s reputation as a well-regulated entity. Subsequently, the FMA has received a number of complaints from offshore investors and market participants who have lost their money to foreign exchange (FX) companies, and other types of financial service providers operating abroad that are registered on the FSPR.
A couple of very suspicious foreign exchange brokers from the Ukraine have been harbored under the New Zealand register. While the local regulator doesn’t really enforce any action against firms which are operating with offshore clients. The regulations are solely responsible for clients domiciled in New Zealand. Paradoxically, a huge number of New Zealand registered brokers do not provide their services to local residents.
23 and Counting…
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While the year has not even reached its meridian, the FMA has already removed no less than 23 firms from the FSPR register. Furthermore, the FMA has had a busy year in Q1 2015, taking action to prevent an additional 20 firms from successfully completing registration on the FSPR.
Ultimately, the FMA has demonstrated concern that local registration agents in New Zealand are facilitating the registrations of these firms. One such example is taking a role as a director and providing local registered office facilities to offshore companies. On the surface, these activities give the illusion and appearance of offering a financial service from New Zealand, when in actuality the substantive business, should exist at all, takes place offshore in a foreign jurisdiction.
According to Liam Mason, FMA General Counsel, in a recent statement on the removal, “We are aware of instances where the FSPR is not being used for its intended purpose. This is taking advantage of New Zealand’s good reputation for being a well-regulated jurisdiction and a good place to do business.
The process follows the natural justice principles that are important to our integrity as a regulator. But this process also takes time and we recognise that in some circumstances we need to alert investors to concerns we may have about a particular offshore company.”
“Where we receive complaints about investors either being unable to access their funds, or being unable to contact a company who is holding their money, then we are warning people to take extreme caution when dealing with those particular companies,” he added.
Last month, the FMA made headlines after signing several Memorandums of Understanding (MOUs) with the Insurance Savings Ombudsman (ISO) and the Banking Ombudsman Scheme (BOS) respectively.