Recently we have seen an increasing number of entities looking to be listed on the New Zealand Financial Service Provider Register (FSPR). Being a listed entity on the FSPR is a requirement if you want to provide financial services to New Zealand resident clients.
With an influx of entities needing assistance in applying for registration on the FSPR, we have also seen trends in the way the FSPR handles these applications. FSPR registration can become a lengthy process where the entity is required to answer several rounds of in-depth questions from the FSPR. These questions may involve the provision of further information regarding:
- your business operations including the provision of a business plan;
- directors and employees and their roles within the business;
- the location of your business and which staff members work from the office;
- the types of financial services to be provided, both now and in the future. This can be frustrating to entities who are applying for registration.
The FSPR is also likely to raise the issue of additional licensing during the registration phase. Additional licensing may be required depending on the type of financial services the entity may provide. For instance, if you are a derivatives issuer providing services in or from New Zealand, you will need to apply to be listed on the FSPR and for a Derivatives Issuer Licence through the Financial Markets Authority (FMA). These applications should be complete simultaneously to ensure the FSPR registration can be processed quickly.
The FSPR appear to be pushing for entities to be licensed under the new FMA licensing regime and this has been raised as an additional question in the registration process, regardless of whether the business provides financial services that require licensing through the FMA. We have seen FSPR applications be sent to the FMA for final review, often taking months before getting a response and further extending the registration process.
In addition, the FSPR has tightened the minimum requirements which must be met before applying for FSPR registration. Applicants must:
- have a physical office within New Zealand;
- employ a Compliance Officer who works out of the New Zealand office;
- maintain client files including Anti-Money Laundering and Counter Financing of Terrorism files, in the entities New Zealand office;
- pass criminal conviction background checks; and
- be a member of an approved dispute resolution scheme (if you provide service to retail clients).
The FSPR may undertake unannounced checks of the above requirements at any given time. The implementation of these new requirements has also seen a number of existing FSPR registered entities be struck off the register.
If you are thinking about applying to for registration on the FSPR, consider your business model and the type of financial services provided:
- Do you meet the requirements for registration?
- Do you need any other type of licence and if not, have you received legal advice on this issue?
- Are you ready for the FSPR to conduct spot checks at your office in New Zealand?
- Do you have directors and employees with relevant experience?
- Are the appropriate engagement agreements in place?
Sarah works with the Compliance Team with a particular focus on compliance and legal services. Sarah also works with the Legal Team providing ongoing assistance in drafting and reviewing documentation as well as legal research. Sarah assists clients with AFSL and ACL applications, variations and also assists in the implementation of compliance reviews. She provides ongoing compliance support in the form of compliance program implementation and reviews.